Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Do 3PLs Have an Image Problem with Young Professionals?

Learning & Leadership | By •

Last week on Talking Logistics, I had a great conversation with Professor Robert Lieb from Northeastern University about the challenges 3PLs face attracting and retaining talent. Of course, the “talent shortage” problem is not only an issue for 3PLs, but also for manufacturers, retailers, and others. But is the challenge the same for everyone, or do 3PLs face unique challenges in terms of attracting and retaining talent?

For example, we all know that, generally speaking, third party logistics is a low margin business, so when it comes to offering attractive salaries, 3PLs are at a disadvantage compared to other industries with deeper pockets. But as Prof. Lieb pointed out, it’s not all about the money:

The research we did this past summer that focused on some of the competitive difficulties [3PLs] have were not just focused on compensation; they were also focused on benefit levels, career opportunities, workload expectations, and so I think the industry has to look at the whole package they’re offering to people coming out of schools and younger, lower-level managers.

I think the expectations of students today are very different than they might have been 10 years ago, 20 years ago and I think there is more emphasis on work-life balance…so I think if you are “light” with respect to salary and benefits, you have to be “heavy” someplace else, you have to convince the students that there are better career options here, or you’ll have [better work-life balance] here, so you have to look at the whole package you’re putting in the marketplace, and that’s going to determine how hard it is for you to find and keep people.

Since I had just written a posting about Millennials in the workplace (A Millennial Walks into a Baby Boomer’s Office), I also asked Prof. Lieb if he thought 3PLs have an image problem with Millennials, especially since 3PLs have a reputation, rightly or wrongly, for being an “old school” industry. Put differently, are the management practices of 3PLs misaligned with the expectations of Millennials? Check out this short clip for his response.

But the image problem goes beyond Millennials, as Prof. Lieb explains:

We’ve talked about this issue before..what do people really know about the third-party logistics industry? It’s an industry that, generally speaking, people don’t understand very well. When you focus on national efforts to try to bring attention to this [industry], the only national campaign that typically gets a lot of coverage is UPS’ [“I Love Logistics”] efforts that you see on the Super Bowl and things like that, but generally speaking, a lot of [3PLs], despite the fact they’re large and very successful, sort of fly under the radar.

I encourage you to watch the rest of the episode, where I share my perspective on the questions above, and Prof. Lieb and I discuss the importance of training and development programs (and whether 3PLs are investing enough in this area, and in the right types of programs), and some best practices 3PLs are employing to address the talent problem.

The bottom line is that 3PLs, in my opinion, face bigger hurdles than manufacturers and retailers when it comes to attracting and retaining supply chain and logistics talent. I also believe the image problem is real — but it’s less about being viewed as an “old school” industry and more about having no image at all (everyday people not having a clue about what 3PLs are and do).

Considering that talent development and retention is one of the four important factors companies must consider when evaluating 3PL partners, I wonder if 3PLs plan to invest more in this area, and be more innovative in their efforts, in the coming year. Post a comment and let me know.

This Week in Logistics News (June 24-28, 2013)

Pharma & Life Sciences | By •

Another crazy Friday morning, now with the kids out of school, so let’s go straight to this week’s news:

Retailers and small and midsize businesses (SMBs) – the two market segments supply chain and logistics software vendors are hyper-focused on these days. This week, for example, JDA announced enhancements to its workforce management (WFM) and all-channel commerce solutions that enable retailers “to simplify and automate retail execution, as well as unify their associates, to create and deliver a seamless and superior customer experience across all shopping channels while maintaining a consistent brand vision.” You can read the press release for more details, but here’s an excerpt about the enhancements made to JDA Workforce Management:

JDA Workforce Management includes a mobility platform that allows retailers to mobilize their workforce across the enterprise to drive sales, increase employee engagement and reduce time spent on administrative tasks.

