Hours of service ruling will impact your business.
Smart Material Handling Eases Rate Pain
On January 4, a new hours-of-service rule for truck drivers became effective. It is imperative that your company know what impact the new rule has on your bottom line. The transportation cost increase to companies will depend on what mix and types of truckload and less-than-truckload (LTL) operations you use within your supply chain network and what loading/unloading practices you have established.
The change with the greatest impact is the new rule requiring truck drivers to have 10 hours of mandatory rest time following 14 hours of on-duty time before the 14-hour clock is reset. The most significant impact will be on truckload carriers, especially those with multi-stop and competitive short haul (less than 250 miles) moves. Under the new hours-of-service rules, a driver may only be on duty for 14 consecutive hours. Breaks do not extend the on-duty time. Idle waiting time at your dock is counted towards the driver's on-duty time.
Whether you have the type of situation that would negatively affect the carrier in terms of these new regulations, chances are you will be in conversations about rate increases as a direct result of these changes in the near future. The best defense to these tactics is a good offense.
Now is a good time to revisit your practices and standards in relation to loading and unloading trucks at your docks. Look for opportunities to eliminate driver wait time. Make sure that any time a driver is waiting around your facility, it's not because he knows it's a good place to hide from his dispatcher.
Second, if you currently use carrier personnel for palletizing, sorting, counting or any other function, find out the dollar value of that service. When the time comes, you can make a realistic cost comparison of paying higher freight rates versus performing the activities with your own staff, temporary or contract labor.
Finally, if you use appointment scheduling for your inbound goods deliveries or outbound goods pickups, be aware of your notify-to-deliver/pickup times. Make sure you are not scheduling further out than needed, and that carriers are not extending your day or times for their convenience.
As for finished product delivery to your customers, begin developing a list of those customers that historically delay the arrival of their goods from you. Begin working with your sales and marketing departments to educate customers on the increased costs now assessed because of time delays.
What effect the new hours-of-service rules will have on improved carrier safety or overall operations is still a matter of debate. What is known is that the carrier community has been hungry for an excuse to raise its rates. These hours-of-service changes will provide the carrier community with the ammunition to begin a rate increase process. You can take steps to actively understand if your business will truly affect the carrier in terms of these hours-of-service changes. If it doesn't, you can use that in the rate negotiation process. If it does, begin making changes and inform carriers of those changes to limit your exposure.
— Dave Bennett, director, transportation cost management services, enVista. (www.envistacorp.com)
RFID Advice Aplenty
On the heels of its release of the RFID Expert System, Acsis Inc. announced the expanded capabilities of its RFID Laboratory, set up to aid Wal-Mart suppliers in their efforts to comply with the RFID mandates. Acsis can advise how best to integrate RFID by identifying the radio frequency characteristics and physical attributes of product and environmental factors that need to be addressed.
RedPrairie Corporation, a supplier of global supply chain technology solutions, announced it has built a fully functional, EPC-compliant RFID laboratory to test RFID technology in a real-world environment. The RFID Lab is driving customer pilot programs, enabling RedPrairie customers and prospects to research RFID tag placement and readability as they prepare for RFID compliance. In addition, using company-specific data and scenarios, the RFID Lab is helping companies determine how RFID will affect their supply chains and how they can achieve maximum value from RFID investments through supply chain process improvements.
RedPrairie Company Leader John Jazwiec says, "Our objective in developing the first EPC-compliant RFID Lab is to help customers test a variety of hardware solutions, tag configurations and products to understand how the technology applies to their business requirements. Companies considering RFID implementations benefit from applying the RFID technology in our high-tech lab to determine first-hand how RFID will work with their products and packaging."
Pigs Do Fly!
Exel, a major provider of supply chain management services, has successfully flown a herd of British rare breed pigs to Bhutan in the Himalayas. Exel teams in the UK and Thailand worked together to complete the shipment, which was reported to be the first and largest of its kind in the world.
The United Nations Food and Agriculture Organization sponsored the shipment completed by Exel on behalf of Harris Associates, a livestock exporter. Harris Associates obtained the 72 saddleback-colored and large black pigs from 20 farms across Great Britain where there are fewer than 500 surviving sows, putting them at the risk of extinction.
