Robots 2C3PO. R2D2. Johnny 5. Optimus Prime. Voltron. HAL 9000. Wall-E. Terminator. Rosie the maid. Bender. You might notice a theme here. This a short list of some of my favorite robots. These robots can do lots of things: help save the galaxy from evil, understand mortality, travel through time to kill (or protect) Sarah (or John) Connor, control space crafts, clean houses, or be the life of the party. What’s one thing you won’t find in this list?  A robot that pick items from shelves and packages it safely in a box. So Amazon is working on that for us. At ICRA 2015 in May, Amazon will host a contest where contestants will build their own robots with the sole purpose of deftly picking and packing items from shelves. According to Amazon, the challenge combines object recognition, pose recognition, grasp planning, compliant manipulation, motion planning, task planning, task execution, and error detection and recovery. The robots will be scored by how many items are picked in a fixed amount of time, with $26,000 in prizes being awarded. The introduction of more automation into the warehouse can certainly lead to cost savings from a labor standpoint, but we are still a ways away from fully replacing human workers. It may not be as exciting as time traveling robots protecting mankind, but it is certainly a step ahead of Rock ‘Em Sock ‘Em Robots.

And now, on to the news.

instacartInstacart, the one-hour grocery delivery company based in San Francisco, is introducing a new pricing model during peak delivery times. Named “Busy Pricing”, the new structure would charge a minimum fee of $1, although the fee could be higher. The customer will have full transparency into the pricing, and can choose to pay the additional fee or choose another delivery time. This move is being implemented to guarantee that specific delivery times will be available. Due to its popularity, the site can sometimes be overwhelmed with requests for certain times, such as Sunday nights. This gives Instacart a little bit of wiggle room. It is also a proven business model, as Uber has implemented surge pricing during busy times (although not to everyone’s liking).

Part of Zulily’s business model was to hold zero inventory. This kept inventory costs minimal, and the savings were passed on to the consumer. The company would purchase merchandise only after their customers ordered it. The problem with this model was the time it took to ship merchandise to customers. According to the Wall Street Journal, the average time it took for an order to leave a Zulily warehouse in Q4 of 2014 was 13.7 days. While their flash sales may have saved customers money, it certainly didn’t win anyone over when they would have to wait two weeks or more to get their order, especially considering their competition could fulfill next day (and in some cases, same day). So Zulily has abandoned this model and will stock inventory in warehouses that will be owned by vendors until it is sold. It may drive prices up a bit for the end consumer, but in today’s instant gratification world, sometimes a price increase just makes sense.

droneThe Amazon drone saga continues. Weeks after the FAA released its proposed drone guidelines, which essentially killed Amazon’s drone plans for the US, Amazon is urging the FAA to speed up the approval process. On Tuesday, an Amazon official told a senate panel “the Federal Aviation Administration is so slow to approve drone permits that the aircraft become obsolete while waiting.” Amazon was granted approval for a test drone, but the months-long wait for regulations made that drone obsolete. As a result, Amazon applied for a new permit for an updated aircraft. At the heart of the matter is Amazon’s view of the drone versus that of the FAA. Any changes to the proposed regulations will have a significant impact on drone deliveries states-side.

Oly Torch Relay X TrainWhen it comes to freight shipped between US cities, the rail is still king. In fact, railways carry more than 40% of the freight shipped throughout the country. Due to its profitability, the international community is taking notice. Over the last few years, Europe, Russia, Brazil and Australia have all sent representatives to the US to gather information about the US rail system. International delegates are also interested in safety technology, as freight rail’s safety record has improved, with the accident rate down by 42 percent since 2000.

MHI and Deloitte released the results of the second annual MHI Annual Industry Report at this week’s ProMat show. The study is based on interviews with more than 400 supply chain executives and explores the current state of the supply chain to identify key trends and technologies that will continue to make an impact. One of the major findings, which we’ve written about on Logistics Viewpoints, is that 1/3 of the companies surveyed are concerned about finding skilled talent to use new supply chain technology effectively. The report also indicates that Innovations like predictive analytics, 3D printing, and wearable technologies are changing the supply chain landscape as the workforce shortage intensifies.

And finally, according to the Department of Energy, the national average for a gallon of on-highway diesel fell 5.3 cents in the week ended March 23 to $2.864. This is the second consecutive weekly price drop, after five weeks of increases. The U.S. average also remained $1.124 lower than the same week last year. All regions in the U.S. also experienced a price drop, led an 8-cent drop in the Central Atlantic and a 7.9-cent drop in the West Coast (less California).

That’s all for this week. Enjoy the weekend and the song of the week, Dan Mangan’s Robots.