 

Available in this latest software release, JDA’s workforce management solution includes the following workforce mobility applications: JDA Mobile Employee Connect, JDA Mobile Operations Connect, JDA Mobile Shift Connect and JDA Mobile Manager Connect. Functionality offered through these mobile applications includes: time and attendance, operations and reporting, dashboards and KPIs for managers, employee shift pickups and swaps for unplanned schedule changes, and more.

Meanwhile, HighJump Software announced that it has updated HighJump Warehouse Advantage Express, its warehouse management system (WMS) specifically designed for small and mid-sized wholesale distribution operations. HighJump Warehouse Advantage Express is built upon the same technology as its tier one HighJump Warehouse Advantage solution. Here are some details from press release:

The HighJump Warehouse Advantage Express WMS is affordably priced for small and mid-sized distribution operations. It provides the key warehouse management features needed to quickly deliver ROI, including the tracking and visibility of inbound orders, directed put-away, variety of picking methods, shipping, directed replenishment and inventory control.

 

The WMS can be deployed in the cloud or on-premise. Companies can purchase only the functionality they need, then add more complex features and modules as needed over time.

On the logistics service provider front, FedEx announced that it is buying 1,900 lightweight, composite-body Reach vehicles from Utilimaster, a division of Spartan Motors. According to the press release, “The Reach van, with its four-cylinder, 3.0-liter Isuzu diesel engine, demonstrates a 35% fuel efficiency improvement over traditional vehicles in the FedEx Express fleet. The lower-weight body design, along with the engine, allows every Reach to significantly reduce fuel consumption and exhaust emissions compared to conventional walk-in vans.” This purchase is part of the company’s efforts to improve the fuel efficiency of its vehicle fleet 30 percent by 2020 (compared to 2005).

One way for 3PLs to differentiate themselves in the market is to specialize — that is, go deep in meeting the unique requirements of a vertical industry. A great example is what UPS has been doing in the healthcare industry — an industry that was relatively late to logistics outsourcing, but is now a growth market (see “Understanding Why Companies Outsource Logistics”). This week UPS launched UPS Proactive Response Secure, “a proactive shipment monitoring and risk management solution…[that] helps ensure time-and temperature-sensitive shipments reach their destinations and guarantees up to the retail value, in addition to other costs, when unexpected events occur – including weather delays.” According to the press release, the solution provides “round-the-clock, 24/7 proactive monitoring and intervention services” and “leverages proactive technology to provide continuous visibility into potential delivery disruptions in near real time to ensure successful product delivery.”

When you consider that a single pallet of a high-value pharmaceutical drug can be worth millions of dollars, UPS must have a lot of confidence in its technology, processes, and people to offer such a guarantee, and I’m sure the cost of the service takes into account the risk the company is assuming.

Last week, I provided my perspective on the future trucking. This week, the American Trucking Associations (ATA) released the latest edition of U.S. Freight Forecast to 2024, which projects an overall increase in freight volumes for all modes of more than 20 percent and an increase in the amount of freight moved by trucks. According to the forecast, overall freight revenue will grow by 63.6 percent to $1.3 trillion annually in 2024 and trucking will see its share of those revenue rise to 81 percent from 80.7 percent in 2012. Truckload volumes will grow 3.2 percent through 2018 and 1.1 percent annually between 2019 and 2024, and intermodal rail will continue to be the fastest growing freight mode, growing an average of 5.1 percent a year until 2018 then slowing moderately to 4.8 percent annually through 2024.

I have a hard time predicting what’s going to happen next month, never mind 11 years from now, especially with so many moving parts involved (the global economy, regulations, geopolitical issues, and so on). But it’s an educated guess nonetheless.

Finally, last October I wrote that the most significant problem facing 3PLs and shippers was a shortage of supply chain and logistics talent. 3PLs are starting to take action, as evidenced by this week’s announcement by Menlo Worldwide Logistics that it has signed a memorandum of understanding with Temasek Polytechnic, a tertiary education institution in Singapore, to establish new scholarship program for students pursuing careers in logistics and supply chain management. Here are some details from the press release:

Under the programme, Menlo has established four annual scholarships of S$2,500 each. The scholarships will be awarded to selected students in their third and final year of study at Temasek Polytechnic who are pursing Diploma in the School of Operations and Logistics Management.

