Corporate Profile: ODW Logistics Getting the Most from Your Staffing

Transcription

3PL Americas
NORTH AMERICA’S WAREHOUSE & LOGISTICS MAGAZINE • SPRING 2015
Corporate Profile:
ODW Logistics
Getting the Most from
Your Staffing Provider
PM 42128520
w w w.IWL A .com
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PUBLISHED FOR:
International Warehouse Logistics
Association
Steve DeHaan, president & CEO
2800 River Road, Suite 260
Des Plaines, IL 60018 USA
Tel: (847) 813-4699
Email: [email protected]
Managing editor
John Levi, IWLA Canada
Copyright © 2015, International
Warehouse Logistics Association
(IWLA). All rights reserved. No
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any publication) without prior
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For permission, contact the publisher,
J.M. Levi & Associates Ltd.
Consulting editor
David Long
Associate editor
Kim Biggar
Publisher
J.M. Levi & Associates Ltd.
PO Box 30039
RPO New Westminster
Thornhill, ON, Canada L4J 0C6
Tel: (877) 305-6587
Fax: (905) 756-1115
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Agreement Number: 42128520
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Cover photo courtesy
of ODW Logistics
w w w.IWL A .com
By Steve DeHaan
7Out of the Gate Strong in 2015
By Rob Doyle
9ODW Logistics: In the Business of Doing
By Kim Biggar
11How to Get the Most from Your Staffing Provider
By Kim Biggar
13Broken RFPs: Are You Procuring for Success When You Outsource
Logistics?
By Steve Banker
14Future Issues of 3PL Americas
16The 2015 IWLA Convention & Expo: CONNECT, DISCOVER,
INNOVATE
21To Hire a Third Party Logistics Company or Not to Hire a Third
Party Logistics Company…That is the Question
25Are Your Background-Check Procedures Placing
Your Warehouse at Risk?
By Kerryann Haase Minton and Sarah E. Flotte
27Corporate Responsibility = Community Investment
By David S. Hamilton
28Advertiser Index
29Task Interleaving to Maximize Your Labor
By Matt Stokfisz
30The Impact of Robotics and Automation on Logistics
By John Manners-Bell and Ken Lyon
33Increasing Warehouse Energy Performance with ENERGY STAR
By Clark Reed
NORTH AMERICA’S WAREHOUSE & LOGISTICS MAGAZINE • SPRING 2015
PM 42128520
and Educational Programs
By Chip Scholz
Design and layout
Pagecraft Computer Services
Corporate Profile:
ODW Logistics
6Two Great Services – Government Affairs
23The War for Talent
Sales representatives
Cheryl Ezinicki, Jennifer Rezny
Getting the Most from
North America’s Warehouse & Logistics Magazine • Vol. 7, No. 2, Spring 2015
By Adam Robinson
IWLA liaison
Morgan Zenner
3PL Americas
3PL Americas
34IWLA Events Calendar
™
PRESIDENT’S MESSAGE
Two Great Services –
Government Affairs and
Educational Programs
T
IWLA is aiming to stop the
duplication of licensing
requirements; our members
shouldn’t need to maintain
multiple licenses.
HE BOARD OF DIRECTORS approved a strategic plan at the 2015
IWLA Convention & Expo in Savannah, Ga. That plan calls for our continued emphasis on both government affairs and education.
In the area of government affairs, IWLA is currently dealing with the following issues:
1. The pharmaceutical licensing of warehouses in California. We are working with the FDA as it develops regulations and a national standard for pharmaceutical licensing. Currently, the industry contends with individual state
standards. In addition, many of our members already have warehouse licenses
and are now being asked to also obtain pharmaceutical licenses. IWLA is aiming to stop this duplication as soon as possible; our members shouldn’t need to
maintain multiple licenses.
2. Standardization – a long-standing issue – of both the storage and transportation of chemicals. These have long been regulated, but the regulations
have not been updated for years. They include a great hodgepodge of different
items. Legislation has been put forward to standardize the regulations; these
updates will be performed through the EPA.
A Government Affairs Fly-In will be held on April 28 and 29 at the Omni
Shoreham Hotel in Washington. Those interested in government affairs and
getting the most-recent information relative to the regulations affecting our
industry should plan to attend. Information is available at www.IWLA.com.
Last year, over 50 percent of our member companies participated in IWLA education programs. This clearly indicates how well our courses are received, and
gives an idea of how much training the association is providing to its members.
From May 13 to 15, IWLA is offering the “Economics of Warehousing and
3PL Sales Course” in Niagara Falls, N.Y. (just across the border from Canada).
In this course, individuals will learn about the structures to calculate rates, and
how to use that information to write a winning bid for business. For these three
days, we bring together operations and sales or finance people – who often don’t
understand each other well – because both are integral to having a successful
customer relationship.
On September 2 and 3, in downtown Chicago, IWLA will once again offer its
annual “Safety & Risk Conference.” Many attendees at this event will be members of the IWLA Insurance Company and so it will focus on best practices to
run safe warehouses and reduce insurance premiums.
Thank you for your membership in the IWLA. We are here to serve you. If
you have any ideas regarding group programs that the association might offer
to members, please give me a call.
Steve DeHaan, CAE
President & CEO
International Warehouse Logistics Association
6
3PL Americas — Spring 2015
CHAIRMAN’S MESSAGE
Out of the Gate Strong
in 2015
I
We are coming off a great
year in 2014 and the 2015
outlook is very good.
T IS AN HONOR to be elected your new chairman at such an exciting
time for the IWLA: We are coming off a great year in 2014 and the 2015
outlook is very good.
One barometer for a good year is the strength of the IWLA Convention &
Expo. The March 2015 event in Savannah set a record for attendance. Not only
that, we had more sponsors and exhibitors than ever before. This is the result of
a great effort by IWLA-member volunteers and the amazing IWLA staff.
IWLA takes advantage of the convention to conduct committee and council
meetings. I attended as many as I could. It was great to see so many volunteers
with a lot of energy. These leaders, your warehousing peers, work hard to deliver
valuable education offerings and information.
Of course, the IWLA Convention also allows time to do many other things.
We honor industry leaders.
• Three worthy individuals received the Jock Menzies IWLA Distinguished
Service Award: Darby Strickland (posthumously), Shippers Warehouse and the
dynamic duo of Paul Delp (Lansdale) and Gary Minardi (San Jose Distribution)
who have helped so many members with our rail-related issues. Gary and Paul,
thank you for your continued service to IWLA!
• Mark DeFabis, IDS, received the IWLA Government Affairs Service Award
for his work representing the industry and spearheading the IWLA Congressional Contact Program.
