Retailers are gearing up for the upcoming holiday season. While most stores are currently decked out in Halloween gear, come November 1, that will all change. Cue the Christmas trees, lights, and music, because the holiday season is fast approaching. I can’t say that I’m looking forward to it. But the retailers sure seem ready. Macy’s recently announced that they will open stores at 6 pm on Thanksgiving, two full hours earlier than last year. And stores will stay open until 8 pm on Black Friday. That is 26 full hours of Black Friday shopping. This week’s news is dominated by more holiday logistics, so enjoy!

Amazon is planning to increase its seasonal workforce by 14% this coming holiday season. That equates to 80,000 workers. The employees will have temporary jobs at Amazon’s more than 50 U.S. warehouses. The company will also place some seasonal hires at its newly created “sortation” centers, where Amazon collects parcels from the fulfillment centers to sort them by ZIP codes for delivery to local post offices. The seasonal hiring spree comes a week after the National Retail Federation forecast $617 billion in holiday spending this year, a 4.1 percent jump from last year. Major rivals including Wal-Mart and Target are also planning to up their seasonal workforce.

Target has a three-pronged approach to improving its holiday season: free shipping, more advertising, and 35,000 new items. Currently, Target offers free shipping for customers who use its branded payment cards. As of today, that offer has been extended to all purchases through Dec. 20. With Amazon and other competitors offering free shipping for price threshold purchases, it is not surprising that Target is adding free shipping as well. The big question is whether the free shipping on holiday items can drive enough volume to offset the logistics costs.

FedExTo say that last year’s holiday season was a disappointment from a logistics standpoint is an understatement. Last year, a combination of last minute shopping and bad weather led to an estimated 2 million packages arriving late for Christmas. This year, FedEx and UPS are planning ahead to make sure this doesn’t happen again. FedEx plans to hire 50,000 seasonal workers, up from 40,000 last year. United Parcel Service Inc. says it will add up to 95,000 people, up from 85,000. Last year, both companies wound up scrambling to hire more seasonal employees than they had planned, which increased costs and cut into profits. FedEx also expects to invest $1.2 billion in its ground-shipping network in its current fiscal year, with most of that going to increase capacity and automation. The company said that the improvements have sped up ground delivery by a day or more in more than two-thirds of the U.S. UPS has also invested to boost shipping capacity during the holidays, said the company’s chief commercial officer, Alan Gershenhorn. He said that UPS had improved it forecasting and package tracking.

Vessels are still backed up off the ports of Los Angeles and Long Beach as gridlock at the Southern California ports continues. Container ship traffic and volume at the LA-Long Beach port complex has been relatively high, contributing to the terminals’ congestion. Other reasons for the gridlock include the increasing sizes of ships in the trans-Pacific trade lane, which require longer times as berth, as well as a shortage of chassis and drayage drivers, and more recently, slowdowns by members of the International Longshore and Warehouse Union.

ApicsBASF and GE Oil & Gas were honored today at the APICS 2014 conference in New Orleans, LA, with APICS Corporate Awards of Excellence in recognition of their commitment to continuing education and innovation in the field of supply chain and operations management. BASF received the 2014 APICS Award of Excellence in Education for its commitment to worker education and training. By paying for employee membership, seminars, meetings, classes, and exams, BASF is emphasizing the importance of continued education and certification. GE Oil & Gas was honored for its multi-year supply chain improvement and innovation project that included establishing a materials management organization based on APICS principles, making significant changes in their organizational structure, and shifting from ‘product supplier’ to ‘solutions-oriented’ partner.

That’s all for this week. Enjoy the weekend and the song of the week, The Trans-Siberian Orchestra’s Christmas Eve / Sarajevo.

It’s not if you’ll run into trouble, but when. That’s what some motorcyclists say. They’re preparing themselves, just in case—something that supply chain managers should also do. For instance, say a natural disaster occurs. When will you develop a mitigation strategy? After the disaster, when you’re dealing with system failures? Or before, when you can identify and evaluate the weakest links in advance and develop a plan to circumvent potential disruptions?

This is no academic discussion. Natural disasters and events like port strikes have already revealed weaknesses in lean global, regional, and domestic supply chains. Disruptions that can break the connections between a company, its customers, and suppliers can last for days, weeks, even months. The longer those connections remain broken, the easier it is for competitors to step in and take market share.

