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Feb 13

Can Staffing Services Help A Firm Hire Supply Chain Talent?

Posted on February 13, 2015 by Julian Blumenthal

Dealing with growth of a small and medium size firm is quite an undertaking. One of the most difficult processes occurs when it is desirable to hire additional help to bring in more business. In midst of growth spurt, the soon-to-be-hiring manager will find herself time constrained just trying to keep up, not allowing much time to seek a new employee.

Earlier this week, in my role as co-chair of an informal networking group, Chicago area Logistics, Operations and Supply Chain Professionals (LOSC) a staffing agency, Ajilon Professional Staffing, spoke to us on their role in the process. Additionally since many of our members in our transition, it was a potential source of talent for the staffing agency. I came away from the meeting with a clearer understanding of when it is advantageous to use a staffing service.

When does it make sense to use a staffing agency rather than just go in house with your Human Resources Department? Where will make sense to spend the money for this service?

Does your Human Resource Department in your small to medium size firm have its disposal the resources to find the right employee for the supply chain position? That is the initial question that needs to be asked once a need for additional employee is determined and approved by upper management. My personal experience is some HR Departments do have the right skills and knowledge, and can develop the appropriate questions to ask the hiring manager and the applicants. But my guess is that most HR departments really do not understand the supply chain position or are able to ask the right questions of the hiring manager to high have a high percentage of hiring potential good candidates for a managerial supply chain position.

Let’s examine why even well-run human resources operation might be better to outsource the supply hiring process. One reason the limited resources a HR department might have to spend time on this project. More importantly, supply chain is a complicated field, requiring knowledge of supply chain organizational processes that HR may not be familiar with. In hiring, the knowledge and skills needed will be identified and candidates for the position would match these. A staffing agency specializing in supply chain will have the experience and skills that many times the firm’s HR department do not.

Most staffing agencies will prepare the candidate for the interview unlike your organization’s HR department. This will mean interview time will be more efficiently spent.

The hiring manager should gain in the preparation process for the staffing agency to choose hires. The hiring questions of the hiring manager can be used for preparation for future interviews with candidates

Making the hiring process more efficient and effective can significantly increase the success of an organization.

 

 

 

 

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Feb 02

Truck Drivers Pay

Posted on February 2, 2015 by Julian Blumenthal

In January 2015, Forbes magazine had an article about Zappo using a Uber-like software to schedule their customer service reps. Like Uber, which changes a premium for peak ride periods, Zappo will pay its customer service reps higher wages in peak periods to improve staffing when it needs it. Here is the article: http://onforb.es/1HNk1lU. I was intrigued with this concept and wondered if it will be used in the truck transportation sector.

There has been lots of discussion about Uber drivers delivering parcels, but less discussion on long haul truckload drivers. Now it is important to note that the truckload spot market does already vary by demand. My assumption is that much of this premium rate revenue on high demand routes goes to the carrier and not to the driver.  But this setup will not last in a driver shortage market.

With driver shortages, there will be pressure on pay. Higher pay on given routes is one way to increase pay but not quite as high as across the board increases.  As with any change, truck drivers would take sometime getting use to change of variable mileage rates, but would be attracted to it, if it really means additional wage income for them. From experience, truck drivers are wary of schemes that lower their wages.  Any change must be fair, clearly beneficial to them to sell them on any wage change.  There is limited trust in the market, so that will be a limiting factor for variable wages to take hold.

On the shipper’s side, I worked for a company which placed great value on predictable costs to achieve planned revenues and profits. Its software infrastructure was designed around that value. If there are variable wages and the shipper is not willing to take the risk, it results in placing the risk on the carrier or 3PL.  Rates will need to have a risk premium, since rates billed to the company will not vary.

I do see carriers exploring this option. It may not take a majority of freight but maybe a significant portion might have variable driver wages, particularly if it can be used to resolve driver shortage situations.

 

 

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Jan 27

In Failure Avoid Six Letter Words

Posted on January 27, 2015 by Julian Blumenthal

The business social media world is much abuzz about the failure of Target Canada. Without any actual data, it is hard to get a handle on the cause of the failure, though empty shelves as a supply chain is often mentioned, as well marketing errors and expanding too fast. Here is a good discussion on the subject from Wharton which features a Canadian Professor Dr. Barry Prentice on the failure: http://whr.tn/1v053mR

So imagine you are Canadian employed in Target’s Supply Chain about to be laid off.  With very few exceptions you are probably one of the people responsible for executing a strategy that was clearly flawed. You can easily imagine in the break room or local bar the failure being discussed. Two six letter words you might hear a lot are: stupid and idiots.