We make new friends and connect with old ones.
• More than 100 warehousemen, partners and sponsors took to the links for
the Majestic Realty 2015 IWLA Golf Classic.
We ensure we understand the business realities facing our companies.
• The IWLA Political Action Committee Dinner highlights IWLA’s regulatory
and legislative work – and it gives us a great opportunity to connect and unite.
We conduct association business.
• We elected new officers and board members and honored outgoing IWLA
Chairman Tom Herche. Tom presided over a record-setting year for the association and worked very well with IWLA CEO Steve DeHaan during his first
full year. Thank you, Tom, for your dedication to the IWLA and your steadfast
service of the past several years.
You won’t want to miss the great things in store for IWLA’s 125th convention
next year in Orlando. Planning is already underway. We look forward to what we
know will be another terrific event under the leadership of IWLA Vice Chairman
and 2016 IWLA Convention Chairman Mark DeFabis.
Rob Doyle
Chairman
International Warehouse Logistics Association
7
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MEMBER PROFILE
ODW Logistics: In the
Business of Doing
By Kim Biggar
O
DW LOGISTICS includes some unusual notions
in its purpose statement and values: Love and laughter aren’t, after all, common factors in corporate visions.
ODW claims the importance of those things – along with
ethics, candor, spirit, community and family, for example
– as fundamentals in
its operations. Bring“One of the best things
ing life to these values
I learned from my
is part of employees’
day-to-day practice.
father is that we’re in
John Ness, ODW
the people business.”
president, describes
the company’s values as near and dear to most people’s
hearts. “One of the best things I learned from my father
[company co-founder Bob Ness] is that we’re in the people
business,” says Ness. Consequently, as the company focuses on attracting, developing and retaining “the best
customers, associates and investors,” its values are central;
they express both what the company offers and what it
expects.
The 3PL business is demanding, notes Ness, and achieving balance can be difficult. Keeping balance in mind is
part of the process to maintain it, so it’s talked about a lot
at ODW. Recognizing that “people bring stuff from home
to work and vice versa,” says Ness, “we celebrate things
that happen at home,” as well as at work.
Work achievements are celebrated with awards. Two
SCOPE trophies are awarded monthly – one at ODW
Logistics, the other at Dist-Trans – to the department or
operation that most successfully cultivates safety, customers, operations, people and execution in its domain. The
trophies, which Ness says are coveted by employees, are
delivered in a suitcase, the cup full of candy, the winning
team’s names engraved on a plaque. A third SCOPE trophy, awarded quarterly, recognizes the work of support
teams, in such areas as sales & marketing, IT, finance &
risk management, and human resources.
Co., an asset-based carrier and ODW Contract Services,
with distribution facilities across the U.S. In 1997, the
company rebranded, becoming formally known as ODW
Logistics, Inc.
In 2003, John Ness became president. He heads up
a full-service third-party-logistics provider that now has
three units: ODW Warehousing Group, Dist-Trans, Co.,
and ODW Logistics and Transportation Services (LTS).
The company has more than 1,000 employees, and over
four million square feet of warehouse space. Its facilities
are located in Ohio, Wisconsin, Illinois and California.
Its areas of expertise include food and beverage, health
and beauty products, consumer electronics, prepaid debit
cards and aftermarket automotive parts.
The ODW Warehousing Group operates both shared and
dedicated warehousing sites. It offers turnkey solutions
for companies with specific distribution requirements.
Dist-Trans, Co. is a regional carrier serving both warehouse and non-warehouse clients. Its truck fleet provides
■ Company History and Facilities
Bob Ness and John Berend started warehouse company Ohio Distribution Warehouse Corporation in Columbus, Ohio in 1971. By the time Berend retired and
John Ness joined the company in 1996, it had expanded
to three facilities in Columbus, and included Dist-Trans
9
regional transportation
service, drayage service
and yard management
services. ODW LTS is
a full-service 3PL. Its
freight services include
transportation management, brokerage,
consulting, network
analysis, optimization,
reverse logistics, freight
pay and audit.
The growth ODW
has achieved comes
down to a few things,
according to Ness: great
people, hard work,
relentless passion,
patience, creativity, diversification and an evolving strategy. “Our management
team is not afraid to re-evaluate or to back track on bad
decisions,” says Ness. “We pursued several freight management strategies until finding the right one and the right
partner.”
Taking on the “best customers” – those that meet the
conditions defined in a metric used by the company – and
sometimes “firing” bad customers has also helped ODW.
Doing business with customers that are a good match with
its criteria has boosted ODW’s Net Promoter Score: it rose
by 58 percent from 2013 to 2014.
■ People in the Business of Doing
ODW management nurtures an entrepreneurial environment, says Ness, that employees have the ability
to influence. “I love healthy conflict,” says Ness, “when
people argue the merits of decisions.” He adds that, in the
logistics/warehousing “business of doing,” people doing a
job well have a sense of accomplishment. ODW promotes
the personal satisfaction employees feel in their work.
10
Further, the company’s leadership-development program
acknowledges the skills and effort of workers, and offers
them a path to management roles.
Ness sees the recently installed event-recording technology in its truck fleet as an effective driving-performance
program. Reviewing video clips of their performance, drivers become more aware of the risks they regularly face and
can identify skills that need improvement. This on-the-job
training is helping the drivers both gain confidence and
reduce their risky and unsafe driving maneuvers.
As well as training and developing current employees
to ensure that they’re as effective as possible, ODW established a logistics staffing company, Staffing Leadership
Group (SLG), to improve its recruiting success. Through
SLG, the company finds temporary workers to fill entrylevel jobs. (With unemployment in the Columbus region
currently at just under 4 percent, employers are finding
hiring challenging.) While they’re engaged through the
agency, workers undergo orientation and training that
qualifies them to be hired by ODW for full-time jobs. As
workers are hired, their “rollover” from temporary status
is celebrated by co-workers.
Thanks to its focus on careful hiring and employee
retention, ODW has some pretty committed employees.
Ness tells of supervisors making last-minute and holiday
deliveries for customers in their personal vehicles. In very
cold weather, teams stay on site around the clock to patrol
the facility, checking for issues that might arise. When its
phone-service provider had a problem that put ODW’s
data at risk, IT employees remained at work overnight to
deal with any fallout.
