Rising costs and a stubborn recession weren't enough to throw Gough Grubbs of Stage Stores off his game. He simply used them as an opportunity for some creative collaboration.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
It's been said that historically, the shipper community gets creative when its collective back is to the wall. Gough Grubbs of Stage Stores is a prime example of that. During the most recent economic slump, Grubbs collaborated with his company's dedicated outbound carrier to work out a new delivery regimen that saved everybody time and money. His takeaway from that experience? "Economic downturns can actually be positive," he says, "in that they force the kind of communication with business partners that we should have had all along."
Grubbs is senior vice president of distribution and logistics at Stage Stores, a retail chain that operates more than 800 stores under the Goody's, Bealls, Palais Royal, Peebles, and Stage brands. He joined the retailer in 1996, following 23 years in the distribution positions with Foley's (May Co.) and Sanger Harris (Federated Department Stores).
Grubbs holds a B.A. in business management from the University of Texas at Arlington and is a frequent speaker on the logistics and supply chain conference circuit. He recently spoke with DC Velocity Group Editorial Director Mitch Mac Donald about the operation he oversees, his management philosophy, and how he was converted from skeptic to hard-core fan of transportation management systems.
Q: Could you tell us a little about Stage Stores and how it has grown since you joined the company? A: When I arrived back in 1996, Stage was operating 235 stores in 13 states. Today, we have over 800 stores in 39 states and continue to expand. This fall, we're opening a store in Wyoming, which will be our 40th state. Our aim is to have over 1,000 stores by 2014.
We sell name brand apparel, footwear, cosmetics, and jewelry to rural America. Our focus niche is to be in towns of less than 50,000, although over the years, some of those towns have grown well beyond that.
Q: Could you briefly describe the distribution network that serves those stores? A: We have three DCs—in Jacksonville, Texas; South Hill, Va.; and Jeffersonville, Ohio. Those DCs have a combined capacity of 1,150 stores, so you can see we have quite a bit of growth potential as long as we stay within our traditional geographic footprint. If we expanded heavily into the West, with the cost of transportation, we might need to consider adding a fourth DC, but we don't see that in the near future.
Q: Sounds like you're well positioned to provide next-day service from the DCs to stores? A: Well, we could if we wanted to, but we're not doing that right now because of volume and distance. After the 2008 economic slump, we began talking with our dedicated outbound carrier, Velocity Express, about reducing delivery frequencies. What we decided was that some of the stores were small enough that they didn't really need three cartons delivered every day, and we could both save some money by moving them to a designated-delivery-day system. So, we took a segment of the stores and put them on a Tuesday-Thursday or a Monday-Wednesday-Friday delivery schedule, all based on volume and business.
It was a win-win for both the carrier and for us. The stores had no objection—they didn't necessarily enjoy going to the back door every day to receive two or three cartons.
That's not to say this will be a permanent arrangement, however. The grand plan, since we have a dedicated delivery partner, is that as it adds other clients in these areas and finds itself going to a location anyway for some other client, we will probably go back to more frequent deliveries.
Q: Tell us a little bit about the logistics operation's role in supporting Stage's broader corporate success. A: Well, as I mentioned, we are a growth company, so our primary role is to make sure that we are never the reason they can't continue down that path—that I have sufficient capacity and have the mechanisms in place to support whatever strategy they decide to pursue.
Another of our main responsibilities has to do with balancing stock levels and transportation costs. We operate literally hundreds of stores in rural areas and the average store size is around 18,000 square feet, so we are pretty shallow in terms of depth of our SKUs. As a result, we have to be very sensitive to how quickly we can replenish to avoid out-of-stocks. Trying to marry up the need to keep inventory in the store but do it cost effectively in so many widely scattered locations is a major challenge.
Q: Could you talk a bit about your specific role? For instance, what do you do when you come to work each day? A: Most of my time is spent communicating with our own merchants, communicating with vendors, communicating with carriers, and trying to develop an environment that is conducive to the maximizing of productivity and efficiency within the organization.
