I subscribe to several magazines, and I love reading the letters from readers commenting about previously-published articles. The feedback readers provide is often insightful, and occasionally even more valuable than the original article.
In the same spirit, one of our goals for launching Logistics Viewpoints was to create “a platform for logistics professionals to share their viewpoints and network with each other.” And we’ve received some insightful viewpoints from several of you over the past few months. Here is a short list of my favorites:
M L Humphreys on Cost Reduction vs. Waste Reduction: “The lack of understanding of what is meant by waste is a major challenge to those of us who pursue business improvement using lean techniques. I think that one of the issues is the cost and financial accounting systems which are the fundamental measuring sticks of business. It is very easy for a CEO to challenge everyone to a 10% reduction in any element of cost. And the determination of achievement is readily apparent each month by looking at the financial accounts (packing materials, labor, etc.). However, it is more difficult (requiring understanding and time) to measure the reduction of waste and its total impact. We need to begin to educate the financial community on the concept of waste and solicit their assistance in measuring and reporting the successes of lean.”
Humphreys also provided his viewpoint on a related topic, Performance-based Outsourcing in Logistics: “The problem with acceptance of PBL has been the general perception that distribution and logistics is essentially a bunch of box-kickers and label-lickers and therefore how difficult can it be to staff and manage. Hence, the profit margin of the 3PL is easy money being given away. In addition, and this may be related to the perceived low-level of value add and general lack of understanding of the logistics function by senior management, there has been a reluctance to establish a true partnership (vs. the standard volume-based contract) because this would require a true understanding of the value-stream map of the organization’s logistics processes and the true costs associated with providing the value. This lack of understanding causes both parties to yield to lowest common denominator (volume) and put sufficient buffer in their offer/agreement to cover uncertainty. As always, lack of total understanding is a major waste.”
LeHigh81 on Managing Transportation with Spreadsheets and Fax Machines: “Your article covers a great point about the need to have simple, easy to use transportation apps. Pre-existing connectivity by the TMS vendors can get companies out of the fax and phone era. The challenge is not an application issue, but whether the vendor has created a network infrastructure that supports multi-party connectivity and made the investment to get carriers and other LSPs connected to the network. As for simplified apps, while transportation system users say they want them, but they also insist on convoluted contracts and business processes that make for complex systems. In addition, change management is still the leading culprit for lengthy systems implementations, SaaS or not. Until users are willing to adopt standardized business processes and rate data from the service providers, they can’t expect to cut implementation time down dramatically.”
Lokmanya on Automated vs. Manual Warehouses: A Different Way of Thinking about ROI: “A good insight on the risks of having an automated warehouse. I had visited quite a few of them in the US and what I gathered was that high item velocity and similar kinds of items stored in the warehouse were the driving factors to introduce conveyor systems in the warehouse. I had the opportunity to visit a book distributor, a pharma and a cutlery distributor in the US. They all had conveyor systems installed for both inbound and outbound operations. Most of these conveyor systems employed cubiscan (weight and volume check) during receiving, automatic carton sealing machines on outbound cartons and weight check to validate correct items are being shipped. Order fulfillment had improved considerably once conveyors were introduced, but as you rightly said, when it came to modifying the warehouse layout (for expansion, adding more racking systems etc.), it was a major task in re-aligning the conveyors and equipment once again, which in turn affects ROI as huge costs were incurred.”
I’ve also received many comments via email, like this one from a logistics executive at a high-tech company regarding Everything Will Be Tracked Wirelessly in 10 Years: “I agree 100% with you that 15-20 years [for everything to be tracked wirelessly] is much more likely [than 10 years]. We’ve been looking at RFID for years and haven’t found many applications where it made economical sense to implement. The incremental gain over a person scanning a barcode is so small it isn’t worth the investment in the infrastructure. In addition, unless the stimulus bill included RFID readers on the highways I don’t think it will be effective for transportation. I have seen it used in yards and the ports and it seems to be a great tool for tracking large containers with removable/reusable tags. GPS has proven to be very useful for security purposes, but the container contents have to be worth the spend.”
The viewpoints that I and my colleague Steve Banker post every day are meant to be conversation starters, not in-depth treatments of a given topic. And we are firm believers in the “We Are Smarter Than Me” concept-i.e., that the greatest knowledge comes from the collective, not a single individual. So, a big “thank you” to all of you who have added value to our viewpoints by posting your own on the website.
And if you haven’t posted a comment yet, but you’re wondering how to do it, it’s easy: just register at Logistics Viewpoints (where you’ll choose a generic userid), log in when you visit the site, click on the posting that you’d like to comment on, and enter your comment in the “Leave a Comment” field. All comments are reviewed before being published, and as outlined in our Terms of Use, we reserve the right to reject any comment that we believe is obscene, objectionable, unprofessional, or spam. But as you can see from the viewpoints highlighted in this posting, the comments submitted to date have all been insightful and valuable, and we look forward to hearing from more of you in the days and weeks ahead.