As the second-generation leader at ODW, Ness is
thankful for having inherited a company with what he
considers a great reputation. His dad worked hard, says
Ness, to establish a strong brand. While continuing to
take care of customers’ needs, growing into new markets
and concentrating on team-building, ODW operates with
a spotlight on its purpose and values, aiming to maintain
that reputation.■
STAFFING CHALLENGES
How to Get the Most from
By Kim Biggar
W
ITH ITS CHANGEABLE need for labor, the
3PL industry is a big user of temporary staffing services. It seems to be, though, that relations between 3PLs
and their staffing providers are less than ideal.
Allegiance Staffing, a staffing firm with offices in 14
states, sent a survey in 2014 about the staffing industry
to 950 IWLA logistics professionals. If you’re involved at
either end of a 3PL/staffing-company relationship, the
results of the survey should most likely be considered a
call to action.
tributes appropriate to their jobs, but those people are
likely only part of your staffing complement. You should
be able to rely on the temporary workers you’re paying to
engage to also effectively meet your needs.
As the customer in the staffing relationship, 3PLs
should expect, says Landry, to receive the best-possible
service from their staffing providers, just as they are
required to furnish their clients with the best-possible
logistics and warehousing service or lose business to competitors. Landry makes a strong argument for how such
high expectations can be met, but it involves a mindset
change on the part of both 3PLs and staffing companies.
■ Survey Findings
Respondents to the survey gave the staffing industry
■ The State of the Market
a very poor Net Promoter Score of -24. (According to the
Landry knows of one 3PL that spent half a million dolNet Promoter Community, at www.netpromoter.com, a
lars on a new piece of equipment, then contracted with the
company’s NPS is determined by asking customers a single
staffing company that offered the lowest price to get workquestion: “How likely is it that you would recommend
ers to use that equipment. They questioned why they didn’t
[your company] to a friend or colleague?” Compare this
achieve the return on the equipment they had expected.
negative result with NPS in the range of 60 to 80 for the
In another case, a major international company that
top 10 U.S. companies in 2013.) In a nutshell, this result
indicates that 3PLs are generally pretty unhappy with their
Makeup of a Temporary Bill Rate
staffing providers.
Tom Landry, president of
Allegiance Staffing, says that
- Use incorrect workers comp codes
a lot of 3PLs see their staff- Reduce insurance coverage or carrier rating
Profit
- Propose, but not pay benefits or vacation pay
ing providers as “a necessary
-Expand recruiter-to-associate ratio
evil.” If that’s the case, there’s
-Hire less-experienced, lower-paid operations team
Operating
clearly something wrong. In
staff members
Costs
-Limit drug testing, background checks & similar to
the 3PL world – even as the
a “by forced request only basis” or less
use of automation increases –
Government Mandates:
-Eliminate other elements of the vetting process
FICA, FUTA, SUTA,
labor is a critical component
-Reference checking
Burden
Workers Comp,
-Second & third interviews
in the efficiency of any operaLiability and Benefits
-Testing (aptitude; skills; safety)
tion. Skilled, trained and ex-Use ‘group’ interviews (code for group lectures)
perienced workers produce
Wage
faster with fewer mistakes.
Transfer a percentage of associates to a 1099
status, eliminating W/C, FUTA, SUTA expense
Since the people who do your
work obviously have an imNegotiate the wage downward with a select
percentage of the associates after the bill rate is
portant impact on the qualestablished
ity of that work, having good
people in place is essential.
Your HR department works to
ensure that your permanent
employees have skills and at3PL Americas — Spring 2015
11
company was “an employer of last
used about 300 temporary workers
resort,” says Landry, that essentially
each day ended up paying approxitrained people who would move on as
mately $2 million more in a year than
soon as they could. “It ended up stuck
it had bargained for. First, the comwith people without other options.”
pany was taking on 50 more workBy paying more, it would hold on to
ers a day than it figured would be
good employees,
needed to do the
and consequently
work. On top of
A lot of 3PLs see their
increase efficiency
that, it was paying
staffing providers as
and reduce costs
overtime to many
related to turnof the 300 work“a necessary evil.”
over, head count,
ers. A high turnrework, scrap and so on.
over rate meant that around 20 of the
The company’s underpayment of
300 people were new to the facility
workers extended to the temporary
each week; those people needed to be
staff it engaged. It worked with lotrained, and took time to reach the
cal staffing companies that supplied
standard pace of work. It was obvious
workers at the lowest prices; to do so,
that the company needed to make
those companies would have to be paychanges.
ing their people the lowest-possible
Part of the company’s problem, says
wages and, likely, skimping on servicLandry, was that it was paying workes. Like their permanent counterparts,
ers about $2 an hour under the area’s
temporary workers in this situation
average for the kind of work it offered.
would either be looking for better opIt may seem counterintuitive, but, acportunities or staying on because their
cording to Landry, raising the hourly
performance was inadequate to allow
pay rate would almost certainly save
for a move to better things.
this employer a significant amount
The problem is that a lot of 3PLs
of money. With the wages it paid, the
buy their staffing services based on
price, and staffing companies compete for business with that in mind.
■ Changing Thinking about
Staffing Requirements
If your company chooses staffing
providers like it does commodities,
based on price, you might be missing
the full picture.
A good staffing company will
screen the workers it sends; it will
conduct interviews, test their skills,
assess their character and reliability,
and check references. In the U.S., it
will verify employment eligibility.
As allowable by law, it will do background and credit checks, and drug
tests. It should be hiring with much
the same rigor that your HR department would use. Careful assessments
take time and cost money.
To meet the requirements of the
Affordable Care Act in the U.S., staffing companies must offer their workers a qualified and affordable health
care plan, says Landry. If a company
Continued on page 15
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12
3PL QUALIFICATIONS
Broken RFPs: Are You
Procuring for Success When
You Outsource Logistics?
By Steve Banker
I
Potential customers are
putting 3PLs into a box
through a process that
is too prescriptive, and
consequently robbing
themselves of an
opportunity to re-engineer
their supply chains.
SPOKE TO CARL FOWLER, the Vice President of North American Sales
and Engineering at Menlo Logistics, on the topic of continuous improvement and procuring warehousing services.
The question I had in mind was this: Suppose you know that your warehousing operations are not what they should be and you want a third-party-logistics
provider (3PL) to manage your warehousing operations for you. Further, suppose that one criterion that is important to you in selecting a 3PL is its expertise
in continuous improvement. How would you know which 3PLs have a strong
Lean or Six Sigma culture? After all, it is very likely that each 3PL would claim
to have expertise in this area.
Fowler had good immediate answers to that question, but he also had a
broader and more thoughtful response about how the existing procurement
process can so often lead to suboptimal results.
