Technological advancements in RFID and sensor technology have created an opportunity for distribution managers in managing their mobile equipment fleets. Equipment suppliers, like Hyster and Crown, are now offering “pay by the hour” programs which track equipment usage and charge hourly rates for that usage.
This option has merit for companies that struggle to size their fleet for operations that undergo periodic peaks in volume due to seasonality, intra-week imbalances and opportunity purchasing. A truck might sit idle 75% of the time making it an underutilized asset or, a truck might be overused during peak periods causing excessive wear & tear and maintenance costs. A “pay by the hour” program allows managers to right-size their fleet and mitigate those fleet management challenges. Currently, not many operators are asking for quotes on this option - but expect this to change as soon as folks become more aware that the option is available.
April 29th, 2008
In Canada, Boom, Bust & Echo (Amazon link here) is a bestselling business book that has people talking more than a decade after it was first published. The book is about demographics and how the demographic patterns in Canada and the United States are major forces in how businesses thrive or fail. As many of us know, the Baby Boomer generation is an enormous cohort with unprecendented buying power whose needs inform what companies bring to the marketplace. Following the Boomers comes:
1. The Bust Generation - a relatively small demographic sliver that is currently 25 - 40 years old.
2. The Echo Generation - a large cohort whose parents are the Boomer generation.
Many companies have considered the sales and marketing aspect of this demographic shift - the boomers are aging, rapidly reaching retirement in huge numbers - and with their buying power, looking for products and services that cater to their active-retirement lifestyles.
But an article in today’s Morning Newsbeat points out a poorly understood ramification of the coming Boomer retirement tsunami. The demographic group that follows boomers, the Bust generation, does not have sufficient numbers of workers to replace the Boomers - not only on the shop floor but all the way up the corporate ladder. The US government predicts that within 10 years, there will be a shortage of labor amounting to 10 million unfilled positions.
What this means is that companies must begin to plan for the shortage today. Retention programs and human-resource strategies that aim to keep quality employees are paramount. Folks who can run a facility, a department and distribution network will be fewer and farther between; the war for talent will be hard-fought. But companies preparing for this today will find themselves on much surer ground when the battle begins.
April 22nd, 2008
The Good
There are many clever things being done by companies to control fuel costs and this weekend’s edition of Parade Magazine contains one such example from UPS. UPS decided to change its delivery routing system such that it develops truck routes that minimize left turns. There is a safety benefit here, since minimizing left turns minimizes the number of times a truck must cross on-coming traffic. But minimizing left turns generates significant fuel savings due to reduced idle time at intersections. UPS engineers figured the company eliminated 3 million gallons of gas last year from making the change. It’s an idea worth exploring for any company that has alot of routes in urban areas.
The Bad
That said, operators must be cautioned not to become fuel price obsessed. Conferences across the continent are devoting huge amounts of time to highlight ways to cope in a high-fuel price environment - often getting down to brass tacks (like retrofitting trucks with equipment to make them more aerodynamic). Of course, the soaring price of fuel makes it difficult, if not dangerous, to ignore. However, we must always look at the total cost of a solution and not focus exclusively on minimizing the cost of one aspect of the supply chain: minimizing the total cost of getting product in your customer’s hands does not result from minimizing the costs of each distinct segment in your supply chain. When cost savings programs are proposed, the impacts on other departments cannot be ignored.
April 8th, 2008
By now, pretty much all internet users have used or been directed to Wikipedia - the on-line encyclopedia that grows by having users submit additions to its volumes. In fact, your children are propably using it to research essays they submit to school, much to the chagrin of teachers who would like to see, now and then, a student use a library!
Well, the Warehouse Education & Research Council have launched a supply chain specific tool called WERC-ipedia. It a fun and handy tool that grows when you the user contributes a word and definition. Administrators at WERC vet each submission for accuracy and clarity before publishing it on-line; so you can rest assured that the definitions are correct.
