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Sep 17

The Ultimate Supply Chain Risk

Posted on September 17, 2014 by Julian Blumenthal

What is the ultimate supply chain risk?  Imagine a natural disaster destroying your business facilities and/ or the community around it, preventing your employers for working.  Obviously this risk involves more just the organization’s supply chain. But should it occur, the supply chain and logistics personnel may be in the best position to put structure back into chaos, something they do on daily basis in their jobs, because the supply chain is chaos waiting to happen.

When you read in the supply chain and logistics literature about supply chain risk, it is usually about losing a supplier or transportation corridors being blocked and having alternatives available. There is relatively little discussion in these articles about what should happen if the worst comes to your location.

What brought  this to mind, was I attended a program put on by the Chicago CSCMP on disaster preparedness on Sept. 11, 2014 at the Chicago area FEMA office.  A disaster simulation exercise using smart phones and tablets was developed. I added to the disaster, personally, by having a smart phone which for some reason could not pick up wi-fi in the building, knocking even more truck capacity out of the market in the game.  While the game did not assume your firm was knocked out (for the most part) and therefore dealt with more familiar supply chain risk issues, afterward disaster preparation for local organizations was discussed.

Here are some the key points I learned  about preparation for your organization:

  1. Have a plan in place to deal with disaster. Oddly, you will know right from the get go the plan will not work for unforeseen events. But should your organization have such an event, a method to deal with the issues will be in place.
  2. Contact your local emergency manager which may be in at the state, county or municipality level. There are a number of reasons for this. One, in an emergency, known actors are likely to get help before unknown actors.  Organizations know it is good business practice to be constructively involved with the community in a known way.
  3. When a disaster hits, it is also an opportunity. Because most organizations are unprepared or not financially strong, 30% to 40% of the businesses in the area are likely to go out of business after a disaster. If your firm is a survivor, you were organization will be more vital to the community and its market.
  4.  Be prepared to do some unusually things. One example, if homes are destroyed, your firm may have to provided housing some their employers to operate the business.

Before I closed I would like to mention some of the people who led the meeting. Kathy Fulton is the Executive Director  of American Logistics Aid Network(ALAN). This is the organization that helps coordinate private sector supply chain resource to a disaster. Megan Chamberlian, Recovery Operations Director for the Red Cross. Many local Red Cross chapters will provide a speaker at no charge to organizations to help in disaster preparedness. Jamison Day, principle Ecosify LLC prepared and led the disaster simulation game. Ian Becherer-Gerrie represented FEMA, who allowed to use their room for the event. In a disaster, FEMA may choose to use resources such as trucks and if they do so they will get first preference in a disaster situation.

 

 

Posted in Infrastructure, Logistics, Logistics Safety, Management, Public Policy, Supply Chain, Sustainability | Tagged | Leave a comment
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Sep 10

How to Over Communicate

Posted on September 10, 2014 by Julian Blumenthal

On Monday evening, I heard Scott Case of Position:Global speak to the Chicago area Logistics, Operations and Supply Chain Group (LOSC) about how social media can used to promote and market 3PL firms.  It causes me to think about communicating in the supply chain.

No field probably has as a longer of history of communication change than the supply chain. When the telegraph was invented, it use for the newly created railroads in the 19th century was obvious. Before the telegraph, there was no way for trains running in on coming directions to meet without one train waiting until the train showed up no matter how much delayed.  With the telegraph, somebody communicate if a train had passed or a known problem in transit. Imagine the improvements, telephones, stock ticker technology, and portable radios added to operations as they occurred.

The current buzz word is too over communicate, because lack of information among the parties can cause any project or process to fail.

By nature, supply chain involves multiple players inside and outside the organization. To effectively run the supply chain all parties must communicate and yes that costs both money and time. So how you communicate, by phone, email, in person, should be part of planning. And one size does not fit all situations. Major changes in process or organizations will would be best communicated with in-person visits because there needs to be a comfort level on what is to be accomplished and equally important to find where the changes makes the potential users uncomfortable.

But day to day communication, might be best done and most cost effectively in an in-house social network, visible and usable by all effective parties, both inside and outside the organization. Daily concerns and issues can be brought up and addressed by appropriate parties. It takes it out of email, which will have all sort of issues from all sorts of people.  Yet even here, thought should be given when a phone call or other direct information may be appropriate.

In today’s complex world, thought on how you would process over-communicating is very important.  The goal is to effectively send out the messages and information, yet do it in a time efficient, cost efficient matter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

person face to face contact, so concerns can be discussed at length.

There are many software programs which set up an in-house social media site. Let me give an example of a good use for such software. Imagine a project that is just being implemented , you can get all parties to use the in house social media so all can be alerted to concerns. Yet it still may be wise to let the leader of the project know about the social media update in advance by phone or email. But unlike email, the information in  set social media confines is one subject, unlike email which includes the rest of the world.

