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.
Do not be looking for a political rant here. This is not about either realities or stereotypes (not mutually exclusive, by the way) in social entitlements. Put aside images of folks living on food stamps or doddering codgers collecting Social Security payments and staying alive thanks to Medicare (that might be us).
But after generations of expanding social entitlements, it should not be surprising that some of the expectations of recipients have spilled over into the mentalities of otherwise productive communities. It's not just a matter of dependence on government programs; it's a matter of expectations that are not, and never were, realistic. But despite their unsustainability, we, as both employees and employers, continue to sink deeper into the entitlement quagmire, like B movie heroes slowly disappearing beneath the swamp's quicksand. Even people that we don't think of as takers—and who certainly don't see themselves in that light—have turned into a class that expects unearned benefits.
The phenomenon is not limited to legions of workers basking in the warm glow of antiquated work rules and contractual annual pay increases. Consider the executive who negotiates like a veteran of Istanbul's Grand Bazaar for a guaranteed bonus at year's end. Bonus? For accomplishing what, exactly? That's no bonus; it is merely slightly deferred compensation.
Problem is that entitlement expectations are a slippery slope all by themselves. They grow, and grow. Then, they morph into "rights" and become amazingly difficult to reverse. The bigger problem is that they sap a company's earnings and rob owners of the capital needed to continue building and growing. And the entitled have no clue of the damage—both long and short term—they are doing. Or of the limitations that their demands have imposed on their future success and well being.
THE SUPPLY CHAIN IMPACT
OK, this is a general problem in business at large. What makes it a big deal in our little universe?
What we do, in the complete and complex world of supply chain management, what we decide to do in dealing with change and challenge, and how well we do whatever the job may be ... all have profound impacts on the success of products, programs, and the very enterprise itself.
At the risk of offending, we submit that the damage that one slightly subpar accounting clerk can do is generally of little consequence when contrasted with the supply chain's ability to wipe out an entire selling season—or put distance between the enterprise and its competitors.
We, more than almost anyone, must get this right.
THE PROGRESSION TO UNDENIED RIGHTS
Some, even many, of today's brutally abused benefits began humanely and innocently enough as ways to achieve reasonable conditions for workers. Think about the linchpins of how work is defined—the 40-hour week, the 8-hour day, and breaks for meals and refreshment.
Some labor unions, having won on simple human basics, began to believe that their mission, and their members' rights, were now tied into negotiating wage increases based on tenure; added (or extended) benefits, such as paid vacations; and work rules to limit management of workforce levels by the enterprise.
Today's expectations include:
Getting paid based on what one does, rather than on what one accomplishes
Getting paid based on who they are
Getting paid more, year after year, irrespective of performance, economic conditions, financial considerations, and future prospects
Getting promoted based on tenure, time-in-grade, and educational level, rather than on qualifications to lead or manage
Getting more paid vacation time, based on tenure or title
Getting paid, promoted, and recognized for showing up every day
Getting rewarded as usual for failure or subpar outcomes.
Please note that the expectations are universally about "getting" with no reference to "earning" or "achieving" or "accomplishing." They are all about individual gain, irrespective of enterprise success or their contributions to profitability and market position. They ignore the ultimate reality that the enterprise must succeed to be able to afford any reward or recognition.
ARE THERE CURES?
Maybe. They begin with a re-ordering of thinking and of acceptance that the new "rights" and growing expectations are a natural and desirable progression. This will take, perhaps, generations to turn around and a commitment to educate in this direction.
We can begin with simple introductions of the long-term economic facts of life within an organization's four walls. Management and associates alike must learn the basics of what makes up profit and loss, of what contributes to margins, of what drives sales, and of the need to make capital investments—and how what they do affects the key elements of a business's economic success, or failure.
Once those basics are in place, we can move on to the next step of understanding enterprise performance—the key measures of return on assets, return on equity, and asset turnover. In our supply chain world, as we have noted several times, we need to teach how our accomplishments and decisions in customer service and satisfaction, sourcing management, inventory management and control, and cycle time reduction affect gross margins, asset base, net profit, and asset turnover.
TODAY INTO TOMORROW
But all this doesn't make a lot of sense to a workforce if all it does is show them how to make the business stronger. They, in enlightened self-interest, need to be able to participate in growth, profitability, and success if they are truly to remain engaged as integral parts of the organization. We have come a long way from the day of orphans working 16 hours a day in textile mills for a few pence and a daily bowl of gruel.
And we have a long way to go in going back to basics, without going back too far, and building self-perpetuating entrepreneurial, engaged, and empowered employees as engines for business success.
Designing appropriate and sustainable incentive programs, with metrics that make sense and objectives that are realistic, is a job all by itself, but it is also part of the complete solution. And it is a solution that we desperately need to build and roll out. The program, by the way, provides the best hope for linking reward with accomplishment—relevant achievement that aligns with corporate needs and objectives.
The path we are on may not lead to Greece, but we are fortunate to be seeing previews of coming attractions throughout Europe.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.