Take an ideal location and an engaged business community, throw in some world-class barbeque, and Kansas City may have the recipe for 21st century supply chain success.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
It rests on America's logistics axis, the focal point for much of the nation's freight moving in any direction. It handles more rail tonnage than any city in the country and more rail cars than any city except Chicago. It is bisected by two major interstate highways: I-35 running north to south, and I-70 from east to west. Its airport handles more cargo than any facility covering a six-Midwestern-state radius other than O'Hare International Airport. Its bi-state, 18-county region boasts more road lane capacity than any of comparable size, which might explain why "rush hour" is a largely alien concept even though more than 2 million people call it home.
It also serves up the meanest barbeque anywhere in creation.
Yet Kansas City, Mo., remains one of the world's most overlooked commerce centers, a reality not lost on its devoted community of business leaders and civic boosters. Upon arrival, visitors will usually be greeted by a boisterous "Welcome to Kansas City!" followed by, "Is this your first time here?" with the tacit understanding that the reply is often affirmative.
Kansas City's image has long been that of a "large small city" dwarfed by Chicago, 500 miles to the northeast, and by its sister city on Missouri's eastern rim, St. Louis, with the latter having a reputation for being more cosmopolitan than Kansas City and with stronger ties to East Coast culture and commerce.
None of that seems to bother the locals. They revel in Kansas City's label as the original "cow town," a phrase coined decades ago after the preponderance of cattle roaming its streets. As they see it, their city's central location makes it—not Chicago or St. Louis—the natural eastern gateway to the west, as well as the ideal northern consolidation point for truck and rail service supporting the booming U.S.-Mexico trade.
Yet for all its strengths as a rail center, Kansas City still lacks the established gateway status of a city like Chicago, where all seven North American Class I railroads come together. Patrick Ottensmeyer, executive vice president and chief marketing officer for Kansas City Southern Inc. (KCS), the Kansas City-based railway, said it is more efficient for shippers and carriers to go direct into Chicago without the need for an interchange at Kansas City.
Still, Ottensmeyer said that, in many cases, Kansas City is the "perfect set-up" for rail movements, especially given its position as a median point for north-south traffic moving between the upper Midwest and Mexico. To leverage the region's pre-eminence as a source of animal protein products, KCS is considering a "shuttle" service at Kansas City under which the railroad would load beef and poultry shipments brought in by truck and then ship it southbound to Mexico, Ottensmeyer said. KCS would carry Mexican produce on the northbound leg, he said.
Chris J.F. Gutierrez, president of KC SmartPort, a non-profit economic and logistics development organization, said Kansas City actually benefits from having Chicago considered a rival for supply chain projects. "Most supply chain professionals know the difficulty of congestion, labor, and other factors that challenge them in Chicago," Gutierrez said in an e-mail to DC Velocity. "Kansas City does not have these issues and offers a competitive option for [a] company to consider."
Gutierrez said that when Kansas City is in the running as a site for a new manufacturing or distribution center, "we rarely are competing against Chicago."
Location, location...
When it comes to attracting industrial development, however, Kansas City still has some work to do. Local financial institutions, by and large, adhere to very conservative lending practices. As a result, there is little, if any, so-called speculative development of industrial properties. While that served the city in good stead during the economic downturn, it has made it hard to aggressively and creatively market a property to a business looking to quickly expand or relocate into an existing facility.
But the city's many supply chain strengths can offset the impact of its lenders' practices. When the Coleman Co. Inc., the Wichita, Kan.-based maker of outdoor products, looked to build a 1.5 million-square-foot distribution center—its largest ever—it chose Kansas City, even though St. Louis made a more "financially favorable" proposal, according to Rob Tecco, Coleman's director of distribution.
Kansas City got the nod because of its abundant labor pool, a friendly pro-business climate, and a superior transport network to support Coleman's receiving and distribution, said Tecco. "We think we have a better transportation piece" in Kansas City, he said.
It didn't hurt that the facility was constructed and in move-in condition for Coleman within 10 months after it committed to Kansas City, Tecco added. Coleman moved into the DC in October 2009.
Kansas City's proximity to major consumer markets also drove Pure Fishing Inc., one of the world's leading makers of fishing tackle equipment, to build a 400,000-square-foot distribution center there in 2008, according to Jeff Kisling, vice president, North America logistics and services. "Kansas City was the place to be from a cost perspective and from an inventory perspective," he said.
Kisling said Pure Fishing's goods can be delivered anywhere in the United States from its DC in three days or less. This is critical for serving West Coast anglers, who make up a good chunk of the company's customer base, he said.
"We can take an order on Monday, ship it out on Tuesday, and our West Coast customers can receive it on Friday in time for the weekend," Kisling said. "St. Louis is too far east" to consistently hit those delivery targets, he added.
Municipal support
Logistics has also been embraced at the municipal level. Perhaps the most striking example is in the western suburb of Olathe, Kan., where over the past 40 years its residents have helped finance—in conjunction with federal and state funding—the construction of four interchanges off I-35. The first three focused on retail and office development. The fourth, and last, was dedicated to industrial development. It opened three years ago.