By planning your communication, you will save time, energy and yes money

 

 

 

 

 

 

Posted in Logistics, Logistics Software, Supply Chain, Training | Tagged | Leave a comment
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Aug 25

Gaining Control by losing it.

Posted on August 25, 2014 by Julian Blumenthal

For mid-size and large organizations the supply chain and logistics process is engaged on two levels, the high level, international space station level, where grand strategies and processes are designed for the organization. Then there is the lower level over a bumpy city street with lots of potholes where execution is difficult and things do not work as planned.

There are too many variables happening at once for the process to be smooth, plus there are new variables being added all the time. But both the high attitude design and the low level grunt work are needed to have a successful supply chain.

So who does upper management handle this. Historically management has been influenced by the command and control which was a corollary of Frederick Taylor’s Scientific Management, whose routes goes back to the 1880’s. In its day, it was a hugh step forward, trying to remove the chaos of a lack of any management process.  But it breaks down in complicated structures as there is just too much to do in a day.

By micromanaging every problem, there is not time to do the necessary short and long term planning, which will make the organization more efficient. Though it has a counter-intuitive aspect, management has more control  by delegating responsibilities to resolve the bumpy road aspects of the job to its lower level people. It would be wise to set standards in how problems are resolved such as safety, accountability, and reporting standards.  There should be an emphasis of solving the problem in a way that it does not continually repeat itself.  By losing micromanaging control, upper management give itself time to look at the big picture.

So what to do what large, profitable customer calls the main manager with a problem. The first choice of action should be to work and train with the manager’s staff to resolve the problem, which is hard choice for a competent manager who might be able to resolve the problem quicker and easier, but at the cost of knowledge not be gained by the staff and lost of respect among the parties. However if the crisis is successfully resolved, there is a real good high that comes when a problem is resolved. Only if nothing is going the way it should the manager take micromanaging control. Even there, time should be afterward to determine why staff could not resolve the problem.

 

 

 

Posted in Inventory planning, Logistics Software, Management, Supply Chain, Transportation | Tagged | Leave a comment
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Aug 06

What is missing in logistics education

Posted on August 6, 2014 by Julian Blumenthal

I met this week with Mitchell Estrada of the Chit Chat group, www.chitchatgroup.com, who has started a logistics education company.  Among our topics of discussion was what college does not teach you and perhaps it should. Among the topics not taught or not taught well are: how to be a business leader and the issues of the day to day job,  the later being the focus of the Chit Chat Group.

A business leader does two major activities, planning for the organization and running the organization. College Supply Chain courses and programs  do an excellent, hit the ball out of the park, job on educating for the planning part of the job of a business leader. Words like supply chain visibility, end to end planning, customer pull, and collaboration are taught exceptionally well. But rarely will they teach that to be the boss, is not at all about bossing people around. The actual running of the operation gets short shift in many training programs. As a leader, one needs to be focused on helping their reports be successful. There is as much the leader can learn from those who report to her/him as from any customer.   Another general missed topic, is how to find the right hirer for an open position. Rarely is training done on the general legal requirements of a business leader, such questions that can not be asked in a job interview.  This paragraph could go much longer, but I will stop here.

In the day to day details of the job, such items as the Bill of Lading, basic import-export custom requirements rarely get discussed. The importance of safety and how to achieve it is rarely mentioned in academic courses. Schools do a good job about teaching about numbers, data, and financial statements but rarely integrate that with the day to day requirements of the job.  Most of us, alas, learn these things under the fire of daily work activity, sometimes through failure.

It costs money to train and the return on investment is harder to measure because it is true measure elimination of mistakes. It is worth the time and cost justification for education and training if you can develop these metrics to sell the program to your management.

Posted in Logistics, Supply Chain Education, Training | Tagged | Leave a comment
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Jul 21

Increases in parcel costs

Posted on July 21, 2014 by Julian Blumenthal

There are going to be some significant domestic US ground parcel rate increases coming around the first of the year 2015, when UPS and FedEx go to dimensional pricing. Lets take an example. Suppose today you ship 5 pounds from Chicago to Buffalo, NY on UPS in box that measures 18 inches by 12 inches by 12 inches. Today that shipment would be priced on a 5 pound basis at a cost $9.06, using UPS standard rate change with no discounts.  With dimensional pricing, the box length, width and height would come to a total 2592 cubic inches. Come the first of the year, both UPS and Fedex ground will divide the box cube by 166, to get 15.6 lbs. and round that up to 16 lbs. That would raise the cost of the shipment from a 5 pound classification to 16 lbs. classification, and the new rate on today’s rate schedule would be $10.41. That is a 15% increase in cost.