Fowler’s immediate answer was that companies should ask:
• How many employee-led Kaizen events took place at the warehouse in question? Were those bottom-up or top-down events? (Companies that live Lean will
tell you bottom-up is better.)
• Does the 3PL run Kaizen events outside of the supply chain area? For example, in back office or sales or customer service functions? This is a good indicator
of how deeply embedded Lean is into the culture as a whole.
• What were the hard dollar savings associated with these continuous improvement events? The soft dollar savings? The productivity improvements?
How were these benefits measured and did the customer sign off on them?
• How many value stream mapping engagements did the 3PL have with reference clients, and did those engagements reach beyond the warehouse to broader
supply chain processes?
Fowler mentioned that 3PLs that have really embedded Lean into their culture have to hire a different profile of worker. So often, 3PLs hire warehouse
associates for simple functional tasks – inventory put-away, pick and pack, and
so on. There is no sense of a greater calling. 3PLs that truly have embedded Lean
into their culture and processes put engagement and respect for the warehouse
worker at the forefront. Workers are given the opportunity and authority to influence the work – through applying their knowledge and experience, and using
teachings on how to use Lean tools to remove waste. If you really want front-line
employees to function well in this environment, you have to be able to practice
“servant leadership” and truly make them the core and the driver of continuous
improvement processes — and by sharing the success with them through performance incentives based on efficiency improvement.
The combination of engagement and incentive pay means that Menlo has
much higher warehouse-associate retention than the industry as a whole.
But while Fowler walked me through the right questions to ask, his perspective was that the traditional 3PL request for proposal (RFP) process is broken.
13
Potential customers are putting 3PLs
into a box through a process that is
too prescriptive, and consequently
robbing themselves of an opportunity
to re-engineer their supply chains.
Is what the company wants really
just the ability to save half a cent on
line orders picked in an hour? Then
the traditional procurement-led process – which requires “conspicuous
compliance to the RFP” – is just fine
for this objective. Noncompliance to
all criteria on the RFP becomes an
easy way to eliminate prospective
3PL partners.
But if the question is broadened –
“Is Memphis even the right location
for a warehouse based on the company’s demand profile? Are we looking
for improvements to the order-tocash process?” – this would involve
services that go beyond warehousing.
In short, companies should begin
by asking themselves how they want
Future Issues of 3PL Americas
3PL Americas is the magazine of IWLA and provides members
and non-members with news and information on concepts and
best practices in warehouse and logistics management. The
lead articles for upcoming issues are set well in advance. We
welcome reader input on themes and articles for future issues.
Lead article themes and deadlines:
3PL Americas • Summer 2015 – Warehouse technology
™
THE MAG A Z INE OF I WL A IN NORTH AMER IC A • W INTER 2015
THE 2015 IWLA CONVENTION + EXPO
PORT OF SAVANNAH
PM 42128520
w w w.IWL A .com
and WMS (June 26, 2015)
•Fall 2015 – Real estate and best practices
in facility management (September 18,
2015)
•Winter 2016 – The future of 3PLs
(December 4, 2015)
•Spring 2015 – Legal challenges for warehouse operators
(April 8, 2016)
Suggestions for authors, articles and themes can be
submitted to [email protected].
to achieve bigger and more-fundamental supply chain objectives. Begin
by using a Request for Information
that states the problem and asks 3PLs
how they think that problem can best
be solved.
In response to an RFI, for the right
opportunity, Menlo is willing to incur
upfront costs. They will send in their
Lean consultants, typically degreed
professionals with engineering and
operations research backgrounds,
who are proficient in network design,
to come up with Menlo’s suggested
alternative to a problem, at no cost to
the customer.
Now, it is likely that other 3PLs
will come up with different alternatives. At this point, the customer may
want to combine the best ideas of
each 3PL into an RFP. In short, it is
an iterative RFP process. This is a
longer process. Menlo is completely
comfortable with a sales cycle that
takes 12 to 19 months. In fact, because they seek to provide creative,
higher-value solutions, a short sales
cycle is suspect.
And what seems like a longer
process can actually save companies
money.
According to Fowler, when Menlo
and most other major 3PLs lose in a
sales cycle, the most common reason
is because the company abandoned
the search for a 3PL partner. “Think
about all the money and time wasted
when this happens,” he notes.
100 FREIGHT INTERMEDIARIES CAN’T BE WRONG
Over the years, Benesch has provided legal consultation and pragmatic business
advice to well over 100 Transportation Brokers, Surface Freight Forwarders, Ocean
Freight Forwarders, NVOCC’s, Air Freight Forwarders, Warehousemen, 3PLs,
4PLs, and other Freight Intermediaries of all kinds. They know that when it comes
to corporate structuring, mergers and acquisitions, transportation and logistics
contracts, best practices, regulatory challenges, insurance and risk management,
freight loss and damage or freight charge disputes, catastrophic personal injuries,
and independent contractor relationships — Benesch knows Intermediaries.
Counsel for the Road Ahead
®
MEMBER
MEMBER
Cleveland | Columbus | Hackensack | Indianapolis | Philadelphia | Shanghai | Wilmington | www.beneschlaw.com
14
Finally, Fowler believes that this
more free-form, higher-value-add
style of procurement actually benefits
3PLs with a true Lean culture. Lean is
what allows 3PLs to creatively solve
important value chain problems.
Steve Banker is Service Director, Sup-
ply Chain Management for ARC Advisory Group. He can be reached at
[email protected]. This article
is republished with his permission.
STAFFING from page 12
doesn’t, its customers might be considered “common law employers”
under the act. Protecting customers
from this exposure costs staffing companies money.
Staffing companies might feel they
need to avoid some of these costs,
along with those for employee benefits and vacation pay, to keep their
prices down and remain competitive. It’s important for 3PLs to know
what the price they’re paying is going
to provide. After all, using staffing
companies is supposed to allow companies to get the workers they need
for the period that they need them
– without having to permanently hire
them and then lay them off – and
still meet all of the legal and financial
requirements related to hiring. For
customers, avoiding risk is a reason
for utilizing a staffing strategy. They
need to know that the staffing providers they use are equipped to accept
risk transferred to them, and won’t
actually amplify the risk.
Landry believes that 3PLs must
rethink how they choose staffing providers. If the decision is made by an
employee in procurement, it’ll likely,
he says, be based mainly on price. But
if a team of employees, including people in operations, HR and procurement, makes the choice, the group
will consider the broader costs related
to the use of temporary staff. They’ll
examine quality issues, dependability,
commitment to service, compliance
with legal requirements, the potential future hirability of the workers
provided and so on. A procurement
employee who makes a poor buying
decision might never learn how costs
for extra workers, overtime, rework
and turnover add to the price in the
company’s agreement with a staffing
company. Instead of driving down the
price for service, employers should be
demanding the best-quality service
they can get. In the long run, says
Landry, they’ll pay less for it.