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Rick MettetalSmall companies, and large ones that have high-value cargo, can’t always hold freight long enough to fill an ocean container or cargo plane. In these cases, they may choose a global freight consolidation option to achieve their goals. But how do you know whether global freight consolidation could be a good option for your global supply chain strategy? Consider the answers to these three frequently asked questions to decide if it’s a good opportunity for your company.

What options are there for air and ocean freight consolidation?
Air and ocean carriers only accept cargo from freight forwarders or freight consolidators. Consolidators for both ocean and air share certain service practices. They can purchase capacity by block space agreement. That is, they reserve committed space from the airlines or vessel space from ocean carriers; they pay for this space, whether they use it or not. And, both types of consolidator can combine compatible cargo from many customers onto unit loading devices or ULDs (for air) or containers (for ocean) to tender to the carriers.

Whether air or ocean consolidation is the right choice for a shipment depends on the required service level and transit time. Air offers faster transit times at a higher cost than ocean. Ocean is slower, but is more cost effective than air. Yet, even in the ocean and air realms, there are many options to consider.

Is it possible to accommodate unexpected changes in routing freight?
A good freight forwarder distinguishes itself best, not when everything is going well, but when things go wrong. Reputable forwarders with experience in more than one type of transportation can help reduce unexpected supply chain failures and provide options if disruption does occur.

Forwarders proactively control loading at origin, the transit while moving inland, and unloading at destination. Their in-house container loading can reduce or avoid unnecessary cargo handling and help prevent damage. But even before consolidation, a good forwarder can identify and photograph cargo that is not seaworthy. In this situation, for example, they can ask the shipper for disposition instructions—accept the freight as is, or send it back to the supplier to reinforce packaging—preventing damage at origin.

What commodities should and shouldn’t be consolidated?
Most types of freight can be consolidated:

  • Packaged or crated merchandise on pallets and skids.
  • General merchandise.
  • Textiles, garments, technology, cell phones, cell phone accessories, and automotive parts.
  • Freight for any other industry with a high level of inventory and a sense of urgency (for companies whose inventory carrying costs may outweigh the cost of transportation).

Commodities that do not make good consolidation candidates include:

  • Fragile, bulky, low volume products. Consolidated freight must be able to withstand some handling.
  • Temperature controlled product.
  • Commodities especially prone to customs exams. Cars, boats, and jet skis can be delayed in customs while VIN numbers are checked, holding up the entire container.
  • Hazmat freight, such as lithium batteries that contain corrosives and acids, is not suitable for air consolidation, and should not be combined with other freight.

Obviously, there is a lot more to global freight consolidation than this. For additional information please visit our website.

 

Rick Mettetal – Vice President, Global Forwarding -Rick joined C.H. Robinson as vice president of Global Forwarding through the acquisition of Phoenix International. He has been in the international logistics business since 1980. He started in sales and has held various leadership positions at the local, regional and corporate levels. Currently Rick is responsible for managing operations within the C.H. Robinson global forwarding division.

promatLogoTNThere is more than one way to skin a cat.  And the fat cat at ProMat is the high-volume of small, multi-line item orders being fulfilled by today’s distribution operations. ProMat 2015 has 808 exhibitors (and 35,000 attendees), so It’s difficult to boil down such a large and diverse set of offerings to one concept, but the changing fulfillment requirements driven by e-commerce is the closest thing to it. The warehouse automation and software vendors at ProMat address these requirements from many different angles, as distinct fulfillment requirements are best addressed by different technologies and approaches. Providers are highlighting the adaptability, flexibility, and cost-effectiveness of their solutions. This is in contrast to the heightened focus that was placed on throughput in the past. Clearly efficiencies and throughput are objectives, but they are being attained through different approaches.

Warehouse Automation Equipment
Shuttle systems are a cornerstone technology for high-volume e-commerce fulfillment operations. Dematic is demonstrating its Multishuttle, Swisslog is showing its AutoStore, and Intelligrated introduced its new OLS shuttle. The OLS shuttle, like Dematic’s Multishuttle Flex, can change width to accept multiple load sizes, providing enhanced fulfillment flexibility.

Wynright, Dematic, and others are demonstrating robotics applications. Wynright is showing its new trailer loader/unloader, while Dematic is showing the application of robotics to split case picking. There is currently moderate use of robotic arms in distribution operations. However, these examples are novel applications of robotic arms in the warehouse.

promat florrThere were conveyor or sortation systems displayed at many booths, but they were mostly of secondary focus. However, some vendors highlighted new approaches and alternative value propositions. For example, Intelligrated is displaying its Dynamic Discharge Compensation system that coordinates the discharge of packages from different lines to increase fulfillment accuracy. And Wynright is promoting its AutoRoll+ Greenline conveyor that only runs its motors when packages enter the zone, providing safety and energy efficiency enhancements.