These words work well if you are Hollywood script writer writing a sequel for Dumb and (6 letters long) Dumber.   In the business world, remarkably few people set out to be stupid and idiots. It is the easy way out by declaring yourself smarter than them.  Ultimately though, it can not lead to future success.

While failure is bad in and of itself, it is also remarkable opportunity to learn. Here the virtue of curiosity should be your focus. Focus on learning why the supply chain failed and why business decision makers choose a faulty course.  Your gained knowledge will be of value to yourself and potential future employers.

Many times bad choices are made as result of poor processes. In a different process environment maybe the the bad choices might not have been made. Sometimes poor processes are the fault of poorly chosen software. Other times, it is a result of failures in company culture. Most often in a combination of both.

The learned lessons of failure, many times are the catalyst to a future success.

 

 

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Jan 15

The Economic Value of Trust in the Supply Chain

Posted on January 15, 2015 by Julian Blumenthal

In the 4th Quarter issue of Supply Chain Quarterly is an article entitled “Off Hours Delivery Project in the Big Apple” by Jose Holguin-Veras, Jeffery Wojtowicz and Stacey Hodges. It tells of the success of the evening and night delivery program in Manhattan. If you wish to see this article, write me in the comments section of this email and leave your email and will forward it to you.

The surprise in the article was what caused the program to be successful. Trust by both consignee and carrier with each other were crucial to make this program successful. Urban congestion is not new problem. The article makes note of Julius Caesar banning day time deliveries 2000 years ago in Rome.

The “before situation” was that day time deliveries which resulted in congestion, slow delivery times and lack of reliability for the carriers.  Some statistics of interest, trucks averaged $500 to$1000 of fines for parking violations in New York per day. In the 10 busiest zip codes in Manhattan the demand for parking spaces exceeds the linear capacity of the streets.

Interesting, the authors contend congestion pricing has not worked because customers demand daylight delivery.  For the process to change, customer’s requirements and demands on the carrier had to change.

Testing of an evening and night delivery program was tried with two different scenarios, one where the consignee provided personnel on site during unloading and the other deliveries where made with no employee on site.  After the end of the test, almost none of the consignees which had stationed personnel to receive the freight continued, because of the extra labor costs. However those consignees that had delivering truck carriers they trusted, continue deliveries without personnel stationed on site, by either giving them keys or key codes continued evening and night deliveries.

Why did they do so? Many deliveries were to restaurants. Due to variability of day time delivers the restaurants needed an average of 1.5 days of inventory. Night time deliveries not only were less costly to deliver but inventory could be brought down to an average of one day. Food was fresher. Working Capital costs went down.

This delivery processs only worked if the consignee trusted the carrier in their facility without their own personnel. Here trusted relationship could be quantified to saving transportation costs, lower inventory, and fresher food.  There were consignees who did not have this type of relationship with the carrier, making night time delivery impossible.

There is lots of literature on the value of trusted car relationship. Many times the absolute rate of a trusted carrier partner is higher but the overall cost is lower.  To make this relationship work, management has to see there is economic benefit in the relationship.

Figuring these things out is one of the places where trust adds value a supply chain / logistics manager is something a person can do that software can not. Executing these decisions is another place software can help but can not do it all. In short, where “trust” relationships are of economic benefit to the firm, it is also an economic benefit for your career.

 

Posted in Infrastructure, Inventory planning, Management, Public Policy, Supply Chain, Sustainability, Trucking | Tagged | Leave a comment
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Jan 05

Sustainable Lobbying

Posted on January 5, 2015 by Julian Blumenthal

Can the concept of sustainability also be applied to corporate lobbying? Let me explain the concept of sustainability and what it means. I will then answer the question. Spoiler alert, the answer is “yes”.

What does the concept of sustainability mean?

In high school or college many of us were exposed to the ideals of environmentalism. Then we entered the work world, with goals for budgets, profits and career success and we wondered how these two competing thought processes could co-exist.

It turned out that they could under the name of sustainability. Sustainability grew in understanding to include not just environmental issues but also legal, regulatory and business issues which effect the very survival of the firm let alone its profitability.

Under the sustainability program umbrella, questions about waste reduction which could lead to significant cost savings and improved profitability were asked. Questions were asked on how to meet regulatory requirements so as to maximize efficiency and minimize costs and fines for non-compliancy. From a business perspective, sustainability asks if our fundamental market changes, can the business change to meet the new realities. One machinery manufacturer who was making descent profits realized that its market was going away in few years so it partnered with other firms in complimentary industries to expand its market into new areas.

Sustainable Lobbying

Being in the supply chain / logistics arena, by definition, you are moving items on transportation and storing them in warehouses, both of which use a lot of energy. So I read and find conflicts between energy regulations, it users, its providers and the environmentalists all the time. The battle between the coal industry and environmentalists is not an easy issue to find common ground. But there are many issues that there is.