Exel transported the pigs by air from London to Bangkok using specially prepared collapsible pens. The pigs were then reloaded by Exel in Thailand for their flight to Bhutan. Limited services at Paro airport in Bhutan meant Harris Associates had to remove seats from the aircraft and reassemble the pens onboard to ensure the pigs had a comfortable flight.
David Arnold, special services manager, Exel, says, "This was certainly one of our more unusual shipments. We are proud to be part of the largest rare breed export since records began."
Bhutan particularly wanted the pigs not just because of their hardiness and ability to survive the Himalayan climate, but because of their color. Their black and white coloring is believed by Buddhists to indicate the awakening of the inner self.
Crown Lift Trucks Win Award
Masco Corporation announced Crown Lift Trucks was a winner of its MASTAR (Masco Supplier Team Award Recognition) 2003 Program. Other winners of the 2003 awards are: Akzo Nobel Coatings Inc., Blum Inc., Chevron Phillips Chemical, Grainger, Hermes Abrasives Ltd., Moore Wallace Inc., Packaging Corporation of America, Sharp Electronics Corporation, Smurfit-Stone Container Corporation, Uneeda Enterprizes Inc., and xpedx. The MASTAR Awards recognize and reward leadership, communication, commitment and cooperation of Masco's extensive supplier group to achieve world-class quality, cost reduction, delivery, sustainability and service. "Crown Lift Trucks has provided support and teamwork that has enhanced our operations," says Alan Barry, Masco's president and COO.
Companies Making News
International Paper and ESYNC announced that the two companies have established a strategic partnership to provide RFID integration and consulting services focused on the Electronic Product Code (EPC) standards and other related auto-identification initiatives.
To completely realize the SCHOTT goal of achieving a consistent worldwide strategy for North America, SCHOTT Fostec is now SCHOTT North America Inc., and is part of the global fiber optic segment of SCHOTT.
Voxware Inc., a supplier of voice-based solutions for the logistics workforce, and LXE Inc., a manufacturer of rugged mobile computers and the back-to-back winner of the Mobile Star Award for best customer service, announced that Voxware's VoiceLogistics applications will be available on LXE's handheld wireless computers.
Tuscarora Incorporated, a wholly-owned subsidiary of SCA and a division of SCA North America, will change its name to SCA North America, Packaging Division.
White Systems, an FKI Logistex member company and designer and builder of high-speed automated material storage and retrieval systems (AS/RS), has signed an agreement with Pacific Integrated Handling (PIH), making PIH its exclusive distributor in 13 western US states.
Wolter Hydraulics and Power Systems announced that it has been appointed ultimate service dealer in Wisconsin for Generac Power Systems Inc. The company will be responsible for dealer network service and parts support. It was chosen based on its financial stability, state-of-the-art facilities, trained service technicians and engineering capabilities.
Zebra Technologies, manufacturer of on-demand printing solutions for business improvement and security, announced it has forged an alliance with Acsis Inc., a provider of data collection and integration solutions for companies running SAP enterprise resource planning (ERP) systems. This new alliance will help consumer packaged goods, retail and pharmaceutical industry organizations implement practical, cost-effective RFID technology in their supply chains.
Smart and Secure Tradelanes, the global initiative deploying an end-to-end supply chain network to enhance the security and efficiency of ocean-container shipments, announced that LXE, a manufacturer of rugged mobile computers, has joined the rapidly growing international consortium. Since launched in the summer of 2002, Smart and Secure Tradelanes has attracted more than 65 partners, encompassing the world's leading port operators, major shippers, and best-of-breed ocean cargo services and solution providers.
Managers Making News
Exel announced that Patrick Moebel will join the company as chief executive officer (CEO) for technology and global freight management-Americas. "We recognize Patrick as a top U.S. executive with an extensive background in the industry. Patrick brings qualities to this organization necessary to further develop sales, operations and general management," said Mick Fountain, Exel's chief executive, technology and global freight management.
