It is OK to celebrate improvement, new applications for old tools, and the march of progress. But let's save the proclamations and euphoria for those few genuine breakthroughs.
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.
One manifestation of living long is that one has seen, if not everything, at least many things. A manifestation of being on the younger side is that many things are being seen for the first time, and with no other point of reference may, among many options, be categorized as:
Denounced in horror, as the work of Satan
Embraced with gusto, as the next big thing
Ignored, as mere chatter
Heralded as game-changers, as kinks are worked out and weaknesses are shored up
Overshadowed by the simultaneous arrival of other solutions in search of problems.
MARCHING TO THE HEAD OF THE PARADE
Promoting the apparently new concept draws in armies of fervent supporters. The trade press is always on the lookout for compelling and provocative content. Academics do not want to seem to be run over by the bandwagon. Earnest and brilliant practitioners extol the virtues and vision of whatever's next and trumpet the promise and potential of the latest and greatest.
Consultants, of course, cannot afford to suffer body blows to their images if they don't appear to be both wise and current. And industry observers and commentators also are compelled to display relevance, along with brilliant mating plumage.
Research is conducted, surveys are carried out, results and conclusions are published. But take a moment when the next PR tsunami wipes out rational discourse. Is the concept really new? (Aha!) Or simply more effective or efficient (e.g., lower-cost, faster-speed mobile wireless access)? (Duh!)
WHAT'S OLD IS NEW AGAIN
News flash! As we've frequently reported, Sears was doing business-to-consumer (B2C) order fulfillment from a megadistribution center over a century ago. (As was Aaron Montgomery Ward.) The only differences of significance from today? U.S. mail as input vs. e-mail or mobile entry. Physical delivery by a third party unknown today (Railway Express) vs. FedEx, UPS, or, believe it or not, the U.S. Postal Service.
Shared transportation, with either competitive or complementary independent companies, has been significantly enabled by new information technology capabilities and a renewed emphasis on cooperation and collaboration in new-century business models. Of course, 40 years ago, we called this aha! practice "pooling." Duh!
In the day, we lacked the power and scope of planning and execution software. There was no warehouse management software, for example. But we still kept meticulous inventory records (on cards), planned pick waves as best we could by thinking through needs and priorities, and slotted products, sometimes based on affinity, sometimes on source, and sometimes on throughput objectives, and sometimes on customer demand priorities. To be honest, it was not easy, and it was extremely difficult to replicate day after day. But it wasn't that we didn't do these things in an age in which fire was a new and precious resource, and we created art by tracing 'round our hands on cave walls.
We have, it seems, evolved through a series of developments in which the rising generation cries "Aha!" and the old codgers sit at the fire and mutter "Duh!" Occasionally, someone in either camp will see the light and make the connections. That's when the Homer Simpson "D'oh!" kicks in.
WHEN AHAs COLLIDE
In the early days of radio-frequency identification (RFID), which some think we're still in, the literature was full to overflowing, even littered, with pretentious writing positioning its authors to be recognized as prescient. Those enamored of other hot concepts focused on the weaknesses of the emerging technology—challenges in wet environments, conquering metallic obstacles, etc. They said, in essence, "Readable technology in or on a package of chewing gum? Not in my lifetime—or yours! Cost will stop this dead in its tracks."
Guess what, again? In their lifetimes, the moisture and materiel kinks have been largely worked out. Chip costs have plummeted. RFID is no longer limited to high-cost/value applications, such as automobiles, E-ZPass tolls, mink coats, and lift tickets at pricey Alpine retreats. The future is now, and something even brighter is probably just around the corner.
HOW EVOLUTION WORKS
But, face it. RFID is just the latest version of "automatic identification." One beginning was the sudden appearance of strange markings on the sides of railcars and continued into the ubiquitous bar code that has gingerly worked its way onto everything under the sun, and from hesitant limited usage, even rejection, to a prime source of real-time information for businesses.
So, the concept is rock solid and mature. The implementation has been 1) made possible, and 2) continually evolving, owing to technology.
A PARALLEL?
Is there a lesson here, a learning that is useful beyond the parable? An old puzzle for children was the riddle involving the fox, the rabbit, and the lettuce. The challenge for their master was to take them across a river in a boat that would hold only two: the master and one other.
The rabbit cannot be left alone with the lettuce, lest he eat it all up. The fox cannot be left alone with the rabbit, lest he eat it all up. The fox can be left alone with the lettuce, but what's the fun of that? So, how can the master get all three—and himself—across the river?
If we change the cast, the **ital{dramatis personae,} to something completely different, will the options change? Let's say that the boss has a box of apps, a techno-geek, and a sales superstar.
The techno-geek cannot be left alone with the box of apps, lest he bug them all. The sales superstar cannot be left alone with the techno-geek, lest he sell all the apps to the geek. The sales superstar can safely be left with the apps because he doesn't really know how to use them.
AT THE END OF THE DAY
Even with the updates, the core of the riddle does not change. And so it is with many of our Ahas. We have very, very few completely new ideas to contemplate, either in our supply chain and logistics arenas or in life. We do have, thanks to technology and a bent for continuous improvement, many core concepts that grow in power and usefulness over time (while retaining their core concepts and objectives).
It is OK to celebrate improvement, new applications for old tools, and the march of progress. But let's save the coronations, jubilees, proclamations, and euphoria for those few genuine breakthroughs—and begin the work of evolving them to new levels, too.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."