CHR Top Threats

Global companies with high-value, high-demand products coming from multiple locations are the most likely to need a mitigation strategy. Certain industries are particularly vulnerable to disruption. Retailers and brand name pharmaceutical companies require speed to market to keep sales channels open and customers satisfied. Manufacturers need raw materials and supplies at planned intervals to prevent downed plant lines and to maintain machinery. Food and beverage companies must be able to trace problems back to their sources in multi-tiered supply networks.

So what can be done?

Mapping the supply chains can identify the chokepoints and whether they are related to suppliers, inventory, transportation, or technology. Questions may arise, highlighting considerations that can be used to develop a resiliency plan.  Such as:

  • Do you have backup suppliers for critical components?
  • Where is inventory located? Is it at the right levels, and are most-used SKUs close to key customers?
  • Should there be a plan for safety stock or forward stocking?
  • What transportation alternatives could keep product flowing?
  • If operations technology is disrupted, corrupted, or destroyed, how quickly can data be recovered?

Certain considerations can help build backup plans for more resilient supply chains and help companies adapt to changing circumstances. Companies with resilient global supply chains are more likely to have goods available when they need them and be able to continue serving customers without disruption. And when they can see their inventory, they are less likely to spend unnecessarily to transport emergency supplies.

Complete redundancy is cost prohibitive. But some redundant stock, systems, and resources can help avoid the waste of system breakdown if a disaster occurs, even in a highly efficient supply chain.  You can obtain tips for reducing risk in the white paper, “Add Resilience to Supply Chains.”

 

Chris O’Brien joined C.H. Robinson Worldwide, Inc. in 1993 and became senior vice president in May 2012. Previous positions with the company include vice president, manager of the Raleigh, North Carolina branch as well as the general manager and later president of the company’s European division.

Diageo's Upgraded Maryland Blending and Packaging Facility (from Baltimore Sun)

Diageo’s Upgraded Maryland Blending and Packaging Facility
(from Baltimore Sun)

Last month I wrote a Logistics Viewpoints article titled “A Maturity Model for Supply Chain Progression?” In this article, I contended that the World Economic Forum’s Global Competitiveness Index (CGI), which measures national economic competitiveness, can also serve as a maturity model for supply chain progression. The CGI framework outlines 12 pillars of competitiveness and categorizes economies into three progressive stages of economic development. The three stages are 1. Basic, Factor Driven; 2. Efficiency Enhancers; and 3. Innovation-Driven. The most sophisticated stage, Innovation-Driven, is heavily reliant upon the pillars of Business Sophistication and Innovation.

I attended a session at CSCMP where a Diageo executive discussed the ongoing transformation of his company’s supply chain. This initiative is focused on enabling more efficient and effective processes in support of Diageo’s product innovation and new product introductions. I see Diageo’s transformation as an example of how business sophistication, in the form of supply chain alignment and advanced operations, and an innovation culture can support a company’s competitive progression.

Diageo’s Context
Diageo is a leading global provider of alcoholic beverages. The company owns numerous internationally recognized brands and produces about 4,000 different SKUs. Diageo’s extensive market share and product line has grown through acquisitions and from organic growth. Historically, the company’s supply chain was focused on cost-containment and took a conservative, low-risk approach to its operations.  But this focus was no longer ideally aligned with the changing market profile or the characteristics of their business.

Diageo realized it was operating in a North American market characterized by diversifying consumer tastes and increasingly granular market segmentations. In addition, the alcoholic beverage market offers high margins, making product availability particularly important to profitability.  As a result of these factors, the company’s supply chain was dealing with increased complexity and pressures to improve speed-to-market. Diageo responded with an approach involving an inherently agile supply chain that would properly align its processes with the current market dynamics and allow it to maximize profitability. Furthermore, the business transformation allowed the supply chain team to serve as an important enabler of this change.

