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Last Thursday I attended a joint meeting of the Traffic Club of Chicago and CSCMP Chicago Roundtable on the subject of the Panama Canal expansion which will allow bigger ships to cross that country. It was a story of people fearlessly taking big gambles, though ones which have a high chance of paying off.  For the about 80 people who attended this event, it really was a challenge to them also. How do you to take advantage of this major change in infrastructure to the benefit of their organizations?

Panama has chosen, with approval of their people in referendum, to expand the canal so ships roughly double the current size can traverse it. It is mammoth project, multi-year, extremely complex, and difficult to manage. The expansion project is likely to be completed in late 2015 or early 2016. When the US turned over the Canal to Panama, they made a choice, an indeed a gamble, that they would not to just sit on the asset, but update so it could bring in more of the world’s ships, which have continued to increase in size. It would keep the Canal relevant to its business environment. Many so called leaders would have chosen to just milk the asset they got and watch it diminish over time.

But Panama did not stop there. Speaker Kevin Keller of HDR Engineering described the land planning initiatives by Panama to take advantage of the new ships and their new business. Their goal is to be the central hub market for of all of Latin America. It is a gamble, taking advantage of its location and its business initiatives, and again is likely to be successful.

Is it possible in America in 2014 to be bold and daring in America, be willing to meet the challenges of the future? We were fortunate to hear from two people at the meeting who are taking that gamble, one in the public sector, one in the private sector. They are Bill Johnson, Port Director Port Miami and James Hertwig, President and CEO of the Florida East Coast Railway. These two people took a lead role in this major project described below.

The Port of Miami has raised nearly $2 billion dollars in capital funds funded in part by the Port, the State of Florida, Dade County, and among its private partners the Florida East Coast Railway.  There was extremely limited federal funding for this, so alternate funding sources were needed.  Some of this money was used to dredge the harbor to 50 feet to accommodate the ships which will soon be able to transverse the Canal.   Miami is the closest US port to Panama and is also a Latin America business hub. Of course vessels this size are also coming from Europe and  Asia and Miami will be one of the few East Coast ports which will be able to handle these ships. A tunnel opening soon will directly connect the port with the interstate highway system taking this traffic off local downtown roads.  The Florida East Coast Railway has reconnected its rail directly with the port, to significantly improve intermodal access and provide it with new business.

Businesses will find with new Canal improved connections and cost to South America and as well as alternative routes to the Far East including China. Will they take advantage of this?

In all these “gambling” stories it took exceptional leadership to get people to work together and effectively manage these projects. There are lessons here for all of us to learn.

I had an opportunity to hear Krish Krishnan Monday evening March 20, 2014 speak on his subject Big Data to the Chicago area Logistics, Operations and Supply Chain Professionals (LOSC). He has worked with many leading companies.  If you get the chance to hear do so.

He defines Big Data as data problems too complex for basic Oracle and Microsoft software. As a way to make big data a little less complex to understand, he asked us to think about Google’s index mathematical model as way of seeing how bid data number crunching works.  A key issue is somehow arranging disparate data.

When there is a big data need, management must not punt on this process. Clarity on what the issue is the key to avoiding spending big bucks on wasted efforts. Your organization’s IT department cannot make those type of decisions for management.  Management must determine what is important to find out and why.  The if skills are needed to carry out the mechanics of the process, talent can be found at a price. It is management’s decision if the cost is worthwhile.

Within the next few days. the Federal Motor Carrier Safety Administration will put out a proposal for electronic logs for all heavy duty trucks and buses.  http://bit.ly/1qDvnxA

Yes, it will cost money to put these devices in tractors, however  electronic logs will be not only useful for enforcing safety regulations, but also useful for managing the fleet with important data information on drivers performance. There will be significant improvement both in performance and management cost in replacing manual review of logs with electronic review.

The American Trucking Association is supporting the concept of electronic logs, I am sure primarily because the benefits sited above.

One of the study themes of my blog is that numbers are a tool that needs to used wisely. Let me use a non-logistics / supply chain example to illustrate this.

This week there was in the Chicago Tribune an article on the opening of a new Mariano’s grocery store in the Chicago area;  http://bit.ly/1d6KZjS. This was former Dominick’s store as Dominick’s chain was closed by Safeway. Dominick’s closed most of its stores in December 2013 while a very few closed in January this year.

Some background first; for generations Dominick’s was one of the major grocery chains in the Chicago area. The independent chain was sold to Safeway in 1995. Safeway cut labor and raised prices. Lower costs and higher revenues the arithmetic said it should mean greater profits. It didn’t. Some years later after the sale, Mr. Mariano who use to run Dominick’s before it was sold, became President of Roundy’s and decided Dominick’s was vulnerable. It was very vulnerable.

When Dominick’s closed its 72 stores it laid off more than 6000 people. Mariano’s bought 11 stores and is hiring 3000 people. Dominick’s lost significant dollars and Roundy’s, the chain owing Mariano’s is profitable. Perhaps Dominick’s was understaffed to save money? Here was a case were a smaller staff cost less, but was harmful to profitability.  Mariano’s had a market focus that better customer service using more associates not only attracted customers to the store but also encourages to buy higher margin items. Mariano’s basic grocery line is competitive to the market, thus lower than Dominick’s prices were. It specialty products, which are the first items you see when you go into the store, gives the store the higher profits.

The lesson for the supply chain is this. The purpose of the supply chain is not to make good numbers. The numbers will measure how efficient a particular process is doing, but unless it helps the business be successful, focusing on those numbers will harm the business not help it. A classic logistic example: a cheap carrier comes into the market. The carrier takes the business away from the high service incumbent. The price is lower, but the customer is not timely served and many deliveries are late. The business is likely to be loss and management’s valuable time is used to resolve the problem, when it should have been focused on making the process better. Metrics needed to be reviewed to see if the focus is on the numbers or helping the business be successful.