 

The programme includes a three-month internship at a Menlo facility for each scholarship recipient, enabling the students to gain real-world, hands-on experience in logistics operations as they pursue completion of their studies. Upon graduation, and with the recommendation of their internship mentor at Menlo, graduates will be considered for full-time employment opportunities with Menlo.

And with that, have a happy weekend!

Song of the Week: “Don’t Look Back in Anger” by Oasis

Note: HighJump Software, JDA Software, and Menlo Worldwide Logistics are Logistics Viewpoints sponsors.

Great Advice for Young Professionals from Supply Chain Executives

Learning & Leadership | By •

Earlier this year, I launched Talking Logistics, a weekly online video talk show where I interview thought leaders and newsmakers in the supply chain and logistics industry. One of my goals was provide students and young professionals with an interactive platform to engage and network with industry executives.

I’ve had many great guests over the past five months, and I’ve asked many of them the same question: What advice would you give to students and young professionals interested in a supply chain and logistics career?

Watch the short clips below for some great advice from Kevin O’Meara, Eric Morley, Will O’Brien, Art Mesher, and Jim Matcham.

Then post a comment and share your advice too.

I have some great guests scheduled in the coming weeks, so mark your calendars to join me every Thursday at 12 ET on Talking Logistics to learn and network with industry executives and thought leaders. You can also click here to catch up on past episodes.

Kevin O’Meara: Be as quantitative as you can – the more you can do the mathematics of supply chain, the more you’ll understand it.

Eric Morely and Will O’Brien: Go broad as well as deep, and find an industry mentor. Follow your passion and recognize that supply chain management is about driving top-line growth too.

Art Mesher: Never stop learning. LEARN is an acronym for me: Listen, Educate, Articulate, Research, Network.

Jim Matcham: Strike a balance between going wide and going deep, and take on a big and difficult project every year.

The Most Important Attribute of a Supply Chain Leader

Learning & Leadership | By •

Last summer, I led a workshop with a group of supply chain executives where we discussed the following question: What skills, knowledge, and expertise must an executive have to lead a supply chain organization effectively in today’s increasingly global, dynamic, and risky business environment?

The group discussed many leadership attributes, but the one that was viewed as the most important was the ability to develop, manage, and grow positive and productive relationships with peers, customers, suppliers, and partners.

Supply chain management is, after all, a relationship business. It’s about people working together to get things done, especially when things don’t go as planned, which is the norm these days in every aspect of supply chain management. You can implement all the technology you want, but if you haven’t earned the trust, buy-in, and respect of the people you depend on to manage your supply chain effectively, especially in times of crisis, then you’re not going to get very far as a leader.

The relationships you develop, manage, and grow can be more valuable to your career than getting an MBA.

When looking to promote or hire a person for a supply chain leadership position, it is important to look at the relationships a candidate already has in place. For example, promoting or hiring someone who already has trusting relationships with the senior leaders of your key suppliers and customers might be preferable to someone who is completely new to your industry and has no existing relationships with your customers and suppliers. The outsider might bring a fresh perspective to the role, but he or she must invest a lot of time and energy building relationships from scratch, whereas the person with industry relationships already in place can get a running start on executing his or her strategy.

And of course, you won’t get far developing productive relationships if you don’t also have effective communication skills — the two attributes go hand in hand.

For more of my thoughts on this topic, watch the short clip below from a recent episode of Talking Logistics, where I also shared several other important skills and experience tomorrow’s supply chain leaders must have.

