With a U.S. economic slowdown emerging and regulatory burdens mounting, smart supply chain leaders will be concentrating upon collaboration and effective use of vast amounts of data in order to maximize productivity.
That was an overriding message of SMC3 Jump Start 2016, held Jan. 18-20 in Atlanta. Fittingly, the conference, now in its 61st year, for the first time featured a Logistics Technology Summit.
In welcoming participants, Michelle D. Livingstone, vice president for transportation at The Home Depot, said forging “shipper of choice” partnerships with carriers is increasingly a priority of the largest U.S. home improvement retailer.
“Another thing that’s very near and dear to the heart is port productivity,” Livingstone said, adding that The Home Depot, headquartered in Atlanta suburban Cobb County, looks to focus even more upon efficiencies in moving goods through marine terminals.
She noted that the company’s “four corners” approach for dividing import volumes between Seattle-Tacoma, Los Angeles-Long Beach, New York-New Jersey and Savannah helped as The Home Depot “fared better than most” among major retailers when labor issues last year seriously slowed operations at West Coast seaports. Livingstone also put in a plug for needed progress in workplace diversity throughout the logistics industry, citing figures showing only about 13 percent of those employed in transportation are female.
In a separate presentation, Bradley S. Jacobs, chairman and chief executive officer of Greenwich, Conn.-based XPO Logistics Inc., said solid partnerships with other providers of third-party logistics services are a priority for his burgeoning company.
“We absolutely want to do more business with 3PLs,” Jacobs said. “We want to work with competitors as long as there’s no BS in the relationship.”
Jacobs added that, after completing 16 acquisitions over the preceding 4 1/2 years, including October’s $3 billion purchase of less-than-truckload provider Con-way Inc., XPO is intent upon a one-year hiatus from buying up other logistics companies, commenting, “This year, it’s all about internally getting things well-honed.”
Such plans, he said, include taking advantage of volume-based pricing breaks and a redesign of XPO’s global sales force such that each customer has a single “relationship manager” cross-selling the full spectrum of the company’s manifold offerings, with support from sector specialists. “Shippers consistently want to save money,” Jacobs said, adding that this becomes even more the case in times of economic decline. “When all is said and done, they want to take cost out.
“We plan to roll out an economy service offering that is more reliable than the present market standard,” Jacobs said, but he noted that such a service is still in planning stages and won’t be unveiled by XPO until 2017 at the earliest.
Jacobs said that, in the logistics business, “too many things go wrong too often,” but that advances in technology, enabled in part by industry consolidation, will reduce problems as well as costs.
Economists speaking at Jump Start shared views that an overall U.S. slowdown can be anticipated to keep transportation pricing down in 2016.
“It’s not going to be an easy year or two,” said Dr. Jeffrey Rosensweig, associate professor of international business and finance at Emory University, while Ben Hartford, senior research analyst for Robert W. Baird & Co., said of 2016, “It’s going to be a tough year.”
Opening the one-day Logistics Technology Summit, Kirk Graves, director of the transportation practice at Atlanta-based supply chain consulting firm CHAINalytics, said he believes that having hundreds of billions of connected electronic devices in use by 2020 will be able to facilitate such advantages as shipment reroutings based upon up-to-second traffic conditions, as well as enhanced tracking and better accident avoidance.
But Graves, a former longtime Macy’s Inc. transportation executive, warned of myriad associated challenges, from security breaches and potentially insufficient bandwidth to data storage and access issues to “power and people.”
Scott Sullivan, chief financial officer and chief information officer at less-than-truckload and truckload provider Pitt Ohio, said current technologies, including “cloud” storage of data via remote servers, are allowing deployment of service improvements at a fraction of prior costs.
However, Greg Smith, an enterprise consultant with India-based Tech Mahindra, said it is essential that logistics professionals become more adept at turning volumes of data into knowledge and thus into productive actions.
“We are not looking at our data as something we’re going to learn from,” Smith said. “We’re not utilizing our data to keep improving our supply chains.”
Mike Neill, director of information technology at Eden Prairie, Minn.-based 3PL leader C.H. Robinson Worldwide Inc., echoed that thought, saying that the Internet of Things, or IoT, connecting billions of devices and objects, including drones and self-driving vehicles, “is going to produce a crap-ton of data – and that’s a technical term – that we have to do something with.”
Neill said he sees Web application programming interfaces, known for short as Web APIs, as both the most promising and most imminent of leading-edge technologies for providing more productive connections between shippers, carriers and other supply chain entities. “It’s not as sexy as drones,” Neill said of Web API, “but I think it’s more important to what’s going on.”
On the conference’s final day, Washington-based transportation attorney John Bagileo, noted that regulations also are important to what’s going on in the transportation industry, including in exacerbating the worsening shortage of commercial truck drivers.
“The more layers of regulation we pile on the industry,” Bagileo said, “the more difficult it will be to recruit drivers.”
Bagileo said it is not unusual for regulations to be misdirected. For example, he said, drivers of passenger vehicles – not trucks – are at fault in the vast majority of truck-involved accidents, so the federal government’s focus might better be upon educating drivers of passenger vehicles.
Also during Jump Start 2016, cooperation among supply chain partners was highlighted by SMC3 through introduction of three sets of Alliance Award winners: Leading U.S. peanut sheller Birdsong Peanuts combining with Cordele Intermodal Services’ inland port facility in getting China-bound exports to the Georgia Ports Authority’s Port of Savannah; Ascena Retail Group Inc. teaming with Hub Group and its Unyson unit in reaping synergy savings via a single technology platform offering visibility across all Ascena clothing brands, including Ann Taylor, Lane Bryant and Dress Barn; and The Dow Chemical Co., Schneider, Estes Express Lines Inc., Day & Ross Freight and XPO Logistics Inc. for collaborating on a solution to keep goods from freezing when moving through the supply under extremely cold weather conditions. (For reception photos, see page 21. Also, see sidebar on page 8, which is a reprint of AJOT’s blog report from the conference.)