This is very well explained by consultant Jerry Hempstead in this weeks Supply Chain News Video at the 3:45 mark through the 13:00 mark. The video can be found at:http://www.scdigest.com/NewsViews/14-07-21-1.php.  Currently, dimensional pricing did not kick in until your shipment reaches 3 cubic feet in space. Next year that restriction will be gone, and all shipments will be higher of dimensional or weight pricing.

So what options do you have as a shipper to mitigate this increase? The easiest and most obvious is to move your business to the United States Postal, which is not changing its structure. If your firm ships more than 50,000 parcels are year, some US Postal parcel posts are actually going down if you meet certain technical shipping requirements.

Other options are:

1) Use regional parcel shipment services, whose rates currently are below the UPS and FedEx level.

2) Redesign your packaging

3) If you are a big enough shipper, you might be able to contract with UPS or FedEx to reduce or eliminate the new increase.

4) You get the parcel distance rates if your business has enough shipments to fill a truckload to a regional center for distribution.

Using the later summer and fall to plan how to respond to this change. Now is the time to prepare for this transition. Contact South Loop Logistics if you need assistance on this.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Posted in Parcel, Supply Chain, Transportation, Uncategorized | Tagged | Leave a comment
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Jul 13

Helping your organization South Loop Logistics

Posted on July 13, 2014 by Julian Blumenthal

In 2013, I started a consulting practice entitled South Loop Logistics. Supply Chain, Logistics and Transportation is my life’s work and something I really enjoy doing. You can reach me at

ju****@so****************.com











 or 312-408-0663.

How can South Loop Logistics help your organization?

  • Problem Solving: Have a cost or delivery problem that needs resolving?  South Loop Logistics can provide the temporary help your firm temporary and urgent needs.
  • Training: With a broad base of logistics, supply chain and transportation knowledge, I can provide one day or longer term training on supply chain processes, software implementation, security and safety regulations to your people in the field to the company’s highest officers.
  • Security regulation compliance: If you deal with international shipments, your suppliers and customers are likely to require supply chain security processes in place. I help write your security policy and help your implement these policies.

For the issues, give me a call 312-408-0663 or email me at

ju****@so****************.com











If you need a broader range of services, I also work with BDI, a group of consultants who strengths lay in procurement, sales training, marketing, and human resources. I work with another consultant who can provided data analytics help also.

 

 

Posted in Logistics, Management, Supply Chain, Uncategorized | Tagged | Leave a comment
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Jul 06

Changes for Truck Brokers

Posted on July 6, 2014 by Julian Blumenthal

DC Velocity in their current issue has an article about the challenges traditional truck brokers have in the current market, found here: http://bit.ly/1ocNZjC.  For the shipper these challenges means market changes and additional risks.

For decades, a person could start a business going to the local truck stop and brokering out loads to truckers there.  Up to recently, all that person needed was a truck surety bond of $10,000.  With truck supply meeting demand for the most part, a reasonably commission and business could be had.

But the market and regulations are changing. Now a $75,000 surety bond is needed (more on this in a bit). Several thousand brokers have been pushed out of the market with this change.

Truck supply is tight, shipper budgets are tight, and it is leading to lower commissions to those brokers who are strictly making money on brokering truck loads. 3PL’s who do transport brokering also, but are much larger operations can generate revenue by changing shippers for additional services such as storage options, and IT services. As an example of the IT services, the 3PL can provide information on the load enroute which shippers and receivers need and want with their software, which the basic truck stop can not provide.

So the little guy is being pushed out the market and some will go out of business.  When that happens, many times trucking bills for brokered loads go unpaid by the broker when he leaves the market. If the trucker has legal resources, shippers can be made to, legally, pay the trucker again after already paying the broker, causing double payments for the shipper or the receiver, whomever is responsible for the freight. The surety bond is insurance that freight bills will get paid. $10,000 which covered alot in the 1940’s covers almost nothing in the 2010’s. $75,000 is somewhat improvement but probably still will not pay most freight for brokers who end their business and disappear.

Shippers will need to consider this risk in choosing their transportation vendors.

 

 

 

 

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Jun 09

When to change

Posted on June 9, 2014 by Julian Blumenthal

My last post was on the importance of middle management. It can be found here:

http://southlooplogistics.com/middle-management-stuck-in-the-middle-with-you/

There is another aspect of middle managers administration that is important, and that is change.  I want to address two separate issues here, process change and transportation carrier change.

Process change means a change in the way your organize and do your business.  Typically it is result of some consultant’s study.  Some consultants never bother to talk to the middle managers, because they are not person paying the bill and the consultants do not want to bother to deal with hostile audience to the changes they propose.  Additionally even when they are queried about the business, a good understanding on why do our doing the things they are doing to operate the business does not occur. This leads to dysfunctional change processes and some case active sabotage of the process by out of the loop middle managers.

