Trends in Logistics

As 2013 trucks along, several logistics trends predicted at the beginning of the year have continued to show promise. As many courier and delivery companies expand more broadly into the supply chain, the need for understanding, and even expertise, in the field of logistics is growing. Several logistics experts weighed in on trends for the year. Has your company addressed these topics? They may be areas of consideration for the rest of the year.

Blue Horsehoe, a provider of supply chain management software solutions, offered several trends for supply chain logistics. Their recommendation: “While some may tend to focus on the threats, amidst economic uncertainty and a more competitive landscape, it’s important to also focus on where opportunities exist to exceed the demands of customers.”

Fabrizio Brasca, vice president of global logistics for JDA Software, also noted several key trends for 2013 in a blog post for Logisticsviewpoints.com. He describes the “connected customer” as one who has mobile access to goods and services and wants speed and service. As companies tackled the up-front technology involved in customer experience (their web and mobile sites, for example), these companies are now looking at how to build up their logistics infrastructures and transportation systems to meet the needs of the connected customer. 

Here are a few key logistics trends that may drive many of the decisions organizations will make to improve their supply chains.

1. Contingency Planning

In 2013, companies need to take steps to prepare their supply chains for any number of contingencies that while unpredictable, can be mitigated with the right planning. The EF5 tornado that struck Moore, Okla., in May was an example of an unexpected disaster that affected businesses in the immediate area as well as the region. In 2012, automakers and computer manufactures saw supply disruptions continue from the 2011 earthquake in Japan. As the year progressed, many were affected by the drought in the Midwest, which started to hit commodity prices at the end of the year. Unrest across the world affected global operations.

At the end of 2012, Hurricane Sandy knocked out the supply chain capabilities of many organizations, and National Oceanic and Atmospheric Administration meteorologists have predicted that the 2013 hurricane season is expected to be more active than usual. Anyone on the East Coast knows that hurricanes can happen anytime during the season, and their paths are not always predictable. 

Inboundlogistics.com offers some suggestions on contingency planning that can help your business stay afloat during emergencies:

- Designate a business continuity point person. Because any disruption to your business can be extremely costly, it's imperative to make someone within your organization responsible for your continuity planning. Give your point person the authority to carry out the job and make him or her responsible for all actions and outcomes, including emergency operations.

- Define all possible disruptions to your business. Business disruptions come in all shapes and sizes—from natural disasters, fires, and chemical spills, to system failures and call center outages, work stoppages and unforeseen airport closures. Think through the gamut of scenarios that could present an emergency for your company.

- Hope for the best but plan for the worst. Outline the steps you'd need to take to remedy each disruption scenario. This includes making sure that everyone involved—technology, operations, purchasing, transportation—knows their role, as well as who is responsible for what actions.

- Know where to get help. Because it's almost a sure bet that you'll need to expedite deliveries in an emergency, talk to drivers and carriers about their capabilities before a crisis arises. Know who to contact immediately during a crisis by making inquiries in advance.

- Test your plan. It helps if you test your recovery plan with your carriers up front to uncover any problems with the process. The cost of a test run will likely be minimal compared to the effect on your bottom line if your expedited transportation plans fail in a real emergency.

- Stay current on factors that can change your plan. Contingency planning is an ongoing process because many factors can change your requirements. For instance, since the Sept. 11 attacks, security measures for cargo tendered to commercial aircraft have not increased, but the scrutiny has. According to FAA regulations, only "known" shippers who have customer records with the broker and either an established shipping contract or an established business history can tender packages or freight to commercial airlines.

2. Workforce Management / Labor Planning

As the U.S. economy slowly recovers from recession, several changes still remain for human capital within the supply chain. Hiring seems to be trending upward, but productivity per employee is declining.  The employment increase has been brought on by higher voluntary turnover, not new hires.  Organizations that understand and adapt to this paradoxical environment will be best positioned for higher returns on their human capital investments.

Many delivery companies struggle with hiring qualified independent-contractor drivers. The Customized Logistics and Delivery Association’s recent annual meeting was the site for several discussions about hiring drivers who embodied their employers’ desired professional image and attitude.

Driver training may be one area of focus for 2013 (see box, page XX). Another area that leads to improved workforce management is to hire great managers for whom great drivers want to work.

During the CLDA meeting, one manager said during a courier focus group discussion that there were three main skills that a successful operations manager in his firm needed to have:

- Communication skills—these managers know how to talk to the drivers.

- Good directional and spatial skills—these managers help drivers save time by knowing exactly what needs to go where and the best way to get there.

- Industry expertise—these managers are experts in the field of delivery and logistics, and they have realistic expectations from the industry and from ICs.

Managers with these skills will create a better work environment for drivers, which means better retention of quality drivers.

3. The Partnership Approach to Expansion

As improvement in the economy affects labor market, it also affects how companies handle expansion of their operations in 2013. As companies look to expand their operations, they are looking for a clear approach to smart expansion. Gone are the days of, “If you build it, they will come.” Companies are better off taking a balanced approach to facility and network expansion.

There is a need in many companies to have someone look at their operations and determine the best approach to facility and network expansion. Due to still tight budgets in the coming year, a balanced analysis of returns over the next 3 to 5 years is seen as a smart plan for the coming year.

Michael Klein, VP of business development of Tatco Industries, a distribution and fulfillment firm in Florida, spoke recently on a panel at the Customized Logistics and Delivery Association annual meeting. He suggested the expansion strategy of partnerships—finding the right business partner rather than jumping into expansion on your own. For example, rather than buying a warehouse, consider partnering with a warehouse to offer those services to your customers.

“You know what your strengths and weaknesses are,” Klein said. “Find a business to partner with that has complementary strengths.”

4. WMS Upgrades

A warehouse management system is a key part of the supply chain and primarily aims to control the movement and storage of materials within a warehouse. It also processes the associated transactions, including shipping, receiving, put-away and picking. The systems also can direct and optimize stock put-away based on real-time information about the status of bin utilization. A WMS monitors the progress of products through the warehouse. It involves the physical warehouse infrastructure, tracking systems, and communication between product stations.

Many companies either do not have a functional WMS or have a WMS system that is unable to do tasks such as directed put away, zone picking, or interface with an enterprise resource planning system or transportation management system. As companies look to upgrade their systems in 2013, WMS upgrades are ranking highly.

5. Alternative Delivery

Large providers are pushing alternatives to at-home delivery. Before, shippers would deliver something to you and try a few times if they couldn’t find you, but this is no longer the case. Locker services and centralized pick-up locations are on the horizon. Traditional brick-and-mortar retailers with e-commerce websites may create temporary local “pop-up” stores where products can be picked up by online shoppers during periods of high seasonal demand. Is there potential for your delivery company to innovate and break into that market?

6. Innovation

The ever-present trend (which makes it not a trend at all) is innovation. Delivery companies working to improve or expand their business in 2013 and coming years need to embrace the concept of doing things differently if they want to achieve success. How will the changing face of the delivery industry affect your business? Brasca said, “Perhaps the most critical imperative for both retailers and manufacturers is to focus on true innovation as they rethink the most basic tenets of how they deliver their products to consumers around the world.

“With today’s delivery addresses spread over a large geographical area, the advent of many small and low-cost packages, and the frequent need to repeat deliveries when consumers are not home, it’s clear that direct-to-home delivery will not remain a profitable option if online shopping continues to grow at its current pace. Manufacturers and retailers simply will not be able to absorb the associated parcel shipping costs, even as their leverage with shippers grows.”

About the Author

Michelle Tevis is the editor of Courier Magazine. Contact her at 816.595.4836 or michelle@couriermagazine.com.