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.
Last year was a busy one for supply chain resiliency. That's unfortunate, because that meant a string of major disasters forced too many supply chains into costly reactive mode. Worldwide, total economic losses in 2017 due to natural and man-made disasters soared 63 percent to $306 billion, according to reinsurance firm Swiss Re. The U.S. was the hardest-hit region, posting $93 billion in losses mostly from a trio of devastating hurricanes during the late summer and fall.
For the supply chain, disasters are a fact of life, and will become a more expensive fact should incidents increase in frequency and severity, as many experts expect. However, as Aaron Parrott, specialist leader in Deloitte Consulting's supply chain and manufacturing operations practice, explains in a recent conversation with Mark B. Solomon, DC Velocity's executive editor-news, there are ways to mitigate the consequences, though not eliminate them.
Q: There were several high-profile disasters during 2017. Did last year's events move the needle in terms of getting businesses to be proactive about hardening their supply chains? Or are businesses still in a reactive mode and view this as a cost of doing business?
A: While 2017 was certainly a notable year for high-profile disasters, we're not seeing business leaders write big checks to overhaul their supply chains. For some companies in highly impacted regions, these disasters may have caused sudden ruptures in their supply chains and revealed unforeseen vulnerabilities. However, when it comes to building supply chain resiliency, we see most companies taking a piecemeal approach over a longer period.
Q: You stress the importance of pushing disaster planning and execution up the supply chain. Given that most large manufacturers have hundreds of suppliers around the world, can such resiliency be consistently achieved without prohibitive cost?
A: For many large manufacturers, 70 to 80 percent of their product value comes from the supply base. An unforeseen issue with just one critical supplier can jeopardize a manufacturer's entire operation and bring production to a standstill. For companies with complex and expansive supply chains, I recommend starting by focusing on the 15 to 20 percent of components and parts that are critical to continuing operations. This more limited focus will avoid incurring high costs while still ensuring continued production through challenging periods.
Securing resiliency can be achieved without prohibitive cost. In the past five years, the cost of implementation has decreased and ease-of-use for digital tools has increased significantly. This allows businesses to integrate cost-effective sensors and software packages to better collaborate with suppliers as well as enable blockchain solutions and data analytics software that can pinpoint and anticipate potential areas of concern.
Q: Beyond the obvious priority of ensuring the safety of employees, what should a company's to-do list be as it is developing a disaster-response plan?
A: A first step is to increase visibility into the supply chain. If your eyes are closed when disaster strikes, you'll end up fumbling in the dark and grasping for solutions.
This visibility requires mapping the supply chain—developing a multi-tier perspective to better understand the overall network. Next, manufacturers must strategically locate any areas where potential supply chain failures might occur. For example, a manufacturer might learn that all its suppliers for one specific component are located in a hurricane-prone area. Can production survive without these suppliers? Are there alternative suppliers that can diversify the components' availability and reduce risk? By answering these questions, manufacturers can more effectively pre-empt disaster-related challenges.
Finally, complex supply networks require advanced digital solutions, including the ability to track material movement, collaborate in real time, and integrate data across multiple systems and locations, along with data analytics to predict supply disruptions and identify current issues. These tools allow for multinodal communication, enabling instantaneous synchronization across the supply chain and providing manufacturers with complete end-to-end transparency. This real-time information, coupled with unfurled supply chain maps, can allow manufacturers to quickly recognize problems, identify solutions, and pursue preventive actions.
Q: What are the challenges in trying to build disaster plans across very long distances and many different cultures?
A: In today's business world, distance and cultural differences no longer tend to pose significant barriers. In fact, the global nature of business often provides significant value for companies that efficiently source through the most cost-effective supply chain networks. As previously mentioned, digital solutions are vital to securing supply chains, enabling manufacturers to maintain always-on agility. These capabilities are essential—not only for global supply chains, but also for national and regional supply chains.
However, companies that fail to maintain clear visibility into their supply chains may be unaware of supply chain issues occurring on the other side of the globe. End manufacturers may not learn of an issue for three or four weeks after a disaster takes place. Without up-to-the-minute information, companies lose the ability to respond effectively to real-time situations. By translating the physical world into the digital world, manufacturers can more accurately capture and analyze data, building resiliency against otherwise unpredictable situations.
Q: All the planning in the world may not help in the event of a sudden disaster and emergency, or if a storm changes its original course. Is there any way for companies to plan for the unforeseen, and if they can't cover all bases, what should they focus on?
A: Securing the 15 to 20 percent of your supply chain containing the most critical components to your products should be the first priority. But planning for the unforeseen requires building a comprehensive infrastructure around your supply chain. Digital technologies are crucial to gaining real-time insights. If components suddenly stop in transit, sensors and trackers can signal a manufacturer immediately and trigger an appropriate response.
Gaining visibility should also be a priority—not only for disaster planning, but also to maintain a competitive edge. Know where your components come from; learn who supplies your suppliers and establish a deep understanding of how your products come together. Building this bank of knowledge and enhancing it with digital insights enables a manufacturer to become more agile and proactive. This agility will not only prove invaluable in terms of disaster response, but also in allowing manufacturers to efficiently source components and boost revenues. Disasters and supply chain interruptions are going to happen, and they are impossible to avoid. Enabling these capabilities will allow companies to respond more quickly, make better decisions, and get their supply chain back up and running faster.
Q: How much traction has the control tower concept received as a proactive strategy?
A: As digital technologies continue driving supply chain resiliency, the most advanced control tower concepts allow for end-to-end transparency and enable a fully integrated network. This degree of visibility and connected information within the supply chain allows for proactive event management in disaster situations and even automated decision-making.
Establishing an advanced control tower to monitor the entire supply chain is the most holistic solution for building resiliency, but it's not necessary for every company. This concept is scalable and can be shaped to meet a range of companies' needs. Again, the control tower concept should not be understood as a one-time solution, but rather a foundation to build on. Start with the basics—increasing supply chain visibility—and scale up capabilities as needed to secure supply chain value.
Q: Can you briefly provide an example of a company that, in your view, does disaster planning right?
A: When the topic of supply chains enters mainstream conversation, it's usually because a company has failed to foresee potential vulnerabilities in the event of a disaster. Some companies were devastated by the previous natural disasters, like the 2011 earthquake in Japan, but have since become models of building progressive supply chain resiliency. Some have effectively navigated multiple earthquake tremors—relying on real-time data, predeveloped contingency plans, and strategic relationships with alternative suppliers.
In extreme disasters, it's virtually impossible to keep operations running at 100 percent, but with proper planning, business leaders can protect supply chain value as well as ensure the safety of their employees.
Q: What role does your organization play in supporting businesses in this area?
A: The tasks of mapping supply chains, identifying the proper digital tools, and developing strategic know-how can be daunting—especially for the world's biggest and most complex businesses. As a leader in building supply chain resiliency, Deloitte quickly bridges the gap between concept and implementation. From developing a strategy to initiating execution, Deloitte's capabilities can help businesses adopt scalable solutions that best meet their needs.
Building awareness of possible disruptions is half the battle. If one supplier is hit with disaster, do you have a backup supplier to fill the void? Do you maintain enough buffer inventory to cushion production during a supply shortage? How can you synchronize your internal and external data to derive real-time solutions? These are just a handful of the many questions companies must ask when building supply chain resiliency.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
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.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.