Warehouse Software Systems
It looks like the Warehouse Execution Systems (WES) term is starting to catch-on. Intelligrated discussed its software offering, consisting of WMS, WCS, and other functionality, and applied the WES term to this integrated solution set. Easy integration and holistic process optimization are the primary value drivers of such a system. Dematic placed focus on its software solutions and emphasized the performance improvements that software intelligence can deliver through real-time adaptations to operational requirements such as last minute order changes.

The performance improvements enabled by software in manual operations were also emphasized.  Manhattan Associates is demonstrating its new Mobile Distribution Management solution that combines information and processes from WMS and labor management. The mobile application is geared toward supervisors and includes a graphical user interface that provides real-time insights into the status of tasks, waves, and labor performance, and also allows the user to take action against tasks while on the warehouse floor. Meanhwile, HighJump is emphasizing its Retail Advantage solution that enables efficient in-store fulfillment of e-commerce orders.

In general, the conference exhibitors that provide solutions supporting e-commerce fulfillment are upbeat and many have stated or implied that their revenues are growing at double-digit rates. It appears to be a good time to be a supplier to distribution operations. As I stated in a previous post, I wish I had the foresight to invest in these companies years ago.

Chuck FuerstDo you have a March Madness bracket filled out for the NCAA basketball finals? Whether you do lots of research on each team or pick randomly, it’s a fun time of year to watch the highs, lows and upsets during the culmination of the college basketball season.

As I filled out my bracket and prepared to dominate my coworkers in the office pool, I realized how much March Madness and the supply chain have in common, especially around in-store fulfillment. In-store fulfillment is an area that many of our retail customers are considering, as it gives them the ability to fulfill an order – no matter its origin – from a brick-and-mortar store. In an omni-channel market, this is critical for ensuring that your orders are fulfilled quickly using whatever means are best for consumers and business objectives. As we work with our retail customers that are considering in-store order fulfillment, there are a few key areas that they – and teams on the road to the NCAA championship – should focus on if they want to succeed.

Master the basics
Sure, a team can have lots of trick plays or high-flying dunks, but they’re not going to advance if they can’t master the basics of the game. The same goes for retailers: while many are exploring new ways to fulfill online orders, they’re also struggling with operationalizing the foundations of order fulfillment, like store pick-up or cross-channel inventory visibility, or fast pick and pack processes. By not having mastery and automation in these areas, they will likely increase their error rate as they scale up to fulfill a growing online order base.

Before implementing an in-store order fulfillment or omni-channel strategy, make sure you have the basics covered so that you can fulfill consumers’ demands for a buy anywhere, deliver anywhere and return anywhere experience. This will also help your systems adapt to an omni-channel environment more smoothly and ultimately provide a better experience for your fans.

Accuracy, accuracy, accuracy
All the plans in the world are worthless if you can’t make the shot. Likewise, your supply chain’s inventory systems and processes – whether in your store or at your warehouse – have to be accurate to justify the investment in in-store fulfillment technology.

Getting all of your systems integrated and acting like a team are the most important steps: Implement a single pool of inventory to which all channels have access, and introduce fulfillment prioritization rules among online, home delivery, store requirements and wholesale orders. In addition, integrate order management, store replenishment, supply chain planning, POS, planogram and ERP systems to give your customers better service and efficiency. Customer experience is critical in the omni-channel world, you might not get a second chance if you don’t execute on that first experience. The ability to communicate among various store and warehouse systems will help you manage your inventory more profitably and give your customers a winning experience.

An upset is inevitable
Just like the 12th seed that beats the 5th seed, you’ll likely have surprises and upsets as you implement in-store order fulfillment technology and processes. Your response will need to be flexible and adaptable during these times.

This starts by recognizing the importance of standardized processes for your in-store teams: labor is much more fluid in a store than in a warehouse, with a wider variety of skillsets and seasonality considerations, so standardization will be extremely important to ensure continuity. Support unique picking requirements, such as variable weights and product image displays, to assist with product locating in stores. Move distribution points closer to buyers for faster lead times and eliminate the frustration of out-of-stock scenarios so that you can build brand equity by connecting customers with the products they want – wherever the product is located.

Build your processes and strategies on a supply chain technology that can adapt to unforeseen situations and continue to support your company’s growth. New challenges, like a changing business model or customer demands, don’t always have to require new solutions. Ensuring you have the right technology foundation to adapt to these changes will make you more successful and profitable in the long run.

Come out ahead
Navigating changes in an omni-channel retail environment requires a mastery of order fulfillment basics, accurate visibility into your inventory, and the ability to flexibly respond to any challenges thrown your way. With a solid foundation and an eye toward the changes that the omni-channel market is bringing, your company can increase the odds that it will come out ahead.