For their part, staffing companies need to push back against the
commoditization of their business,
says Landry, which forces them to
cut costs – and services – to appeal
to customer demand. They need to
boost their commitment to customers
by providing better-qualified, reliable workers who are matched to
their assignments and appropriately
paid, and be available when customers need them, even if that involves
weekend and early-morning work.
Charging customers just a few pennies extra per man-hour will cover
the extra costs they’d incur in making
these changes, says Landry.■
15
THE 2015 IWLA CONVENTION & EXPO
The 2015
IWLA
Convention
& Expo:
CONNECT,
DISCOVER,
INNOVATE
March 8-10, 2015
in Savannah, Georgia
By all measures it was a great
convention! As a location, the city of
Savannah is a superb destination –
the city is beautiful and the Westin
Savannah Harbor Resort is very
hospitable. The hotel provided a great
convention venue and being on the
Savannah River, it gave a close-up
view of container ships entering one of
America’s great ports; and incidentally,
it also hosted a challenging PGA golf
course.
The convention was marked by a
record attendance and tradeshow
participation, informative and
inspiring speakers, well-attended
panel discussions and
social activities.
A message from Immediate
Past Chairman Tom Herche
As I reflect on the past year, I am filled with
gratitude. Being IWLA Chairman was a
great honor for me. I was blessed to have
worked with so many wonderful people in
our industry and with a top-notch IWLA
staff.
It was Steve DeHaan’s first full year as our
president and CEO. I was able to observe
and work with Steve as he made positive
changes that made IWLA that much better!
Steve also showed that he has great
leadership qualities, guiding us to achieve
one of the best – if not the best – financial
years IWLA has ever had. We are certainly
headed in the right direction.
The success of the past year did not just
happen. There were many volunteer
warehouse members that made a large
contribution. We had educational offerings
that were more popular than ever and
exceeded our revenue budget. We had more
of our companies join the IWLA Insurance
Company (our captive) to help them with
safety and insurance costs.
The 2014 IWLA Convention & Expo in
Arizona and the 2015 event this year in
Savannah were rousing successes. Our
government-affairs efforts have grown and
have been more successful. We raised more
money than ever for the IWLA Political
Action Committee in an off-year election.
We also had a great success rate: 100
percent of our candidates won election.
The IWLA Board invited committee chairs
to the meeting in Savannah. More than a
dozen joined us, and I believe they all
made a contribution and benefitted from
the experience.
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16
As we wrapped up the meeting in
Savannah, I told those present that it was
wonderful working with a board whose
members were in this for the right reason. I
do not believe that anyone had an agenda
and that we were all in this to benefit IWLA.
Chairman Tom Herche welcomes the
delegates
This is a great industry and the primary
reason I was honored to be chairman was
because of all of the great people in our
industry. I characterize our membership as
honest, hard-working folks who take care of
their people and their customers. People in
our industry have to do things right
because of the small margins. And our
members are almost always in the business
for the long haul. I think our industry is a
good example of our capitalistic freeenterprise system.
Rob Doyle will be an outstanding chairman
for this coming year; he has already hit the
ground running. He has proven his worth
many times over in the past five years. He
served as chairman of the Savannah
Convention Planning Committee – and his
leadership was a large part of the success
of the 2014 Arizona convention. He and I
worked very closely this past year and his
support and advice were invaluable.
Rob is a very hard worker and I know
that this year under his leadership will be
successful for IWLA and rewarding for all of
those who will have the opportunity to work
with him.
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17
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19
ANNUAL CONVENTION
1 – 4 June 2015
Liverpool, UK
The IFWLA convention is a four day programme of business and culture
planned for some 250 national and international delegates, comprising
manufacturers, retailers, third party logistics providers and other supply
chain and logistics practitioners.
Bringing together all sides of the global logistics industry, the International
Convention is under-pinned by a two day conference to be held on
Tuesday 02 and Wednesday 03 June, at Liverpool’s historic Town Hall
www.ifwla.com
Join over 250 international delegates in a programme of work and culture
www.ifwla.com
WAREHOUSING
& LOGISTICS
INTERNATIONAL
www.warehousinglogisticsinternational.com
The online journal of the International Federation of Warehousing and Logistics Associations
IFWLA 2015
The International
Federation of
Warehousing Logistics
Associations
BENEFITS OF OUTSOURCING
To Hire a Third Party Logistics
Company or Not to Hire a Third
Party Logistics Company…
That is the Question
By Adam Robinson
T
HIRD-PARTY-LOGISTICS PROVIDERS (3PLS) have grown tremendously in recent years, as the dynamic of getting goods to market has
evolved. In days past, entering a market meant making a significant investment
in facilities and infrastructure to ensure the effective delivery of your product.
No more. Today, 3PLs can handle every step of the process for you, liberating
your time and resources to focus on selling your product.
The 3PLs of today can provide a much broader range of services than they
used to. It used to be that their primary focus was on warehousing and shipping, so if you sent them your product, they would store it and ship it for you.
Now, 3PLs can handle almost your entire business. This includes not only the
complete supply chain cycle, but also such functions as customer service, order
management, sales support, e-commerce and IT integration. In fact, there are
very few aspects of a business that a 3PL can’t take care of for a client; 3PLs have
the resources to provide clients with the benefit of top-tier technology without
the investment. However, before we get into whether or not you should hire a
3PL, what do shippers want in a 3PL to begin with?
3PLs can handle every
step of the process for
you, liberating your time
and resources to focus on
selling your product.
■ What do Shippers Want from a
Third‑Party‑Logistics Company?
According to the Capgemini Consulting 2014 Third-Party Logistics Study,
its eighteenth annual study, shippers most value a 3PL’s ability to provide
continuous improvements (55 percent), followed by experience in the shipper’s
industry (49 percent) and an established, ongoing relationship (42 percent).
Further, shippers appear to be seeking strategies to control costs while striving
for optimal 3PL relationships by seeking a balance between centralization and
decentralization of their sourcing decisions.
Collaboration is also something that shippers want more of, and results indicate that collaboration is increasing. According to the study, the majority of
shippers and 3PLs say their relationships have grown more collaborative over
the past three years, with shippers even more likely than 3PLs to say they are
much more collaborative. (See Figure 1.)
Collaboration opens the door for more strategic relationships among shippers and 3PLs. In order to attain more highly functioning and cost-effective
supply chains, shippers need strong, lengthy and partner-focused relationships
with their 3PLS and 4PLs.