And here are some other insights from last summer’s workshop:

  • Look first at your supply chain model and strategy before determining what skills, knowledge, and experience you should look for in a leader. For example, if your supply chain is highly decentralized and outsourced, you would probably look for a leader with different skills and expertise than if your supply chain is highly centralized and vertically integrated.
  • Since technology plays an important role in supply chain management, it is important for supply chain leaders to have a good, up-to-date understanding of technology trends and capabilities, and to establish a collaborative relationship with the CIO.
  • The development of “high performance” teams is at least as important (and maybe more) than developing “high potential” employees. The book “Chasing Stars: The Myth of Talent and the Portability of Performance” by Boris Groysberg was referenced in the group’s conversation. Put differently, you want to make sure that the loss of a high potential employee won’t significantly affect your team’s ability to execute and accomplish its objectives.
  • As leadership expert Ken Blanchard said, “When you stop learning, you stop leading,” and the best way to develop new knowledge and skills is by doing. This requires prospective leaders to take risks and overcome their fear of failure. It also requires a company culture that encourages risk taking and supports prospective leaders through their learning curve. However, some cultures (e.g. China) view any kind of failure as unacceptable, which hinders risk taking and creates challenges for executives that manage global teams. In other words, “empowering employees” is not easy to implement everywhere. Also, with many entry-level positions being outsourced, there are fewer internal roles and opportunities for young professionals to get the experience they need to grow and move up the career curve.

Do you agree that developing, managing, and growing relationships is the most important attribute of a supply chain leader? Are relationships more valuable to your career than getting an MBA? Post a comment and share your perspective on this topic.

4 Important Factors to Consider When Evaluating 3PL Partners

Logistics Service Providers | By •

I often get emails from logistics executives looking for help and advice on selecting a 3PL partner. A couple of weeks ago, for example, I received an email from someone asking if I had updated a framework I had developed several years ago to help companies evaluate 3PLs. The answer was no, but this person’s email got the wheels in my head turning: What are the most important factors to consider when evaluating and selecting a 3PL partner?

I discussed this question last week on my talk show Talking Logistics, which you can watch by clicking below. I won’t repeat everything I talked about here, but I want to focus on the four evaluation factors I highlighted that go beyond the basics.

3PL_Factors_Spreecast_Screenshot

First let me tell you how I came up with these factors. I started by looking at the most common areas where 3PLs fall short of customer expectations. The number one complaint of customers — by a wide margin — is that their 3PLs are not proactive enough in identifying continuous improvement opportunities (see my October 2011 posting “I Wish My 3PL Was More Proactive”). Another top complaint is that 3PLs are slow to implement process changes and other requests.

I then asked myself, are there things you can look for when evaluating prospective 3PL partners that would minimize or eliminate the risk of experiencing these issues? And that’s how I came up with these four evaluation factors:

1. Alignment of Continuous Improvement Cultures. I’ve had the opportunity to research many successful 3PL-customer relationships and the common thread across them all is that both parties have strong continuous improvement cultures, usually grounded in Lean/Six Sigma principles — a common language that immediately creates a bonding point. It’s like meeting someone for the first time and realizing that you both grew up in the same neighborhood or went to the same university. Sharing the same experience and level of commitment to continuous improvement creates a strong foundation to build a lasting relationship.

And you can gauge that level of commitment by, among other things, the number of continuous improvement projects the 3PL initiates and completes each year; the investments it makes in formalized training programs; the number of Six Sigma Black Belts the 3PL has across the organization; and the number of awards it receives from customers related to successful continuous improvement projects. Simply put, if continuous improvement is not part of a 3PL’s DNA, then you are setting yourself up for disappointment down the road.

2. Modern IT Platform with a Focus on Innovation. Why does it take a 3PL so long to make a process change or enable a new process in response to a customer request? The answer, in most cases, is that they are burdened with an inflexible and outdated IT infrastructure. If the majority of a 3PL’s systems were developed in the 90s (or earlier), or they are written in outdated and proprietary languages, then you are putting yourself at risk of experiencing integration issues, and more importantly, the 3PL will not be able to keep pace with your rapidly changing supply chain and logistics requirements. In short, make sure that a 3PL’s commitment to continuous improvement also applies to its IT systems, that the company is keeping pace with the rapid and ongoing changes occurring in technology, and that its IT strategy and roadmap align with yours.