Larry Wuench, vice president of distribution for Mitsubishi-Caterpillar Forklift America (MCFA) in Houston, is stepping down to take a more active role as a company representative and spokesperson. Assuming his responsibilities are Kent Eudy, vice president of marketing, and Jeff Rufener, vice president of sales. This news follows MCFA's recent introduction of its new president, Hideaki Ninomiya, who brings more than 15 years of material handling experience to the position from his previous position with Mitsubish Heavy Industries Ltd.
ABB, the power and automation technology group, said that group executive Dinesh C. Paliwal has taken on the additional role of president, ABB Inc., in the U.S. He succeeds Donald Aiken, who will retire at the end of January.
Orion Packaging Systems Inc. has announced the promotion of Mark Collins to vice president of sales, and R. Carson Howard to south central regional sales manager.
White Systems, an FKI Logistex member company, announced the appointments of Richard Lanpheare to regional sales manager in the Northeast, and Daniel Van Hooser to regional sales manager in the Midwest.
Manfred Hahn has been named vice president and general manager of Bosch Rexroth's mobile hydraulics manufacturing facility located in Wooster, Ohio.
Forte Industries has hired Chris Barnes and Rob Ulery as directors of business development.
Scott Gilmour has been appointed vice president sales and marketing at Boston Rack & Wire, distributor for Interlake Material Handling in the United States.
Joshua Egbert, CPE has been promoted to managing consultant of Humantech Inc., a full-service human performance consulting firm specializing in occupational ergonomics.
Bushman Equipment, Inc. has appointed Peter Kerrickas vice president.
Susan Alt has been named president and CEO of Volvo Logistics North America, Inc. Alt was formerly vice president-marketing for Volvo Trucks North America, Inc.
Top Manufacturers Use 3PLs
More top U.S. manufacturers are using third party logistics providers (3PLs) as part of their extended supply chain than ever, according to the latest research conducted by Accenture and Northeastern University. The percentage of large manufacturers using 3PL services increased from 65 percent in 2002 to 83 percent in 2003.
Eighty-five percent of survey respondents reported that use of 3PL services had a positive or very positive impact on logistics service levels. This figure increased 18 percent from 2002. Seventy-seven percent of users reported use of 3PL services had a positive or very positive impact on logistics costs, up from 70 percent in 2002.
The research consisted of two surveys, one of which captured data from 66 executives of the largest American manufacturing companies. The other is a companion survey that polled and received responses from 20 CEOs of the top global providers of 3PL services.
"The 90s was the era of re-engineering and most companies focused on improving core competencies such as manufacturing processes," said Accenture Associate Partner Brooks Bentz. "During the first decade of this century manufacturers are supporting this focus by outsourcing logistics activities and other non-core competencies. In large part, they view outsourcing as an effective way for improving supply chain performance and reducing costs in segments of the operation not historically viewed as mainstream."
Associations Making News
The Conveyor Equipment Manufacturers Association reports that its September 2003 Booked Orders Index was 116, up two points, or an increase of two percent from August's Index. The September Index represents a decrease of 10 percent from September 2002.
The Healthcare Distribution Management Association (HDMA) board of directors released a position statement setting a goal for manufacturer and wholesaler deployment of radio frequency identification (RFID) tags bearing electronic product codes (EPCs) at the case level by the end of 2005. The HDMA board statement also sets the goal for pharmaceutical packagers and manufacturers to deploy RFID/EPC technology at the selling unit level by 2007.
The Association for Automatic Identification and Data Capture Technologies has elected four new members to its 13-member board of directors. New board members are Frithjof Walk, of Feig Electronic; Chuck Biss, Hand Held Products; Scott Medford, Intermec Technologies Corp.; and Barry Issberner; Symbol Technologies.
Supply Chain Investment Hot
U.S. companies have begun to attack the more than $117 billion in excess inventory and $83 billion in lost sales associated with disconnected and uncoordinated supply chains, according to Yankee Group. The research firm says companies have shifted IT dollars from core or internally-oriented technologies to technologies to enable networked supply chain management.
The Yankee Group's research found that 71 percent of companies increased investment in edge-of-the-enterprise technologies. The portion of the budget allocated for these technologies grew 75 percent on average, while the overall IT budget grew only 3.7 percent.