Given the available capabilities of a 3PL, this begs the question:
Should You be Utilizing a Third-Party-Logistics Company or Not?
The answer, of course, is that it all depends.
It depends on a multitude of factors, not the least of which are the stage your
21
Figure 1
technology, make sure it is not outbusiness is in (to help you understand
sourcing this technology to a software
your needs, use the 3PL checklist at
provider. This could be problematic
cerasis.com/2013/08/05/third-parwhen you, as a user, want updates to
ty-logistics-companies), the amount
the technology. Third-party-logistics
of existing infrastructure you have,
companies with in-house technology
and the functions that you require
teams that develop the TMS themto service your customers. While it
selves will provide the best value.
doesn’t make sense in every situa4. Core Competency: Utilizing
tion, the benefits of using a thirdthe resources of
party-logistics
an expert frees up
company can be
While it doesn’t make sense
your time and fistaggering.
in every situation, the
nancial resources
Here briefly
to focus on what
are five benefits
benefits of using a thirdyou do best. You
you can realize
party-logistics company
can have confifrom using a 3PL.
can be staggering.
dence that your
(These are just the
logistics are being taken care of, so you
top five on a macro level; there are
can focus on growing the enterprise.
many other benefits on a micro level.)
5. Scalability: 3PLs are almost
1. Expertise: A third-party-logisinfinitely scalable. If your business
tics company handles logistics for a
triples in 18 months, you don’t have to
living… as an entire business model.
rush to secure new facilities, buy new
That’s all it does. Believe it or not,
equipment, or hire and train staff. It
there are some traffic and transportasimply takes a phone call to reach out
tion managers who are not experts in
to the 3PL to secure new rates as you
logistics, so why not let the experts
open up more shipping lanes or add
handle all of the details?
another login to the transportation
2. Efficiency: Not only does a
management system as you bring on
third-party-logistics company have
new locations.
the expertise, it also has the infrastructure and technology to be really
■ “But I Can Do It Cheaper/
good at what it does. This translates
Better Myself… I Don’t
to higher service levels to your cusNeed an Outside Thirdtomers and, very likely, cost savings
Party-Logistics Company
for you. Higher quality. Lower cost.
Telling Me what To Do.”
The Holy Grail of business.
We get it. You’ve mastered your lo3. Technology: Since 3PLs usugistics processes. You are an expert at
ally have the latest technology, you
getting the best rate from the one LTL
get the benefits of the technology
shipping carrier you use. Once your
without having to make the capital
company hires a third-party-logistics
investment. Win, win. However, a
company, they will no longer need
caveat here: If the 3PL is offering
you… Right? No, that is usually not
you TMS software and other freight
22
the case. In fact, they can have you
stay more strategic, not bogged down
in the weeds of detail and tactics, and
focused on growing the business.
While we all tend to think that we’re
good at everything we do, that’s not
always the case. More to the point, doing it ourselves generally requires an
investment in facilities, equipment,
people and time. In many cases, that
investment is fixed. Your warehouse
doesn’t grow or shrink based on how
much space you need at a given time.
Your warehouse rent doesn’t change
based on how much product you ship,
nor does the cost of your forklifts,
pallet racking or utilities. Your labor
is variable, but only to a point. Most
businesses are still going to have a
minimum amount of staff, regardless of revenues, to handle the tactics
and details of freight, transportation
procurement, carrier relations for ongoing freight maintenance, and more.
When you use a 3PL, you pay only
for what you use. When you do move
product in or out, you pay only for
the freight costs. You’re getting fulltime people at pro-rated wages. You
will also likely benefit from your provider’s economy of scale. Freight and
shipping costs will almost certainly
be better than what you can secure on
your own, for the simple fact that your
3PL is moving a lot more product that
you are individually. Win, win, win.
Now, this doesn’t mean that a 3PL
is right for your company. If you’re
in an industry that is very localized
or distribution-focused, it may make
a lot more sense to do it yourself.
Perhaps you are the expert in your
field, which negates the benefits of
outsourcing. There are no absolutes in
anything, especially business. When
it comes to decisions affecting the
future of your company, there are
usually not even any rules of thumb.
Every circumstance is as different as
the enterprise that is exploring it. It all
comes down to what’s right for your
business, your customers and your
people. But, it never hurts to at least
have a conversation with an expert.
Adam Robinson is marketing manager for Minnesota 3PL Cerasis.
LEADERSHIP AND MANAGEMENT
The War for Talent
By Chip Scholz
T
A chronic shortage of talent
is one of the constraints
on a company’s growth.
HERE IS A WAR FOR TALENT TODAY, and it affects every American business. It is driven by demographics: the Boomers are retiring
and leaving the workforce in ever-increasing numbers; college and university
graduation rates can’t keep up with the need for educated talent; and there is a
shortage of people willing to work in a warehouse for the wages now paid in that
environment. Here are some of the facts:
• By 2020, the U.S. Bureau of Labor Statistics says that over 50 percent of
the workforce will become eligible for retirement. We do not have workers with
enough training or skills to replace experienced retiring workers. The shortage
of available skilled workers is likely to exceed 10 million by 2020.
• One-fifth of this country’s large, established companies will be losing 40
percent or more of their top-level talent in the next five years. The replacement
pool of 35-to-50-year-olds has declined by 20 percent during the same period.
• Within the next 10 years, 18 million jobs will require individuals with baccalaureate degrees. At current graduation levels, the Employment Policy Foundation predicts a shortfall of 6 million candidates.
• In 1973, blue-collar workers represented over 60 percent of the workforce.
Very soon, just 10 percent of the workforce will be blue-collar. The Hudson
Institute estimates that only 20 percent of our workers will have the skills to do
60 percent of the jobs.
The competition for talent is pervasive. Job-hopping has increased as the
economy has lost active workers. According to a Society of Human Resources
Management (SHRM) survey, 75 percent of American employees and 82 percent of American executives are looking for a new job. Here are a few more stats
you need to pay attention to:
• Despite economic uncertainty, nearly seven out of 10 U.S. workers say job
change will be at their own initiative.
• Thirty-nine percent of the workforce has worked for six or more companies
– up from 27 percent in 1999.
• Forty-five percent of workers want to change jobs at least every three to five
years – up from 26 percent in 1999.
Why is this important to you? Only 15 percent of the executives surveyed by
McKinsey & Co. said improving the talent pool is a top priority, even though 75
percent of those same executives said that “a chronic shortage of talent” is one
of the constraints on their companies’ growth.
