Archive for April, 2008
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