Realigning the Diageo Supply Chain
Diageo spent over $250 million on its transformation that included a production network redesign, internal process enhancements, technology standardization, and a fundamental shift in focus from cost savings to product delivery and revenue growth. The company began by analyzing its markets and anticipating future growth patterns. From this process, it determined the optimal locations for its facilities. Once the desired locations were determined, Diageo purchased assets, upgraded facilities, and enhanced internal processes. They reduced the number of disparate planning systems down to two, and also standardized PLCs. Demand forecasting has improved as a result, providing better supply/demand alignment.

Investments were made on high-speed lines so they could bring in-house some production that had previously been sent out to partners. Perhaps more importantly, the company developed dedicated lines for agility and responsiveness. The ability to switch over lines so quickly is a critical element to the project’s success, as optimized production locations and the ability to quickly switch over lines provide quicker routes to market. This supports new product introductions and enables Diageo to be “first to shelf” and ultimately increases revenues from new products. In fact, Diageo stated that new products have been responsible for 28 percent of growth over the last few years.

Diageo continues to enhance its processes and systems. For example, an advanced planning and scheduling system is currently being rolled out. The Diageo speaker asserted that the region-wide project has been a success, measured by a 48 percent increase in overall equipment effectiveness (OEE) and a 30 percent increase in productivity.

John Butler MenloFor years, safety practice traditionally focused on the workplace environment in an effort to prevent personal injury. Formal and informal audits produced a long list of action items such as a hole in the floor, a damaged tool or poor lighting. Management would correct all of the noted items in a timely manner and feel good that they had fostered a safer workplace. While it is admirable that logistics companies are addressing identified hazards, those efforts may not go far enough.

Is the goal of “injury-free” too narrow? In today’s environment a company may brag about multiple years of injury-free performance, but what about other sources of risk? In my opinion, “harm-free” is a more effective measure of a company’s full safety performance. While prevention of personal injury remains a primary goal, it is important to include other sources of harm and risk. These sources include environmental harm, sustainability, cargo damage, equipment damage, facility damage, business interruption, vehicle accidents, negative media and the Lean wastes of time/money/energy. A logistics provider cannot rest on an injury-free record if they fail in any of these other categories.

Safety organizations such as the National Safety Council and the American Society of Safety Engineers advise that a majority of all reported incidents, rather than being attributable to physical workplace hazards, are caused by human behavior. So, have we been “spinning our wheels” all these years?

Cultural change in the workplace is required to affect human behavior. The answer may rest in a process called Behavior-based Safety. Behavior-based Safety (BBS) has existed in some form since the 1980’s but many companies may not have been ready for that type of cultural change. However, it may have a better chance of success in today’s workplace. BBS is a peer-to-peer observation process that pairs positive reinforcement with concern for risky behavior. It is an employee-driven process, not a top-down management initiative.

The first step is to identify the specific type of behavioral risk in your workplace. A manufacturing facility will have substantially different behavioral risks than a pallet-in, pallet-out warehouse. This is not a “one-size-fits-all” solution. Keeping in mind all of the risk sources mentioned earlier, conduct an analysis of all of the related incidents and near-misses that occurred in your facility in the last few years. Initially you will focus like a laser on the top three or four risky behaviors, rather than take the previous “shotgun” approach of identifying hundreds of potential issues. Once you have developed your focus list of risky behaviors, you’re ready for the next step.

Observers are selected from the hourly workforce and provided specialized training to identify risky behaviors that appear on the site-specific Pareto chart that analyzes root causes of past incidents. Training also includes how to speak with co-workers in a caring, non-confrontational manner. The foundational element of the BBS process is that it is anonymous and no corrective action may ever be associated with it. Observed employees must be able to be honest when asked why they are not taking a precaution in the workplace. Checklists focused on the top three or four risk behaviors only capture what is occurring, not who is exhibiting that behavior. When a worker is taking all precautions to avoid risk, the observer provides positive reinforcement. When a worker is taking a risk, the observer will ask why the worker is not taking the accepted precautions and record the response.

This anonymous data is aggregated, usually through software, and reviewed by a steering team, also consisting of line employees. The steering team will analyze the behavioral data and identify countermeasures to be implemented in the workplace. As each risky behavior is eradicated over time, the next focus item takes its place until all behavioral risks have been addressed.

Employee participation as observers or members of the steering team rotates over time to allow all workers to become engaged in the process. The result is a facility-wide mentoring pool. As new employees are hired, the mentoring pool can extend the lessons learned to the new associates.

