Up To Speed
In an era of intense global competition and increasingly complex supply chains, logistics providers are innovating to help their customers reduce costs and streamline operations. Shippers need all the help they can get to meet their customers’ demands and get a leg up on the competition.
The innovations providers come up with are as varied as the logistics discipline itself, from introducing new transportation ideas and tightening the relationship between warehousing and transportation, to streamlining warehouses and optimizing networks.
Technology also plays an important role in logistics providers’ innovations. Moving data is almost as important as moving freight in the 21st century. Logistics providers have morphed into information technology providers.
“We offer our clients expertise in global-trade management,” says Lance Malesh, chief global sales and marketing officer at BDP. “We help them reduce complexity and navigate the changing rules related to trade.”
Earlier this year, Kenco Logistics Services started an innovation lab to research improvements for customers. “The mission is to collect ideas from across the organization,” says Kristi Montgomery, Kenco’s vice president for Innovation, Research and Development. “We have found that our most innovative employees are those at the front lines.”
“A growing number of companies are using e-commerce as a strategy for expansion into new markets,” says Jacques Retief, global vice president for Contract, Logistics and Distribution IT at UTi Worldwide. “We provide them with a logistics infrastructure that enables them to do so.”
At A. Duie Pyle, a Northeast less-than-truckload carrier, innovation takes the form of collocating an 80,000-square-foot warehouse with a truck terminal in southern New Jersey. “This logistics center combines warehouse operations with our traditional cross-dock,” says Randy Swart, the company’s chief operating officer. “Our customers can have their shipments pulled from inventory and loaded directly onto an outbound trailer. They can call us at eight o’clock at night and have the cargo pulled and delivered to the next terminal the following day.”
Tiger Cool Express introduced a new transportation service last year that no one thought of before: intermodal for refrigerated produce. The startup acquired special containers wired up with multiple sensors that keep track of every aspect of cargo moves. The company recently ordered 500 more of the specialized containers, bringing its inventory to 734.
“Our service takes a day longer than truck but it is 10 to 15 percent cheaper,” says Tom Finkbiner, the company’s CEO. “Our supermarket-chain customers operate on low margins, so if we can save $500 to $1,000 per truck on refrigerated produce shipments, we can add significantly to their bottom lines.”
Kenco recently introduced performance-based pay for workers in one of its warehouses in an effort to boost productivity. “It was put in place this year to serve as a test bed for us,” says Montgomery.
“It’s going very well so far. We also introduced new software which allows workers to keep track of their performance pay. We have found that to be an enormous engagement factor.”
Kenco has also streamlined warehouse operations to save clients money and enhance their operations. A distribution facility operated for a diesel engine manufacturer benefitted from the implementation of LEAN principles, resulting in labor cost reductions of 10.45 percent. Another Kenco customer wanted to consolidate a 600,000-square-foot facility and a 250,000-square-foot facility into 474,000 square feet. The solution involved implementing a very narrow aisle storage system which increased pallet locations by 66 percent. In the case of a manufacturer in the kitchen and bath industry, Kenco redesigned a warehouse to condense a high-velocity pick zone by more than 80 percent, resulting in reduced pick times and labor costs and savings to the customer of more than $300,000 in one year.
“We are constantly talking to clients about network optimization, where their shipping points are versus where their customers are,” says Mark Casiano, senior vice president for Sales and Marketing at Odyssey Logistics and Technology. “Customers often shift and warehouses may not be located optimally.”
Network optimization involves ensuring that distribution points are aligned with customers. Shippers may negotiate the best transportation rates but if their shipping distances increase, so will their costs.
“Then you have to figure out is the juice worth the squeeze,” says Casiano. “What is the cost of moving a warehouse versus the potential transportation savings?”
Shippers seeking to enter new markets via ecommerce are often looking to minimize risks. “They can start trading without putting assets down,” says Retief. “That plays well for 3PLs because we are already in those areas. We are able to replicate solutions across the globe.”
Last-mile delivery options often give new shippers the biggest headaches. In South Africa, because of security concerns, UTi introduced lock boxes where consumers receive their online orders. “The user gets into the locker with a cell phone,” says Retief. “It’s all about bringing logistics and technology together.”
“We are seeing more companies looking for answers to the demand planning and forecasting,” says BDP’s Malesh. BDP has developed proprietary technology that it makes available to clients to help them in these areas. Why proprietary? “Because we provide customized solutions,” says Malesh. “Since we own the code, we can fit it to the client and continually adapt to their needs.”
BDP has introduced versions of its BDPSmart technology that have been adapted to several industry verticals including chemicals, life sciences and consumer products.
Odyssey recently introduced WIN (Web Integrated Network), a free cloud-based transportation management application that offers shippers an Uber-like capability to match loads with transportation providers. WIN supports truckload, less than truckload, intermodal, and bulk transportation and provides shippers with access to Odyssey’s network of carriers and the spot market.
WIN provides shippers with the most-used components of a TMS, letting them load their routes, contracts, carriers and rates. “The system helps them make decisions rather than looking at spreadsheets,” says Casiano. While WIN is carrier neutral, the idea is that shippers will want to book Odyssey carriers.
What’s the common denominator among all these innovations? “We see an increased focus on reducing supply-chain risk,” says Malesh.
“Shippers are making sure that products are where they are supposed to be and that they avoid building up massive amounts of inventory.”