It’s also important to look at the number of IT resources a 3PL has and how much the company invests in technology annually, as a percent of net revenues. But don’t be fooled by the overall dollar investment. Many 3PLs spend a lot of money on IT annually, but the vast majority goes to maintaining existing systems. And the older and more outdated the systems are, the more money they cost to maintain. Therefore, what you really want to know is how much of a 3PL’s annual IT budget goes toward innovation-related projects — i.e., toward developing or implementing new applications or functionality, especially customer-facing solutions.

3. Invest in Talent Development and Retention. There is a shortage of supply chain and logistics talent in the industry, and it’s arguably the biggest issue facing both 3PLs and their customers. At the end of the day, it’s people that make or break any relationship, including a business one. In fact, one of the things that often creates friction in a 3PL-customer relationship is when the primary person in charge of managing the customer relationship is moved to a different account or leaves the 3PL. How deep is the 3PL’s talent pool? Will the replacement be as competent and have the same communication and relationship management skills as the other person? Does the 3PL have a defined succession planning process that involves the customer to ensure a smooth transition? These are all important questions to consider. Ideally, the 3PL will have people across all levels of the organization that are knowledgeable about your vertical industry, and even better, have worked in it. Also, take a close look at the training and development programs the 3PL invests in, and the content of those programs. This will shed some light on what skills and knowledge the 3PL deems important, and if they align with your expectations.

4. Provide Business Intelligence and Insights. This point goes beyond IT. Sure, having access to BI dashboards is very important, but I view that as a basic requirement these days. What I’m talking about here relates to something many customers say they want from their 3PLs: “Tell me something I don’t already know.” As I wrote about last September in “Operational Excellence is Not Enough – Why 3PLs Must Leverage Their Most Valuable Asset,” customers want their 3PL partners to provide them with insights about leading industry practices and trends, as well as to facilitate networking and knowledge-exchange opportunities with other shippers in the 3PL’s community. Does the 3PL conduct market research and share its findings with customers? Does the 3PL organize peer-to-peer learning and networking events for customers and industry experts to attend? Does the 3PL make it easy for you to contact and collaborate with their extended team of experts? If all a 3PL has to offer is a dashboard, then don’t expect to gain much insight beyond what you already know.

Obviously, there are many important factors to consider when evaluating and selecting a 3PL partner. But in my opinion, the four factors above are the most critical in paving a smoother path to a long and successful relationship.

What do you think? Post a comment and share your perspective.

This Week in Logistics News (January 21-25, 2013)

Learning & Leadership | By •

It’s been a brutally cold week, so grab a blanket and something hot to drink, and let’s go straight to this week’s news.

Another week, another mobility-related announcement from a supply chain and logistics software vendor. Infor announced an enhanced version of Infor Supply Chain Execution (SCE), “with more than 100 new core industry features, including mobile and voice enablement, visual metrics, and ION integration to ERP.” Here are a couple of excerpts from the press release:

Warehouse Director – SCE 10.2 features an innovative iPad app called Warehouse Director, which provides managers with a real-time view of warehousing activities from a simple and easy-to-use mobile platform. The app contains a color-coded metrics panel to better visualize management of incoming and outgoing workloads. The location panel is equipped with inventory heat maps and zoom-able overviews of the warehouse floor. These features let users monitor critical functions such as: expected work volume, location queries and inventory information at a glance, while still maintaining the flexibility to work from a remote location.

 

Voice Activated Control – SCE 10.2 is equipped with voice capabilities to allow users a hands-free approach for interaction within the supply chain. Operators are able to perform tasks such as picking, cycle management and replenishment using only voice-activated commands, adding a new level of control and convenience to enhance operational efficiency.

The bottom line: The iPad is replacing the clipboard, and eventually your voice will become the preferred way to interact with enterprise software programs.