The Chemical Industry developed the “Responsible Care” initiative to develop standards of safe stewardship of its hazardous products. After 9-11, US Customs developed a voluntary import security program called C-TPAT to improve security. It was so well founded it has been copied in programs around the world.

The sustainable lobbying concept would say yes these are our own business interests but we are recognize there are important global and national interests. To make things sustainable common ground and working together is important. The passionate followers of a particular issue may not be won over, but people in general respond when their interests are considered. Getting people to work together is a powerful political force. It is goal of this to change the culture of partisan gridlock to one of sustainability of our government processes.

When sustainability was first gaining its toehold in the business world, it was a culture change corporations needed to get through. Because of its success, improving profitability while improving the companies’ environmental food print, these programs continued.

Starting to look at lobbying in a sustainable prism may begin to break down the barriers of the partisan divide and set goal where business can prosper in a country where broader goals are met. A successful process can lead to more business and greater profits.

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Dec 29

Supply Chain Issues for 2015

Posted on December 29, 2014 by Julian Blumenthal

2014, My Predictions and How They turned out, 2015 to follow this section

Before I attempt to look ahead, let’s see how cloudy my crystal ball was back in December 2013. Here is what I predicted and what I missed.

I predicted the Hours of Service change would have minimal effect. I was half right. It had almost no impact on short distance drivers, but changes in 34 restart rule did affect long distance operations. Enough so, that Congress suspended the changes in the rules effective January 1, 2015.

Electronic log regulations would be issued. They were proposed but not finalized.

I did not think same day delivery would take off. It has in limited versions in big metro areas. For a limited market it is important.

The enlargement of the Panama Canal would have a significant effect. The Florida East Coast railroad has moved to direct port operations at Miami in anticipated of the delayed opening of the enlarged canal in early 2015. I will write about this more in my issues of 2015.

The Keystone Pipeline would be approved. It did not happen and frankly, it was only critical in political circles not operational circles, as rail provided more flexible transport services.

I predicted petroleum by rail would rise with increased regulatory demand for safe practices. Both of these happened.

I predicted supply chain software would become a mature product. With industry consolidation, this appears to be the case.

I totally missed the steep price decline of petroleum, something that in retrospect was likely to happen due to the increase product production. I did not articulate that the truck driver shortage would be as strong as it was.

Now, About 2015

The big issues of 2015 will be response to the west coast port problems, and transportation capacity issues.

In retrospect, believe both the unions and the management of the west coast ports will feel it was a mistake not to do a strike or a lockout, to speed up the resolution of the issues involved. There is nothing more costly to a user of transportation services than unpredictable delays, increased transportation and inventory costs and lost business revenue resulting from delays. It will force shippers to go to alternatives like Canada, Mexico and the Panama Canal, even before its expansion starts. A long term transportation shift is in the offing. Florida East Coast railroads Port of Miami intermodal investments may start paying off even before the Panama Canal expands, because of this. So will the Norfolk Southern and CSX intermodal investments in the eastern port of the country.

Despite a cooling world economy, a significant slowly of fracking petroleum growth, in the US, rail and truck capacity overall will be stressed. Rails are having troubles with present volumes. They are responding with large capital budgets. While these single line investments help, bottlenecks in Chicago and other interchange points requiring joint cooperation of railroads and government, which will continue to be difficult to execute.

Trucking driver shortages will continue, as long hours and too low wages will continue to hurt the long haul sector. I believe this log jam will start be broken, by a combination of higher driver wages (major carriers increased wages over 10% this past year), and better driver management, allowing drivers to get home more frequently. Shippers will drag their feet on the higher costs, but will be compelled to pay the higher freight costs to get products to their customers timely.

Because of higher e-commerce demands and higher transportation costs, the demand for warehouse space will grow, to get products nearer the customers.

Petroleum prices will gradually increase, as the market tightens and taxes increase on both the federal and state levels to pay for infrastructure repair and expansion.

Posted in Export, Import, Inventory planning, Logistics, Logistics Networking, Management, Public Policy, Supply Chain, Sustainability, Transport Energy, Transportation | Tagged | Leave a comment
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Nov 17

The Future, Its About the Details

Posted on November 17, 2014 by Julian Blumenthal

When I was a kid back in the 1960’s, I use to eagerly await the latest edition on television of the “Jetsons”, an animated cartoon of what it would be like in the future.  With the flying cars, building mostly in the sky, telephones with pictures, and patio futuristic dog walks (for his dog Elroy) my childhood vision of the future was about hardware and physical things. When thinking of the future we might think of latest technological hardware and not remember the importance of details.

Recently, Marc Mitchell of LTL Technologies Vice President of McLeod Software spoke to the Chicago area Logistics, Operations and Supply Chain Professionals (LOSC).  And yes, he said there will be neat hardware in the future, but much of the future will be handling the details in more automated and efficient ways.