Supply chain software vendors have implemented several strategies to meet extended SCM requirements. Vendors have incorporated supply chain event management, portals and other capabilities into their applications to make it easier for customers, suppliers and service providers to access information.
RFID Presentation Area At ProMat 2005
As industry gears up to respond to the January 2005 RFID deployment mandated by Wal-Mart and the Department of Defense, Material Handling Industry of America (MHIA) has announced plans for a special RFID Presentation Area at ProMat 2005, January 10-13, 2005.
"Backed by its international reputation, and with the partnership of RFID industry leaders, ProMat 2005 will be at the forefront of providing responsible education and well-planned and broad application of RFID," according to Dr. Richard E. Ward, MHIA executive vice president of professional development. "D-Day for RFID appears to be January of 2005, but the real impact will come later as the value proposition for all supply chain partners becomes better understood and the focus on deployment spreads throughout the economy. This cannot occur without a great deal of education and careful planning. That is where ProMat comes into play."
The ProMat RFID presentation area will consist of approximately 25,000 square feet near the center of the ProMat 2005 show floor. The area will showcase state-of-the-art RFID applications, capabilities and their implementation considerations. The area will include a theater pavilion for RFID multi-media presentations and display space immediately adjacent to the theater for the program sponsors and partners.
Any ProMat 2005 exhibitor with a paid company booth can be associated with the special RFID Presentation Area by becoming a sponsor. Only RFID sponsors will have a presence in this special area of the ProMat show floor.
ProMat 2005 will be the most comprehensive international material handling and logistics show held in the U.S. in 2005. In addition, the Department of Commerce has designated ProMat 2005 as an International Buyer Program Event. More than 700 exhibitors are expected to showcase their solutions at ProMat 2005.
Raymond Fleet Services Program Enhanced
The fleet services program from the Raymond Corporation provides users with online information and reports on lift truck fleet data by truck, facility, region and company. The program maximizes lift truck efficiency while reducing operating and maintenance costs.
Delivered in concert with local Raymond dealerships, the program involves a continuous process of assessing fleet operating hours, applications, availability, maintenance and special needs; comparing the fleet to possible replacements for potential savings; recommending replacements, warehouse layout and truck configurations, financing, maintenance and training; implementing replacement, maintenance and training programs; and monitoring the program.
Supply Chain Planning Market Solid
The overall supply chain planning and collaboration market exceeded $1,903 million in 2003 despite the weak macroeconomic environment over the past two years. This is particularly interesting since the recession in the U.S. had substantial reductions in capital spending, especially on information technology. And the industrial manufacturing sector, at $1,615 million, accounted for 85 percent of this market.
Despite the slow, challenging market, many companies regard the current business climate as a good opportunity to take decisive steps aimed at revamping their operations and making them more cost effective. Therefore, the market focused on industrial manufacturers and retailers will grow to $2,190 million by the end of 2008 on a cumulative annual growth rate of 2.8 percent during this forecast period, according to a new market study by ARC Advisory Group.
Environmental Stewardship Award
ORBIS Corp., a subsidiary of Menasha Corp., manufacturer of plastic reusable packaging for use in a wide range of material handling applications, has received the Orion Environmental Stewardship Award for its installation of energy-efficient lighting fixtures manufactured by Orion Energy Systems in its Pleasant Prairie operation. By doing so, ORBIS will conserve approximately 333,333 kilowatts (kWh) per year and 6.6 million kWh over the lifetime of the Orion fixture.
As a part of an overall environmental program, ORBIS has established objectives and targets to drive continual improvement in the environmental results of its operations. ORBIS also has committed to prevent pollution and ensure regulatory compliance in all daily activities. Current programs include solid waste reduction plans, community service tree plantings, recycling programs and electrical energy reduction initiatives.
ABB Strengthens U.S. Power Supply
ABB, the power and automation technology group, says it has successfully commissioned a high-voltage direct current (HVDC) transmission system link, interconnecting the eastern and western power grids of the United States. The back-to-back system is expected to boost grid reliability.