On the connectivity front, HighJump added new enhancements to itsTrueCommerce® EDI solution. According to the press release, “users will now experience one-click access to a ‘dashboard’ view highlighting the history and tasks completed for each EDI transaction through the new transaction history feature.” The solution has built-in reporting features that “enable users without technical knowledge to generate a wide range of pre-built and custom reports in their choice of graphical formats directly from Transaction Manager. Detailed tabular and graphical reports can easily be created based on trading partner, document type or activity.”

As I have mentioned in the past, B2B connectivity is not a sexy topic, and the technical details are lost on most people, but it’s a critical piece of the IT puzzle. The question is whether companies should continue to invest in creating and maintaining their own connectivity networks or should they access it as a service instead, like they do with electricity, telephone service, or any other utility. I am biased toward the latter approach, and I shared my reasons why yesterday on my talk show where I discussed the rise of Supply Chain Operating Networks.

The key takeaway is that when it comes to enabling supply chain processes, companies are starting to realize that software is not enough, and they are beginning to focus more on their supply chain connectivity capabilities and options. Similarly, software providers are paying more attention to connectivity too, as evidenced by the acquisitions and partnerships that have occurred in recent years (e.g., IBM acquiring Sterling Commerce, SAP acquiring Crossgate, Oracle partnering with E2open, HighJump acquiring TrueCommerce). Simply put, if you are a supply chain and logistics software vendor and connectivity is not part of your strategy and offering (either directly or via partnerships), then you will find yourself at a competitive disadvantage moving forward.

Walmart and Apple continue to step of their efforts to ensure that their suppliers — especially second and third tier ones — are complying with their labor, safety, and environmental policies. Here are some excerpts from a Wall Street Journal article on Walmart’s new “zero tolerance” policy:

Starting March 1, Wal-Mart will employ a “zero tolerance” policy to sever ties with suppliers that subcontract work to factories without the retailer’s knowledge; Its previous “three-strike” policy gave suppliers three chances to comply with Wal-Mart’s safety requirements.

 

Wal-Mart also will begin publishing on its corporate website later this year the names of factories that aren’t authorized to do business with its suppliers, “to require more accountability and transparency, so there is no way a supplier can say, ‘Oh we didn’t know,’ ” Mr. Kamalanathan [Wal-Mart’s vice president of ethical sourcing] said.

Meanwhile, Reuters reports that Apple “stepped up audits of working conditions at major suppliers last year, discovering multiple cases of underage workers, discrimination and wage problems.” Here are some excerpts from the article:

[Apple] said on Thursday it conducted 393 audits, up 72 percent from 2011, reviewing sites where over 1.5 million workers make its gadgets.

 

In an interview on Thursday, Apple senior vice president of operations Jeff Williams said the company has increased its efforts to solve two of the most challenging issues – ensuring there are no under aged workers in its supply chain and limiting working hours to 60 hours a week.

 

While child labor reflected a small percentage of the workforce, Apple is now investigating its smaller suppliers – which typically supply parts to larger suppliers and hence face less oversight on such issues – to bring them into compliance, sometimes even firing them.

The key takeaway here is that “I didn’t know” is no longer an acceptable answer when issues arise with suppliers. Having more visibility and control of your extended supply chain not only prevents or minimizes compliance issues, it also enables you to better understand the risks in your supply chain, and to be more agile and responsive when disruptions occur.

Finally, while I don’t normally comment on awards, Transplace’s announcement this week caught my attention. The company announced that it was ranked fifth on Chief Executive magazine’s 2013 “Best Private Company for Leaders” list for its investments in talent and leadership development. Last October, in one of the most read postings we published last year, I discussed what I called the most significant problem facing 3PLs and shippers: a shortage of supply chain and logistics talent. One of my predictions for 2013 was that we will see more programs and partnerships in the industry to address this talent shortage problem, and Transplace’s efforts in this area are a good example.

Have a great weekend!

Song of the Week: “San Francisco” by The Mowgli’s.

(Note: Descartes, HighJump Software, Infor, Oracle, SAP, and Transplace are ARC clients and/or Logistics Viewpoints sponsors)

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