To test it out, I went through the section on Incoterms which can be confusing for many people. These are concepts that we all have to grapple with as supply chains become increasingly international and the drive to reduce costs push us to put every single cost item under the microscope. Sure, CIF terms might have the least number of hassles, but there may be savings to switch to CFR. And if you didn’t understand that last sentence, you need WERC-ipedia!
April 1st, 2008
Advances in materials handling technologies allow conventional operations (i.e., reach truck & pallet jack operations) to work with clear heights approaching 40’. With this increase in storage height, sprinkler systems have had to play catch up. Traditionally, warehouses with these clear heights have relied on in-rack sprinklers to provide adequate fire suppression. However, we all know the headaches that come with in-rack sprinklers:
· The risk of damaging a sprinkler head or line and releasing water inadvertently.
(I witnessed such an occasion at a facility in Texas that was struggling with order throughput at the time. Not only did the burst damage product and create a hell of a mess, it stopped operations just long enough to make that day’s shipping fall well short of the mark with pickers standing around waiting to get access to these critical aisles.)
· The inflexibility it introduces in rack profiling since openings are set to protect the sprinkler lines. Either an operation lives with the profiles as they are – despite unavoidable changes in their operations – or sprinkler lines are moved at great expense.
In ambient environments, like dry grocery warehouses, ESFR (early suppression fast response) systems provide the necessary fire protection from the ceiling leaving the racking free of obstructions and operators with the maximum flexibility.
However, until very recently, frozen environments have not had similar solutions available. Tyco has developed its Quell sprinkler system that allows freezer operations to provide adequate fire suppression from a ceiling mounted network that eliminates the need for in-rack sprinklers. You can read more about the system here.
March 19th, 2008
One of the first things anyone in the distribution business learns is the 80/20 rule, or more formally, Pareto’s Law:
· 80% of shipping volumes are generated by the top 20% of SKUs
· 20% of shipping volumes are generated by the bottom 80% of SKUs
Traditionally, this is what we call the “fast-slow” split and every distribution center grapples with how to manage these very two different sets of items. In fact, at KOM, we like to remind people that there is a third set of items, the “hyper-fast”, that deserve special attention since these top 5% of SKUs can generate anywhere from 30 – 50% of total shipping volumes.
So who was Pareto and where did his law come from?
Vilfredo Pareto was an economist and avid gardener in Italy during the late 1800s. He made two observations in his professional work and hobby that led him to articulate what would later become “Pareto’s Law”.
· As an economist studying land ownership in Italy, he observed that 80% of the land was owned by 20% of the land owners.
· As a gardener, he observed that 80% of his peas came from 20% of the peapods he grew.
This curious coincidence led him to look for that distribution pattern elsewhere and he noticed a great many things had this logarithmic distribution. Today, Pareto’s Law describes patterns across a whole range of disciplines, not just the supply chain.
· Traffic engineers tell us that 80% of the traffic is generated by 20% of the vehicles.
· Marketers tell us that 80% of a marketing campaign’s results come from 20% of the advertising spend.
· Cooks tell us that a chicken is 80% done in the first 20% of its cooking time.
So here’s a water cooler game for distribution folks – where else in life have you seen Pareto’s law in action?
March 11th, 2008
There are countless ways we strive to communicate with you. For a company like KOM International, this may mean news releases, articles in industry publications, email correspondence and updates, or our website. Each of these communication channels allows us to share news and keep you current on the latest developments at KOM.
With this blog, we open up another channel to share our ideas, suggestions and concerns. What makes this channel unique, is that it creates the opportunity for you to respond. Here, at this space, our community of operators can gather to exchange views, swap ideas and, hopefully, have a good laugh now and then.
We can’t do this alone: we need you. We encourage you to join the conversation by sending us a comment when you read something that provokes thought. Or maybe, you’ll read the comments and be provoked to share an insight or experience based on a comment posted from someone else in the KOM community. You should also send us questions or topics you want addressed on this blog; count on us to get the discussion started, we’re counting on you to keep it going.
March 5th, 2008