The HVDC system, called the "Rapid City Tie" because it passes close to Rapid City, South Dakota, carries 200 MW of power. ABB completed the $50 million contract in only 19 months - six months faster than the industry standard.
"The new power transmission system will substantially increase grid reliability in the U.S.," says Peter Smits, head of ABB's Power Technologies division. "Interconnections such as the Rapid City Tie lower the risk of blackouts, because they allow a controlled power flow between otherwise independent power grids."
The HVDC system provides voltage and frequency support in case of disturbances in either of the grids. ABB designed, manufactured and installed the HVDC system as part of the joint project between Basin Electric Power Cooperative of North Dakota and Black Hills Power of South Dakota.
The high-voltage alternating current grids in the eastern and western U.S. do not operate synchronously and require a technology interface to connect them. HVDC technology takes the AC from one grid, converts it into direct current, and then re-converts it into AC for the other grid.
Compliance More Than Data Submission
The Automotive Industry Action Group (AIAG) says adherence to the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act means more than providing raw data to avoid the act's civil or criminal penalties.
"Submitting data is not enough," says Andrew J. Cummins, executive director for AIAG. "Companies should move beyond compliance to reap the full benefits of the TREAD Act, such as leveraging the data to reduce manufacturing and warranty costs."
In 2000, Congress passed the TREAD Act, which requires companies in two reporting categories to submit statistical data about consumer complaints, warranty claims, property damage claims and field reports in an electronic format to the National Highway Traffic Safety Administration (NHTSA) on a quarterly basis. This "Early Warning Reporting" system is intended to identify defects in vehicles and equipment. Non-compliance can result in civil penalties of up to $15 million. Company executives could face prison time as well.
"Transmitting your reports electronically is the easy part," says Morris Brown, AIAG material management program manager. "The real challenge exists when companies must answer to the NHTSA when asked for clarification on their reports."
Since 2002, AIAG has been addressing the TREAD Act and its implications to the automotive supply chain. It has been actively assisting the automotive industry to understand compliance. This year, the organization hosted four educational events and participated in a webcast to help the automotive supply base to understand the act's impact.
Ask the MHM Editorial Advisory Board
Our cover story on the military's efforts to establish asset visibility throughout its supply chain inspired this month's query to the MHM Editorial Advisory Board. We asked board members several questions about how their companies establish visibility of inventory and other assets throughout their supply chains.
Does visibility end in the warehouse or distribution center dock?
Gerald Moultry, vice president, field operations, Pharmaceutical Division, CardinalHealth:"It is critical that we have visibility of our inventory throughout the supply chain. It's important for JIT purposes as well as forecasting. Also, because of the sensitive nature of our products, we need to maintain visibility for security purposes."
Tan Miller, senior director, logistics, Pfizer: "It's critical that visibility be available throughout the supply chain from original material supplier to the manufacturer and distributor to the retail customer warehouse and store location."
Brian O'Donnell, director of technical operations and planning, Liz Claiborne: "In today's environment, it is essential that we closely manage each step of the supply chain. This will allow us to make critical decisions with accurate information at any point in the process. It is no longer acceptable to operate in a black hole, where you lose track of your product. This visibility includes manufacturing and all areas of logistics/distribution until we transfer ownership to our customer (FOB our dock or consolidator)."
Gregg Schwerdt, distribution manager, Beauty Care, Procter & Gamble: "In most instances, visibility of customer inventory ends at the customer dock. From there, it is expected that customers will manage and supply their locations in FIFO manner to ensure retail consumers receive the freshest product available. Procter & Gamble does maintain some supplier-managed inventory programs (where we are the supplier), but this currently only applies to managing inventory to targets set by the customer and really no further than this."
David Rogers, vice president, logistics, Rockwell Automation: "In the U.S., 85 percent of our channel partners provide inventory status updates on a daily basis for A and B items. This provides visibility to on-order, in-transit, on-hand and available inventory. It also gives us visibility to end user demand. This has allowed us to aggressively pursue our VMI program and also provided a resource for sourcing items that are of limited supply to our customers."
Does visibility extend downstream to the customer? Upstream to the supplier? End to end?
Gerald Moultry: "Our visibility ends at the customer delivery site. We at least know what is in the customer's orders and can verify the receipt of that order."
