Posts filed under 'General'
During the ‘90’s, society’s most common buzz word was RECYCLE. With our children coming home asking for assistance with their recycling homework and projects, it became engrained in our social ethos that the earth’s resources are limited and things must be done to preserve them.The latest buzzword is “green.” Within the last decade - not only has this buzzword become commonplace it’s now expected that governments, corporations, and consumers take action. Going green no longer only involves recycling, it’s an ideology and LEED is a process by which companies are striving to get there. Leadership in Energy and Environmental Design (LEED) is an internationally recognized building certification system designed to encourage and implement “green” building practices that lower negative environmental impacts, conserve energy, and improve quality of life. The more ambitious the goal achieved in each of these areas - the higher the LEED accreditation earned, with LEED certification as the basic level followed by Silver, Gold, or Platinum.
How much does doing things “green” cost? Upfront costs so far have been shown to be only 2% more for a LEED certified building than a conventional one. System paybacks are expected within a very short time frame - depending on the level of LEED certification sought that is, and how committed the project is to the bigger, longer-term picture. Using new “green” technology and reuse of existing materials, not to mention the growing number of tax incentives can bring overall costs down when implementing “green” strategies, which very often simply employ good common sense.
Going LEED, however, can have a hefty price tag. Most of the additional LEED costing comes during the design stage of the project. As well many new technologies are more expensive, and extensive research may be needed when considering multiple building scenarios or options. Figures can rise to as high as 30% of the project during this phase.
LEED construction is not necessarily a quick and easy construction method and at times it can be difficult to justify certain additional costs. The key to a successful LEED implementation is to remember the defined goal and to stick with it, which may very often not be cost-related. For example, a project for a new commercial building to be built over an existing educational facility had the goal (among others) to minimize the impact on the environment. An astounding 95% of the demolished building and site work was recuperated and reused in some way and did not end up in landfill. Another project saw the implementation of systems with 20 and 30 year paybacks, because their goal was to be “ecologically responsible…. and to leave a legacy for future generations,” they refused to sacrifice long-lasting solutions for short-term savings.
Building “green” is fast becoming the popular way to build new corporate headquarters, retail outlets, government, and educational facilities, and even warehouses. By mid-2007, in the United States over 100 million LEED certified square feet were constructed with approximately 8000 projects pending… doubling over the previous year. At the beginning of 2009, those numbers rose to 20,000 projects registered or certified, and 284 million square feet certified.
July 7th, 2009
This year’s show was a great chance to catch up with all the terrific people we work with in the industry, customers and suppliers alike. Too bad it coincided with the longest stretch of sub-zero temperatures Chicago’s experienced in over a decade!
If anything stood out at the show, it would be the expanding presence of automated materials handling solutions. Cranes of all sizes were on display, automated guided vehicles were whirring around their booth tracks and palletizing arms were building pallets across the show floor.
This last, automated palletization, had a few interesting solutions for non-homogeneous box sizes. One company, Axxium (www.axxium.com), was demonstrating how its palletizer took the cube dimensions of boxes arriving down a sortation lane and planned out its pallet building sequence by consequence. While the pallet build rate did not rival what can be achieved by a human being, it was an impressive display nonetheless.
Several operators that we had a chance to talk with about automation told us the key driver in studying the suitability of this sophisticated machinery was not so much about payback periods and reduced operating expenses, but eliminating job functions which are chronically difficult to staff - even as the job market weakens. It isn’t simply the savings accrued from replacing a labor function, but savings that come from the human resource department costs in constant recruitment and training of new staff to do the work. With the potential for tighter OSHA regulations on the horizon, the impetus to look seriously at automated solutions will rise.
January 26th, 2009
Thanks to all of you who made the KOM Klinic 2008, our 25th annual conference, such a tremendous success. The key to this event, year in and year out, is the opportunity for distribution managers and executives to spend two days collaborating, idea swapping and sharing experiences. And, of course, we squeeze some fun as well.
Our speakers almost exclusively come from the ranks of KOM clients so attendents learn from folks on the ground who are getting things done. These brave souls step up to the podium and make our event unique in the industry. Following are some key take-aways from each speaker:
- Allan Kohl, President & CEO of KOM, walked the group through a case study in automation design for a foodservice distributor where automation can be a tool to enable sales growth.
- Eberhard Braun of METRO Cash & Carry International GmbH gave an overview of the complex logistics network required to support 2,000 wholesale stores across 29 countries. For many North American based retailers, globalization is an inbound phenemenon. Eberhard showed us that the outbound side has many risks and challenges along with enormous opportunities as well.
- Klinic veteran Ron Cellupica, VP at Price Chopper drew on his 35 years in the grocery business to put Computer Generated Ordering in historical perspective. The immense power of data processing today makes complex decision making possible to automate and companies pursuing those possibilities are seeing benefits rapidly accrue.
- Scott Craig, Director of Supply Chain Services for Hannaford Brothers shared insights on how to develop an operating strategy culled from lessons learned at Hannaford as well as personal lessons in life.
- Pat Tagnani, Senior Director of Supply Chain Services for LMS, led a moderated discussion on the topic of fuel prices. Discussion groups came up with a number of ideas - some that were completely off the table just a few years ago - on how to manage our way through this new world of high energy prices.
- Another veteran of the Klinics, Richard Kochersperger, reminded us of the trends in retail and demographics that are shaping the nature of our businesses. Top of mind: staffing the supply chain in light of changing attitudes towards work in the young workers of North America.
- Charles Fallon, partner at KOM, gave a brief review of the productivity benchmarking survey for 2008. One highlight: the most productive warehouses invest in inventory control and minimize the number of problem orders they handle. Problem orders can turn a 200 cases per hour selection rate into 40 cases per hour.
- Ken Koester, Sr. E. VP of Affiliated Foods Midwest, gave a primer on building a compelling case for supply chain investment. From the perspective of a former CFO, Ken covered the basics in building a financial analysis and putting together the financial measures that will win board approval.
- Steve Creed, E. VP of Warehousing and Transportation for Associated Grocers of New England, walked the audience through his company’s recent move from a decades-old facility to a state-of-the-art 350,000 sq.ft. facility in Concord, NH. Steve shared strategies and tactics for managing a move which was completed in a weekend and maintained a 96% service level during that period and the first days following.
- Tom Frederick, Director of Distribution Services, Weis Markets shared with the group the experience of selecting and implementing a Yard Management System. The technical considerations and operating benefits of such systems were presented - Tom also gave some cautions on potential pitfalls to avoid.
- Clem DeLiso, President of Pioneer Cold Storage, teamed up with Nick Hill of Hill Energy Services to paint a picture of the current energy market in the United States and strategies to manage energy costs through load deferring and pricing contracts. As the cost of energy rises, operators must become increasingly sophisticated about their energy purchases and use management.
When not in session, attendents enjoyed the sights of Old Montreal in a collegial atmosphere. The weather was perfect.
June 16th, 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
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
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