The beauty of the BBS process as described is the simplicity of achieving cultural change. BBS is low cost and employee-driven, with few management time requirements. And it works!

Need help developing a BBS process at your workplace? There are companies that specialize in implementation of BBS processes. ProAct Safety (proactsafety.com) in The Woodlands, Texas, is an industry leader.

 

John Butler has more than 36 years of experience in the area of Occupational Safety and Health, including a Master’s Degree in the discipline from New York University. His efforts on behalf of workplace safety run the gamut from firefighting, light manufacturing, transportation, and air freight to warehousing and supply chain management. He has spent his formal safety career with Menlo Logistics and currently serves as the company’s Director of Safety.

You’ve been offered an interview for a supply chain position, and you need to prepare for it.  What next?

Research the Company – Before you ever go on an interview, you must first research the company and be fully prepared to answer the questions “What do you know about our company?” or “Why do you want to work here?”  If these questions are not asked, a candidate will almost always be asked if they have any questions.  Genuine questions about how a company competes in their market will be well received.

Go to the company’s website, spend time there.  If the company is public, read pertinent sections of the Annual Report, particularly about their strategy and how they go to market, the financials, and their products. You can search the document using terms like “logistics” or “transportation” to find details of their strategy that are related to your job.

Do Google searches using the company’s name and read about their successes and failures over the past few years. Understand who the big players in their industry are, and spend some time reading those companies web sites and Annual Reports.

Understand the Job Requirements – Make sure you really understand the job you are applying for; duties, skills, relevant experience, and other requirements.  If you are working with a supply chain recruiter, realize they can be a good resource to clarify responsibilities and provide insights into what the company is looking for.

Research the Interview Process – The Glassdoor website is a good resource.  They actually have a part of their site titled Supply Chain Interview Questions. If the company interviewing you is a big company, they is apt to be feedback on that company from candidates that interviewed for jobs there.  Good content is often provided surrounding the length of the interview, the interview process, the types of questions asked, and even specific questions that were asked.

scinterviewpicture

If you’ve been offered an interview from a company not in Glassdoor, the process is tougher.  Here your best resource is LinkedIn.  Using the advanced find feature of LinkedIn, you put in the following:

 

Keyword:  Supply chain or logistics

Company:  The company or division’s name

Once you type in the name, a box will appear that says “Current or Past.”  Select “Past” and hit “Search.”  A list of ex-employees will appear.  Ask to “connect” to employees that have left in the last few years, and then send them an email explaining that you have an interview opportunity with their former employee and ask if they would be willing to talk to you about their experience.  To be able to do this efficiently, you will have to pay a fee to LinkedIn, but it is not large and it is a good investment.

Prepare for Behavioral Questions – If GlassDoor and LinkedIn end up being dead ends, then prepare for behavioral questions.  Behavioral questions are becoming more common.    Behavioral questions are designed to elicit specific and detailed responses about the situations or tasks in which you were involved in previous jobs, the actions you took, and the results.  The questions sometimes start with the phrase “Tell me about a time when…”  The way to prepare for these questions is to focus on your most relevant accomplishments and achievements that relate to the core competencies they’re seeking for their position.  Those competencies are often outlined within the job description.  Commit to memory your top 4 or 5 achievement stories and be prepared to adopt those stories to the behavioral question.

Sell your Work Ethic – 3PLs are some of the biggest hirers in the supply chain arena.  Most work their employees hard.  Unless it is an analyst position, requiring IT or business intelligence capabilities, then you need to realize this won’t be a 40 hour a week job and may not even be a 60 hour a week job. Not surprisingly, 3PLs often have high turnover in their management ranks.  Hitting this head on can be effective, “I understand this is not a 9 to 5 job and that a lot of your hires can’t take the pace. If this means greater opportunities to learn and grow, then great!  I’m all for it.”  Of course, if you are a believer in life work balance, then you should not be interviewing with this company.

Practice Interviewing – Most colleges have Career Centers that will run mock interviews for students.  Share what you have learned about the company and interview process with the staffer and then do a mock interview.  If you are not a college grad, try and do the same thing with a family member or acquaintance that has had a successful business career.

Good Luck!

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