Many studies have shown that low-performing companies have nearly
twice as much turnover among top-performing employees as high-performing
companies. To put that fact into context, consider that three out of every four
Fortune 5000 companies on the list in 1970 are no longer on the list. One out of
three firms that went public since 1988 are out of business.
What are you doing to win the talent war? What are you doing to change your
outcomes? What do you need to change in the way that you recruit, hire, train and
develop your employees? How can you maintain a high-performing workforce?
One way is to keep a handle on your turnover. Imagine, if you will, that
23
you are a typical 3PL. Your customers
are demanding that you continue to
reduce the cost of your service to
them. You, therefore, require more
cost savings, so that margins remain
bearable and there is some return on
the time, effort and money invested.
You have done just about everything you and your team can think
of to reduce costs further. You
have squeezed your current suppliers, changed to new suppliers, and
stripped the workforce to its bare
bones. You absolutely don’t know
where you are going to find anything
else to cut!
Turnover impacts your bottom
line in a lot of sneaky ways. It is usually the last place that companies
look to improve their returns because
there is no line item on a P&L marked
“turnover.” The costs are soft, hidden. Labor costs on the P&L may
even show a decline in times of high
turnover, providing misleading information.
However, depending on the source
of the information, it is estimated
that turnover costs three to five times
the annual salary of the position that
turns over. Those numbers may be
high, so let’s put some meat on those
bones to assess the conservative costs
of turnover. Let’s assume that the
position that turns over has an annual
salary of $50,000. Here are the costs
that are incurred:
• While the position is vacant, coworkers are asked to fill in. Productivity drops as others cover the tasks
of the open position. Morale suffers –
which leads to more turnover. Stress
levels increase due to longer hours,
leading to mistakes, accidents, injuries, illness and reduced quality.
3 Estimated Costs: $25,300
• Recruiting costs include lost
productivity of the managers that
have to recruit. Additional costs may
include a recruiter or temp agency.
Advertising a position, going through
résumés, travel arrangements for
meetings, etc. all add up. In a tight
labor market, relocation fees, signing
bonuses or referral fees need to be
factored in.
• Once you have hired a new employee, the costs continue. You most
likely end up paying the new worker
more than you were paying before. To
eliminate problems, you give raises to
close co-workers. Productivity issues
arise because the new employee is
not up to speed and other employees are filling in. You are paying the
new employee fully even though their
productivity is low. To get them up to
speed, you have to train them. That
means that managers, supervisors
and other employees are pulled away
from their jobs, further lowering productivity.
By losing that one employee, the
bottom line is affected by $110,500.
Drop in the bucket? Maybe, but consider the multiplier effect. If you have
100 employees that average $50,000
in salary per year and your turnover
rate is 30 percent (not unheard of),
turnover just cost you more than $3
million. Is that significant? Wouldn’t
Continued on page 26
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24
LEGAL
Are Your Background-Check
Procedures Placing Your
Warehouse at Risk?
By Kerryann Haase Minton and Sarah E. Flotte
I
Kerryann Haase
Minton
Sarah E. Flotte
As a rule of thumb, credithistory information should
not be pulled or considered
unless an applicant
or employee is being looked
at for a financial position.
N DECEMBER 2012, the U.S. Equal Employment Opportunity Commission (EEOC) announced that one of its top priorities until calendar
year 2016 is eliminating systemic barriers to recruitment and hiring. With this
priority in mind, the EEOC has cracked down on employers who – like many in
the warehousing industry – run background checks before hiring a new worker.
Specifically, the EEOC wants to make sure employers are not using credit- or
criminal-history information, which is included in most background checks, to
discriminate against applicants and employees. Although federal law does not
prohibit employers from asking applicants and employees about their creditand criminal-history information, federal anti-discrimination laws do prohibit
employers from discriminating against applicants and employees when they use
this information.
Liability for disparate treatment (or intentional discrimination) arises where
an employer uses history information differently based on an applicant’s or
employee’s race, national origin or other protected trait. Liability for disparate
impact (or unintentional discrimination) arises if an employer uniformly takes
credit- and criminal-history information into account and, doing so, disproportionately excludes people of a particular race, national origin or other protected
characteristic, where the inquiry is not job-related for the position in question
and consistent with business necessity. The EEOC is increasingly interested in
the latter form of discrimination, targeting neutral background-check policies
that disproportionately exclude minorities.
As a rule of thumb, credit-history information should not be pulled or considered unless an applicant or employee is being looked at for a financial position.
For instance, a warehouse should not run a credit-history report on an entrylevel warehouse worker who is responsible only for packing and moving goods
on the floor, because his job has nothing to do with finance. On the other hand,
a warehouse supervisor who deals with customer payments on a day-to-day basis would be the proper subject of a credit report. Because the supervisor deals
directly with company finances, the warehouse may run his credit history as it
is job-related and consistent with business necessity.
To the extent employers in the warehousing industry conduct background
checks, they should consider taking the following steps:
• Have a policy in place to ensure background information is being considered
consistently to avoid the appearance of intentional discrimination from one
employee to the next;
• Make sure the background information being considered is job-related and
consistent with business necessity;
• Allow employees to explain any background information that may be used
against them;
• Analyze each employee situation on a case-by-case basis; and
• Comply with state law regarding the use of background checks.
25
With these steps, employers in the
warehousing industry can proactively
attempt to address the EEOC’s stated
concerns regarding the use of creditand criminal-history information in
employment decisions.
Kerryann Haase Minton is managing partner at Michael Best & Friedrich LLP in Chicago. Sarah E. Flotte
is an associate in the same office.
TALENT from page 24
that $3 million be better off working
for you or in your pocket?
It is a bottom-line expense that
doesn’t show up specifically on the
books, but costs you plenty in bottom-line dollars. Let’s talk about a
few ways to lower your turnover so
you can keep more of your hardearned money.
1. Hire the Right People: I am
sure you have had the experience of
hiring someone that interviewed well,
looked great on paper, but never performed up to expectations. We hire
based on the knowledge and skills
(résumé, references) that are presented to us. We hire people we like,
or who are like us. We hire through
the lens of our own biases. We may
see the attitudes that the candidate
shows during the interview, but we
don’t know what attitudes they will
bring with them to the job.
According to a Michigan State
University study done by Dr. Robert
Hunter, the traditional résumé/interview hiring process is only 14 percent
effective in finding the right people.
If you add reference checks, you can
increase your efficiency to 26 percent.
This is typically how most companies
hire. That means that only one in four
of your hires is a good one!