Brian O'Donnell: "In the future, to really gain supply chain excellence, I see the boundaries of who is controlling the supply chain breaking down. When manufacturers, wholesalers/retailers and the customer really start working together at the optimal solution, that is when we will see the largest payoffs."
Gregg Schwerdt: "Within the supplier network, where P&G is the consumer, there are various supplier-managed inventory programs which enable suppliers to see our daily demands, but, as with the retailer providers, we are required to ensure an efficient flow to our production systems to meet FIFO."
David Rogers: "We have developed web-based tools that provide estimated delivery information based on the inventory visibility that we have at the distribution point closest to that customer. We have implemented VMI concepts and extended visibility to component inventories through EDI/web-based tools. Although we have not implemented a complete end-to-end solution, we are beginning to leverage the visibility that we gained to improve decision-making at each layer in the supply chain."
How important is technology in establishing visibility?
Gerald Moultry: "Technology is extremely important in establishing visibility. RFID will be a key part of future visibility because it will allow us to receive item level detail directly from the product. This will allow us to track the status of the product in real time all the way through to the customer."
Tan Miller: "Technology is naturally a critical element of visibility. However, it takes much more than technology. Disciplined processes for acquisition, dissemination and ongoing maintenance of information are essential. Without the appropriate processes and people supporting technology, technology itself is of little help."
Brian O'Donnell: "Technology plays a major role in maintaining visibility. We are able to track each purchase order/shipment through each segment of the supply chain. This is accomplished from our systems (state-of-the-art logistics packages and WMS), accompanied by the technology deployed from the providers/manufactures that we choose to do business with. With the amount of freight, new requirements (customs/security), and consistently trying to reduce cycle time, the need for real-time information is critical."
Gregg Schwerdt: "Overall, there are both electronic and manual systems to manage inventory of various SKUs being utilized. Ongoing, we would expect that more and more interaction will take place throughout the supply chain as technology continues to evolve and costs of applications become less expensive and more user-friendly."
David Rogers: "The application of technology and creating flexible solutions that address various degrees of business system complexity and partner capability are vital to the visibility we have."
How important are your human assets in establishing visibility?
Gerald Moultry: "Human assets are very important in establishing the visibility of the product because the product will always be handled by humans. Also, even after RFID, we will still need humans to tie the RFID information together and make decisions based on the information provided."
Brian O'Donnell: "Human assets are the critical component in maintaining visibility, whether it be manual tracking, exception handling or problem resolution. A human is still the bridge that connects technology to the reality of making the entire process work."
David Rogers: "Data cleansing and quality are critical in the process. The supply chain analysts that provide the skills needed to make sure the data are accurate are just as important, if not more, than the technology being applied. Most often, poor data quality is a symptom of the need to apply process improvement to inventory or item master management."
What are your plans for improving visibility?
Gerald Moultry: "We are constantly looking for ways to improve visibility because better visibility translates into better quality."
Tan Miller: "Improving our supply chain visibility is an ongoing priority and is a work in progress."
Brian O'Donnell: "Our plan for improving visibility is to keep filling in the holes where increased visibility will give us that competitive edge."
David Rogers: "Continue to expand the application of tools being used in areas where we have visibility to make it as close to 100 percent as possible. We are looking into the application of a transportation management system as global sourcing requirements increase the percentage of total lead time that is attributed to transportation between partners. We are also looking to apply emerging technology such as RFID to provide greater visibility to where and how customers are using our products and drive the next significant improvement in productivity throughout our supply chain."
If you have a material handling problem or a question which you'd like to pose to the MHM Editorial Advisory Board, please forward it to Tom Andel, chief editor, at firstname.lastname@example.org. We'll print the Board's responses in future issues.
Strategic Council On Security Technology
The Strategic Council on Security Technology announced the global rollout of phase two of the Smart and Secure Tradelanes (SST) initiative. In the last year, SST has become the largest cargo security program in operation, helping global shippers to automatically track the location and status of containers, while creating a system to detect and report container tampering. The second phase of SST focuses on further expansion of the global network, extending operations, shipments and integration into existing