 

Chuck Fuerst is the director of product strategy at HighJump Software. He has more than 15 years of experience in the technology market, working for supply chain and ERP software companies to deliver innovative solutions. Chuck is responsible for monitoring supply chain industry and technology trends and identifying ways to enhance the value of products for HighJump’s customers. He holds a bachelor’s degree in marketing management and innovation from Concordia University.

Six years ago, Del Papa Distributing, a third generation family-owned beer distribution company that delivers more than 10 million cases of beer annually, decided that Galveston, Texas was not the ideal location for their operations.  Galveston seems to be unusually prone to hurricane damage.  The 1900 Galveston hurricane was famous for the devastation it wrought.  But in 2009, Hurricane Ike flooded more than 17,000 homes and businesses and also left one to three feet of water in Del Papa’s warehouse and offices.

Not surprisingly, not long after Ike, the leadership of Del Papa decided it was time to look at an inland location for their administrative offices and warehouse.  Because this was a green field opportunity, Steve Holtsclaw, the Director of Information Systems, thought this was a perfect opportunity to update their IT networking capabilities.  Today we call this an Industrial Internet of Things implementation, at the time this was referred to as a unified network for voice, data, and video.

Steve’s arguments prevailed.  Part of the decision on the new location, in Texas City, Texas was based upon the ability of Internet Service Providers to provide a high bandwidth mainline connection and a different ISP to be able to provide a backup connection that connected to a different part of the building.

At the same time they were implementing the integrated networking solution, they were re-implementing a warehouse management system, route accounting, and delivery services solution from Softeon.  The new 26-acre site combines a 126,000 square foot warehouse with corporate offices and parking for their truck fleet of 18 trucks.  The site went live in the fall of 2012, with the IIoT and software implementations taking about a year; starting about 6 months before the building was occupied, and finishing up 6 months after the company was in the building.

The IIoT implementation, led by Cisco partner Zones, included a Cisco IP platform connecting a WIFI network for the RF guns in the warehouse, video surveillance cameras, physical access controls for gates and doors, wired and wireless IP phones, smart phones with cameras and a telepresence system, digital signage for employee communications, and temperature sensors in the warehouse and keg vaults.

Employees have a single sign on that gives them access to all the capabilities offered by both Cisco and Softeon that they have the proper permission to access.

For Del Papa, the implementation improved warehouse operations, increased daily shipping capacity, and improved customer service.  It also helped to reassure important suppliers that their brand would be protected, reduced energy requirements, and streamlined safety and security.

Warehouse productivity rose by 18 percent.  I told Steve that seemed like a lot.  Steve explained that the reasons for that degree of improvement were first of all, the new warehouse allowed them to improve their layout and reduced floor workers’ travel times; secondly, the old site had dead spots where RF gun and Voice Recognition coverage was spotty or nonexistent.  In the new warehouse the RF guns and Voice Recognition system – they use Vocollect – can be used throughout the entire warehouse.

DSCN0321

Del Papa Warehouse

The customer experience also got better.  In the past, sales reps would call the warehouse with a rush order. However, warehouse employees are rarely at their desks.  They often did not receive a voicemail in time to rush a late afternoon order that same day. Now, using IP Phones, a sales rep with a last-minute order can reach staff anywhere in the warehouse.  Further, during the deliveries the Softeon delivery services module allows the drivers to print invoices on the spot.  These are dynamic invoices; the drivers may have been asked by the customer not to take cases they had ordered, or they may be asked to add cases that were not ordered.

Del Papa also wants to keep their suppliers happy.  Their largest supplier is Anheuser-Busch. Anheuser-Busch wants to insure that their beverages are kept at the proper temperature.  The new warehouse measures the temperature in several zones with sensors located at a height of both 30 feet and at the five foot level.  If the temperature is beginning to trend out of the desired range, at either height, a warehouse manager, even one working remotely, can access the temperature controller and turn down the chillers.  This means the manager does not have to interrupt busy warehouse supervisors.

Not too surprisingly, the new unified infrastructure was more energy efficient.  By connecting lighting, HVAC systems, keg vaults, etc. to a centralized system that can be monitored, analyzed and controlled remotely, Del Papa has reduced energy usage nearly 27 percent over the past 3 years.  The payback on the energy efficiency has substantially surpassed what they had planned for in their business case.

Steve says that as a family owned business with long term employees, theft and safety were not as big an issue for them.  Nevertheless, they have connected video surveillance and physical access controls to help prevent theft.  If someone without the proper clearance opens a door to a restricted area, the Director of Safety or other key managers can be instantly alerted and link to a video from a nearby camera they can play over their smart phones.

My largest take away from this story is not amazement at what Del Papa achieved, but rather the idea that a company moving to a green field site would be crazy not to implement a unified network.  When I mentioned this to Steve, he agreed.  “In a green field situation, this is what everybody should be moving to.  Not implementing technology that is not integrated and collaborative would be insane!”