Tim McKee, president of the Olathe Chamber of Commerce, said the projects have yielded financial benefits far in excess of their costs. "For each interchange that we have built, we have seen private investment of more than $1 billion," he said.
But perhaps the most ringing endorsement to date of Kansas City's increasing relevance on the logistics map can be found in Edgerton, Kan., about 25 miles southwest of the city off I-35. There, workers are erecting an intermodal and distribution complex that will occupy more than 7 million square feet and cost about $750 million, 80 percent of which will be funded through private sources. An additional $100 million in public money will be spent on infrastructure such as access roads around the park.
The project, considered one of the most important development efforts in the history of Kansas, is expected to create more than 13,000 direct and indirect jobs statewide and generate about $1.7 billion in tax revenue over a 20-year period, according to state estimates.
Anchoring the complex will be a $250 million intermodal yard being built by BNSF Railway. The BNSF terminal, slated to open in the fourth quarter of 2013, will replace a smaller facility near the city and become a linchpin of the railroad's southern corridor connecting Chicago and the Southwest. At full capacity, the facility will be able to handle 1.5 million intermodal "lifts" per year, compared with 313,621 lifts handled at the existing facility in 2011. A lift is defined as one trailer or container being placed on or taken off a rail car.
Ground was broken at the BNSF facility in mid-March, and the project is expected to take about 22 months to complete. For BNSF executives, the contrast between the progress at Edgerton and an ongoing project in Southern California, which is in its eighth year of development and remains mired in bureaucratic and environmental red tape, could not be starker.
"We have to get your spirit out there," remarked John Lanigan, BNSF's executive vice president and chief marketing officer, at a conference in Kansas City in early April.
The U.S., U.K., and Australia will strengthen supply chain resiliency by sharing data and taking joint actions under the terms of a pact signed last week, the three nations said.
The agreement creates a “Supply Chain Resilience Cooperation Group” designed to build resilience in priority supply chains and to enhance the members’ mutual ability to identify and address risks, threats, and disruptions, according to the U.K.’s Department for Business and Trade.
One of the top priorities for the new group is developing an early warning pilot focused on the telecommunications supply chain, which is essential for the three countries’ global, digitized economies, they said. By identifying and monitoring disruption risks to the telecommunications supply chain, this pilot will enhance all three countries’ knowledge of relevant vulnerabilities, criticality, and residual risks. It will also develop procedures for sharing this information and responding cooperatively to disruptions.
According to the U.S. Department of Homeland Security (DHS), the group chose that sector because telecommunications infrastructure is vital to the distribution of public safety information, emergency services, and the day to day lives of many citizens. For example, undersea fiberoptic cables carry over 95% of transoceanic data traffic without which smartphones, financial networks, and communications systems would cease to function reliably.
“The resilience of our critical supply chains is a homeland security and economic security imperative,” Secretary of Homeland Security Alejandro N. Mayorkas said in a release. “Collaboration with international partners allows us to anticipate and mitigate disruptions before they occur. Our new U.S.-U.K.-Australia Supply Chain Resilience Cooperation Group will help ensure that our communities continue to have the essential goods and services they need, when they need them.”
A new survey finds a disconnect in organizations’ approach to maintenance, repair, and operations (MRO), as specialists call for greater focus than executives are providing, according to a report from Verusen, a provider of inventory optimization software.
Nearly three-quarters (71%) of the 250 procurement and operations leaders surveyed think MRO procurement/operations should be treated as a strategic initiative for continuous improvement and a potential innovation source. However, just over half (58%) of respondents note that MRO procurement/operations are treated as strategic organizational initiatives.
That result comes from “Future Strategies for MRO Inventory Optimization,” a survey produced by Atlanta-based Verusen along with WBR Insights and ProcureCon MRO.
Balancing MRO working capital and risk has become increasingly important as large asset-intensive industries such as oil and gas, mining, energy and utilities, resources, and heavy manufacturing seek solutions to optimize their MRO inventories, spend, and risk with deeper intelligence. Roughly half of organizations need to take a risk-based approach, as the survey found that 46% of organizations do not include asset criticality (spare parts deemed the most critical to continuous operations) in their materials planning process.
“Rather than merely seeing the MRO function as a necessary project or cost, businesses now see it as a mission-critical deliverable, and companies are more apt to explore new methods and technologies, including AI, to enhance this capability and drive innovation,” Scott Matthews, CEO of Verusen, said in a release. “This is because improving MRO, while addressing asset criticality, delivers tangible results by removing risk and expense from procurement initiatives.”
Survey respondents expressed specific challenges with product data inconsistencies and inaccuracies from different systems and sources. A lack of standardized data formats and incomplete information hampers efficient inventory management. The problem is further compounded by the complexity of integrating legacy systems with modern data management, leading to fragmented/siloed data. Centralizing inventory management and optimizing procurement without standardized product data is especially challenging.
In fact, only 39% of survey respondents report full data uniformity across all materials, and many respondents do not regularly review asset criticality, which adds to the challenges.
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.