So yes there might be driver-less trucks in the future. But will not their be a political stink people who do not want driver-less trucks driving on the interstate next to them, delaying the process.

But the use of data, to record truck and vehicle performance, safety, maintenance, and operational will ramp up. More and more freight invoice activities will be electronic.  Supply chain visibility several layers down of suppliers will increase.  Dispatching trucks will be more and more automatic, handled by supply chain. So the future will be more about the details and less so about the hardware.

Will we need human beings at all? The answer is a definite yes. Technology is designed for the norm. Anybody who has every dispatched a truck, sent a box out, or the receiving end of angry customer whose needs were not met, knows logistics is dealing with change and things out of the norm. That is why the 3 PLs who are known for outstanding technology are hiring so many people these days, because the software and hardware only works well with human oversight.

 

 

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Nov 10

Holiday Season Networking

Posted on November 10, 2014 by Julian Blumenthal

The Holiday Season is not only can be a joyous season to be with your family, but I good time for low pressure networking  with your business colleagues.  The holiday get together are particularly good time to network because they are low pressure environment, where makes connections is the thing, and not selling. Relationships for them to be value need to earn their trust.

I am involved with a number of networking groups, with many people in transition. Some of these people, the minute they get a job they step out of the networking.  With jobs changing on average every 3 years, that means if you step out of networking, you will start over the next time you are in transition.

The field of logistics is full of change. Many networking groups provide insightful people who will help y0u understand those changes, many of which will affect the organizations you work out.  So by attending you learn something that will make you more valuable to your organization or perhaps the next one.

I was not good networking for many years.  Slowly I found my niche. Most people find networking difficult in the beginning, but they learn to maneuver in that field with experience, which is another reason to make time for life long networking.

 

 

 

 

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Oct 22

Truckload Bids

Posted on October 22, 2014 by Julian Blumenthal

In a Supply Chain Digest video conference, MIT’s Chris Caplice, Executive Director for the Center of Transportation and Logistics at MIT, said something that was surprising. Studies show he noted that over a third of the time the winning bidder in a truckload bid never sees a shipment on the lane it won.

The major problem seems to be execution. It is possible to make a great strategic plan but not be in tune with the realities of actual operational practice. How can you avoid this issue?

Be sure your operational people are consulted regularly and as part of developing strategic plans and transportation bids.  Chris Caplice makes an additional point that understand how your organization handles the inevitable changes in the transportation environment, either through flexibility such as alternate supply source contingencies or  establishing extra capacity, sort of a transportation safety stock.  Probably in the day to day world, specific effort to develop a strategy in these areas may not have been done.

Doing the above will create a realistic bid which would give the firm the best opportunity to enjoy the benefits of the process.

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Oct 02

Predicting the future

Posted on October 2, 2014 by Julian Blumenthal

For many years, I worked in the salt industry. A significant part of the business was selling salt for the purpose of deicing winter streets and sidewalks. Every year about this (September or October), people would say in my presence that they just read that his coming winter would be worst ever. Yes, every year I heard that. Every once in a while, like last winter, the worst ever forecast would be right. Most times it was wrong, or only right for a small part of the country. There seems not be much of a market for a winter forecast that reads that winter will be moderately bad, or maybe moderately good.

In the supply chain and logistics field we live and die on the demand forecasts. Actually that is not quite right. More accurately, the amount of inventory we are comfortable with is based on how accurate we believe the demand forecast will be. The less we believe it, the higher the amount of inventory needed to cover demand variability.

So how do you plan for the unknowable. The further away from today we get the more the variability of demand planning grows. Lets take next winter and figure out how to handle our truckload demand. We know last winter, because of weather, trucks were scarce, and cost per mile skyrocketed on spot truckload market many times exceeding the $2.00 per mile mark. So how should we plan for next winter?

One approach is to expect the worst. Plan large amounts of inventory and high transportation costs. Your budget will be high, but unfavorable variances are less likely. It is easier to cut back if the worst does not happen.

Another approach is to plan for an average demand and cost for the winter. This approach will lower your future budget cost making management happy or at least less combative. However in the back of your mind, contingency plans need to be made particularly for a worst than expected winter.  Being prepared will cut the amount of money needed and those unfavorable budget lines.

The two approaches above will not cost a lot in data fees. A third option to look at a large group of studies on next year’s winter forecasts. It will cost a bundle in research fees to do this. But you are more likely to closer to actual demand and cost.  If you have very significant freight volume you are likely to be justified in covering the data costs because of the more accurate demand forecast.

Day to day business always take a lot of one’s daily time. But it will be less overall work if you take time to plan.

 

 

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