Let’s imagine an example of this. Let us suppose the business is going to switch to electronic dispatching through a TMS (Transportation Management System) rather than make a phone calls to dispatch the loads. The electronic system would certainly reduce manual processes, store more useful data, and more often find the lowest cost carrier than a manual process uses. It appears to be a big win for management. However, if you talk to the middle managers you will learn that the phone calls are more than just dispatching. The middle managers are getting carrier operational information and useful customer information. Losing that information will cause the new process to sub-optimize, and may cause the middle managers to ignore the new system as much as possible. A well done change program will find ways to incorporate the missing information in the system. It might simply be done with a weekly conference call with the carrier and way for the system to reflect that information.  The key is for the change to be successfully implemented it needs middle management buy in and must address the issues they face.

Let’s discuss changing transportation carriers.  One thing usually missed in most supply chain texts and articles, is the relationship nature of the business, between vendors, in this case, carriers and the middle managers.  A carrier will know when to bring a truck into the plant for least delay in loading. It will know from experience about customer requirements, for example, how clean the trailer needs to be delivery to a particular customer. Is it any wonder that a middle manager would not want the complication of a change of carriers?

So part of the process of change in choosing carriers should be to have the new carrier represents talk to the middle managers before a change is implemented so this information can be decimated.   Indeed, there should be a company procedure in changing transportation carriers.

Including middle managers in process and carrier change is critical to any successful change.  Change processes must include them.

 

 

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May 30

Middle Management: Stuck in the Middle With You

Posted on May 30, 2014 by Julian Blumenthal

“Stuck in the Middle with You” was a pop tune in the early 1970’s song by Stealers Wheel. It comes to mind after watching a video of Dr Shay Scott, Managing Director of the Global Supply Chain Institute at the University of Tennessee,  being interviewed about logistics talent management.  His main point, middle managers are forgotten in the supply chain management process. The interview video can be seen here:

http://bit.ly/1sqQdyc

Dr Scott’s says organizations spend a lot of time developing new entry talent and sometimes top senior talent, but little development is done on the people currently employed in middle management.  This is true even though organizations are absolutely dependent on the success execution of their business on middle management, there is almost no planned development for this group.  Dr Scott argues that development and training of middle managers needs to included in the strategic objectives of the company. Looking at this as being like any other business process with objectives, a predicted cost of return, and metrics is the way to go.

Developing your middle management talent really is difficult. Generally these people are so busy with day to day work, it is hard to pull them away.  A company culture where it is desirable to grow the broad spectrum of talent is rare.  Any development program needs to win top management’s support and money.   The benefits are not only improved costs, but improved competitiveness with the appropriate best practices.

Development can take many ways. Employees can be encouraged to be  involved in professional organizations giving these employees a way to learn best practices and the new ideas in the field. It may involve participating in logistics/supply chain focus courses developed by Universities who have strong supply chain, logistics departments. It can involve a mentoring program. Like anything, a clear, focus and accountable process is the key.

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May 12

US-Mexico Trade on the Rise

Posted on May 12, 2014 by Julian Blumenthal

Last Thursday,  I attended a morning session on the NAFTA trade with Mexico put on by several organizations including the Council of Supply Chain Management Professionals (CSCMP).  Here some of the things I learned at that event.

US-Mexico trade has grown in an astonishing way since the implementation of NAFTA in 1994, from total import/export trade in 1993 of $32.7 billion to $506.6 billion in 2013.  Exports in 2013, $226.2 billion,  increased 4.7% from 2012.  Imports increased 1% to $280.4 billion.  Mexico is the 2nd largest export market for US Goods after Canada. It is third on the list of exports. At the conference, a figure was used by several speakers saying that 40% of the content imported from Mexico back to the US was US content.  One of the vendors at the event, Scarborough, a Kansas City based 3PL reported its business is up 1000% with Mexico in the last 3 years.

Despite all of this growth, there is great potential for future growth, as Asia is getting priced out of the market with higher wages and higher transportation costs, and the Latin America and Mexico market is growing. Viewed with my recent blog on the expansion of the Panama Canal, , there is a growing future of inter-Western Hemisphere trade.

There are several steps which ease this process:

  • President Obama has committed with Mexico’s President to allow electronic clearance of freight by 2016.  Today’s paper process causes numerous delays as minor errors stop freight sometimes for days. Electronic processes can have edits and responses to errors can be handled quicker.
  • Changes in Mexico law will end the requirement that custom brokers clear freight only at the border
  • Investments in infrastructure on both sides of the border, will improve transportation flow.

Even with these changes, it will take expertise to ship to and from Mexico, to meet the export-import documentation requirements. A skilled Custom House Broker and 3PL is essential to avoid costly delays.

 

Posted in Export, Import, Infrastructure, Logistics, Public Policy, Supply Chain, Transportation | Tagged | Leave a comment