Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
Although "third party" has become industry shorthand for contract logistics service provider, LSPs are not the only third parties lurking in the underbrush of supply chain management. The weeds are also full of management consultants.
They're everywhere. They're at every conference, seminar, and convention. They're on the Internet with Web sites, e-newsletters, webinars, and spam. They're in all the trade publications—and that includes the authors of this piece.
Who are they? What do they do? Do they help—or hinder? Is there really a value proposition involved? In answer to that last question, we contend that management consulting at its best is a high calling and a noble endeavor, requiring enormous amounts of both talent and integrity, as well as strong senses of mission and urgency. At its worst, it is an embarrassment on a good day, and a scandal when all the results are in.
Big fish in the global pond
As for who they are, consultants come in all shapes, sizes, and flavors. But in general, a consultancy will take one of the following forms: mega-firms, other big (but not enormous) players, small/midsized houses, sole practitioners, and academics.
Let's start with the mega-operators. This category is made up of huge organizations with thousands of people. They may be partnerships; they may be corporations. They are increasingly multinational.
Many have their roots in the giant public accounting firms.Severalyearsago,eachof theso-called "Big Eight" U.S. CPA firms had enormous consulting divisions. They generally attempted to be all things to all clients and would undertake consulting in any channel that held the promise of growth and/or profit, including public sector operations. As they created multinational accounting conglomerates, their consultancies likewise added at least the appearance of international capability, which tended to be more promise than practice.
Today, as a result of mergers, acquisitions, and divestitures, those origins are not always obvious. Accenture spun off from Arthur Andersen, which itself disappeared, thanks to Enron. KPMG became BearingPoint. Ernst & Young, itself a merged operation, was folded into Cap Gemini to form CGE&Y, which later changed its name to Capgemini. PwC, another merger product, was acquired by IBM after an attempted purchase by HP, and disappeared as an entity. Deloitte Consulting, yet another merger/acquisition, retains its corporate identity but is legally a separate LLC entity.
The overall business model for the mega-firms is a hierarchical organization dependent on sales genera- tion by a relatively small number of rainmakers to provide billable hours for large numbers of analysts and managers. Thorough methodology and process development is supposed to allow relatively inexperi- enced consultants to tackle complex problems in consistent ways.
The model has been likened to bringing in busloads of bright kids who have been indoctrinated into the corporate culture and provided with workbooks full of process descriptions and solutions. They must then hope to come across a client who is asking the right questions. Sometimes they become confused and come to believe that the answers are more important than the questions.
(Full disclosure: Both authors are alumni of one of the mega-firms.)
The next tier
In the next tier down from the mega-firms are a handful of companies that might be described as big and important but perhaps not overwhelming in size. This category is populated by consultants that have all con- centrated on strategy but have taken differing direc- tions. Some (e.g., McKinsey) tried their hand at tactics and implementation to grow the business, but strug- gled to bridge the gap. They remain successful in oper- ational issues with strategic implications. Others, like Bain, have opted to take equity positions and manage cor- porate operations. Still others, like Boston Consulting Group, have stayed focused on strategy and related topics.
Several entities opted to concentrate on performance standards, productivity, and cost reduction. Alexander Proudfoot was a pioneer and the model for much of the productivity consulting segment. The practice survives today as a unit of Management Consulting Group PLC.
The business model for these companies is often based on the engagement of contractors, who are off the payroll as soon as their assignment is complete.
Small and midsized houses
The small and midsized consultancies tend to be built upon limited, but deep, functional experience. They come and go, and wax and wane while they are here, but some have demonstrated remarkable staying power. These players, which are too numerous to name here, can be local, nation- al, or global in coverage. They may be franchises, or they may be real companies. They may affiliate with "stringers" in several locations, handing out business cards to anyone with a suit and a laptop, or they may grow more organically. Some achieve greater functional breadth through working partnerships with other consultancies or broaden their geographic coverage with multinational alliances. They may follow the hierarchical organization model or they may be flatter partnerships, with more hands-on consult- ing involvement from senior partners.
The supply chain field has spawned quite a few of these operations, and many of them deliver cost-effective and sustainable results. Some are highly specialized, while others offer a broad range of supply chain strategy, planning, and execution services.
(More disclosure: One of the authors is a partner in a small/midsized supply chain consultancy.)
Hanging out a shingle
Next come the sole practitioners. The solos run the gamut from internationally renowned specialists to prematurely retired managers to those who set up shop after being shown the door by their previous employer. The subcategories are not mutually exclusive.
There are many excellent one-man (and one-woman) shops. For the right kind of problem, they can often offer an on-target solution at the right price. The best of them recognize their limitations and are brilliant at enlisting other specialists to work on solving the fundamental problems. The worst of them believe their own press clippings and hesitate to bring in people smarter than themselves to help deliver the right answers.
(Still more disclosure: One of the authors is a sole practitioner, and the other not only has been but will be again.)
Tales out of school
There is one other important category of consultants to consider. Many respected academics practice consulting, on either an institutional or a private basis.
Often, their consulting contains a research component directed at a technical solution to a specific, knotty problem. Sometimes, they are able to assemble teams of students to observe and assess operational problems and practices. Other times, they might conduct and analyze industry surveys.
There are times when the right approach to a problem is to build a team with academic and consulting components, to develop an effective blend of esoteric and practical solutions.
One other category deserves mention—and caution. Many service providers—3PLs, motor carriers, parcel com- panies, real estate firms, and the like—offer consulting services. It is possible for a service provider to dispense honest, independent advice. The test—often difficult to evaluate in advance—is whether the "consultant" describes, and offers up, competitive alternatives to his own service.
Editor's note: Next month, we'll look at why companies use consultants, what services they can provide, and how to find and select a consultant.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."