What makes that possible is that I have a very good team. They are solid. They are experienced. They are great leaders. That has allowed me to focus my efforts on things outside the four walls. They are running what goes on the inside.
Q: So you're a proponent of hiring good people and getting out of their way? A: Absolutely. Often when I speak, I open with, "I love my job." The reason I love my job so much is I get to do my job. So many of my peers appear overworked and over-tasked. When you talk to them for just a little while, you find out that the reason is that they're not only doing their own jobs, they're also attempting to do their people's jobs.
Q: Assume for a moment that you've stepped into a new job and discovered some pretty substantial personnel problems within the logistics operation. How would you go about orchestrating change? A: I think you do it one step at a time. You have to spend time with each of the individuals to try to get to the root of the problem and then go attack those issues.
That can lead to difficult decisions, like having to cut loose a star player—someone who's well thought of in the industry—for the sake of the team. Sometimes that has to be done and a lot of things happen as a result of that. For one thing, it sends a message about what is acceptable and what is not acceptable no matter who you are. For another, people see that you're serious about your philosophies and they start to get into line.
Q: You've spent 40 years in the logistics profession. What are some of the biggest changes you've seen in that time? A: The biggest one is the increased availability of data. Take advance ship notices, for example. We're now at about 93 percent advance ship notice utilization. An advance ship notice is basically like an electronic packing slip for every carton that comes across. With that information, you can do a better job of staffing, and the receiving process is more efficient because instead of having to do the old count and sort and stack, you just scan a carton. On top of that, it allows us to make store allocation decisions based on up-to-the-minute information, rather than having to decide as much as six weeks out where merchandise is going to go. When you do that, of course, by the time it gets there, that's not where you need it.
It's the same thing for transportation. We have a transportation management system that helps us optimize our loads. When we first installed the system back in 2002, we compared the routes it developed with those created by our people and questioned some of the decisions. We said, "Why are we sending that truck there?" But when we went back and did the math on the miles and the costs, it was right.
Q: What do you see coming down the road in terms of logistics technology? A: I'd say RFID has a great deal of potential. We are not a part of that right now—mainly because the price has not come down enough that it has been totally embraced by the vendor community—but I think it is coming.
I remember a day when just scanning a bar code seemed like a huge win. But now I'm hearing complaints from store personnel about the amount of time they have to spend at the back door to receive freight because they have to scan a bar code. With RFID, they could just wave a wand over a pallet load of cartons and get back to their primary job of selling. I think we will get there.
RFID holds similar promise for tracking inventory. The ability to validate your inventory with the stroke of a wand is something we will eventually have, and probably sooner rather than later.
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.
Chief supply chain officers (CSCOs) must proactively embrace a geopolitically elastic supply chain strategy to support their organizations’ growth objectives, according to a report from analyst group Gartner Inc.
An elastic supply chain capability, which can expand or contract supply in response to geopolitical risks, provides supply chain organizations with greater flexibility and efficacy than operating from a single geopolitical bloc, the report said.
"The natural response to recent geopolitical tensions has been to operate within ‘trust boundaries,’ which are geographical areas deemed comfortable for business operations,” Pierfrancesco Manenti, VP analyst in Gartner’s Supply Chain practice, said in a release.
“However, there is a risk that these strategies are taken too far, as maintaining access to global markets and their growth opportunities cannot be fulfilled by operating within just one geopolitical bloc. Instead, CSCOs should embrace a more flexible approach that reflects the fluid nature of geopolitical risks and positions the supply chain for new opportunities to support growth,” Manenti said.
Accordingly, Gartner recommends that CSCOs consider a strategy that is flexible enough to pursue growth amid current and future geopolitical challenges, rather than attempting to permanently shield their supply chains from these risks.
To reach that goal, Gartner outlined three key categories of action that define an elastic supply chain capability: understand trust boundaries and define operational limits; assess the elastic supply chain opportunity; and use targeted, market-specific scenario planning.
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.”