How can you increase your chances? If you add testing for attitudes
and behaviors, your rate of success
goes up to 53 percent. And if you add
a job benchmark, your success rate
climbs to 76 percent.
Further, if you hire the right person for the job, you will reduce stress
on the person you have hired. They
will be doing the things they like to
do and are suited to do. Doing the job
comes more easily, and job satisfaction increases.
2. Set Clear Expectations: Nobody comes to work wanting to do
a bad job. One reason for turnover
is a lack of clear expectations that is
evidenced by a lack of clear direction
about the way success is measured
and what outcomes the work will result in. Be sure to develop a clear set
of work standards, and allow your
employees to interface with customers as often as possible. Don’t forget
to celebrate achievements in hitting
the standards!
Now comes the hard part… What
are your expectations for the company? Do you have a clear vision for the
future? Does everyone in the company understand the vision, the values
and the mission? Can they tell you
how what they do relates to accomplishing the vision? If not, you need
to clarify those things for yourself and
for your employees.
3. Create Opportunities for
Growth and Development: If an
This article is for informational pur-
poses only and is not legal advice.
Transmission of this information is
not intended to create, and receipt
does not constitute, an attorney-client relationship. © Michael Best &
Friedrich LLP 2015
employee finds work to be challenging with opportunities for personal
and professional growth, job satisfaction increases.
Promote from within when you
can. Vary job assignments and offer opportunities to work on special
projects beyond the scope of their
normal jobs. Split jobs into different
levels, thereby offering increasing
leadership opportunities. Help them
develop their personal and professional leadership abilities through
workshops or coaching.
4. Managers Must be Good
Leaders: Employees always work
harder for good leaders. Good leaders can be developed, but it must be
intentional. Make sure you and your
managers are well trained. People
respond to managers they can trust
and who can inspire them to achieve
their goals.
Reducing turnover and creating
more productive employees gives you
an added bonus. You won’t spend all
of your time worrying about where
your next hire is going to come from,
allowing you to invest more time
working on your business, not in your
business. Isn’t that where you want to
invest your time?
Chip Scholz is head coach of Scholz
and Associates, Inc. and serves on
the IWLA board of directors.
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GIVING BACK
Corporate Responsibility
= Community Investment
By David S. Hamilton
N
Giving back to the
communities that have
supported our businesses,
and where our employees
live, is more than just
a corporate responsibility;
I see it as a corporate
necessity.
EARLY 30 YEARS AGO, when I started my company with little more
than youthful determination, a shoestring budget and the support of my
loved ones, my main focus was getting the business off the ground and taking
care of my family.
There were lots of early mornings and late nights in those early days and,
in fact, that really hasn’t changed much. But many
other things are very different now.
Instead of one truck, a handful of employees and
cramped office space, today our company employs
more than 2,000 team members across the nation.
And as our business has grown, so has my idea of
what it means to be a responsible corporate citizen.
I believe it is incumbent upon business owners
to support the communities where they operate,
and move beyond those borders as they become
able. That support may manifest itself in myriad
ways, but it’s important for successful companies to
promote a culture of giving back.
For me, that means promoting a culture within
the company that extends to our community, exemplified by the set of guiding principles on which
we’ve built our business:
Practice Honesty, Integrity and Fairness in Everything We Do.
• We are only as reliable as our word. To compromise that would be to forfeit
the work that has gone into making our name trustworthy.
Ensure That Every Customer Receives Value, Quality and Satisfaction.
• Each of our customers is our most-important one. Recognizing them as
individuals with specific needs, we will endeavor to exceed expectations by providing maximum service in every aspect of each operation.
Create an Environment in Which Our Employees Can Succeed.
• Each associate is recognized as a valuable part of our operation, and all are
compensated based upon individual performance and offered an opportunity to
participate in a profit-sharing program.
Return to the Community a Share of the Success We Experience.
• We are successful today because of the community’s faith in our service
and our name. We will, therefore, faithfully return support to our community
through charitable contributions to various organizations and funds.
And while I’ve been committed to leading my company by these guiding principles from the start, my broader outlook on corporate responsibility started to
take shape for me years ago when I first began to travel the world on mission
trips and saw firsthand the often overwhelming needs surrounding us.
At the time, my business was still young, and my resources didn’t exactly
match my burning desire to create a better community. I saw great need, but
27
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AmeriGas......................................... 26
Ancra International LLC...................... 15
Benesch, Friedlander, Coplan
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IFWLA............................................. 20
Dave Hamilton and friend
IWLA........................................ 24, IBC
Konstant Storage Systems...............OBC
McCloud Services.............................. 12
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Redirack Storage Systems................OBC
Rogers-Premier Unloading Services..... 24
Scholz Leadership Development.......... 31
Shinetoo Lighting America LLC............ 31
Sonwil Distribution Center.................... 4
Sphere WMS.................................... 32
Editorial and Advertising
Disclaimers
The editorial contents of this publication are educational and informational
in nature, and not intended as minimum
standards, or legal or other professional
advice.
The International Warehouse Logistics
Association has endeavored to include
appropriate and accurate statements, but
disclaims any and all warranties and/or
responsibility for the statements or their
application. Users should confer with their
professional advisers for specific input
and assistance concerning their respective
projects.
didn’t know what I could do to make
a difference.
I talked it over with my wife Ruth,
and decided to follow the advice of
Mother Teresa, “If you can’t feed a
hundred people, then feed just one.”
From that initial commitment to
help others, one person at a time,
our nonprofit organization Point of
Impact (POI) was born.
Simply put, we decided to do what
we could with what we had. We began
with an outreach program in Honduras, providing education and medical
aid to a few underprivileged children.
As our company grew, so did this organization, and the voluntary participation in it by our employees.
In an inspiring example of living
out the culture reflected in our guiding principles, our employees have
eagerly adopted Point of Impact. They
have also enlisted the support of their
family and friends to help it grow.
Today, through POI, our company
and dedicated employees help feed,
tutor and provide medical assistance
Any expressions of opinion or perspective by authors of articles included in this
publication are not necessarily those of
the IWLA.
The inclusion of commercial advertisements in this publication constitutes
neither a recommendation nor an endorsement of the product or service
advertised. Although the International
Warehouse Logistics Association will not
knowingly publish a false or misleading
advertisement, no attempt has been made
to verify the contents of advertisements
included in this publication unless other
than as set forth in writing by IWLA.
28
Impact Logistics, Memphis
to hundreds of children and their
families in Africa, Honduras and at
home in Memphis.
And while we’re doing more
through POI than we were in the beginning, we realize that the needs are
still great. Giving back to the communities that have supported our
businesses, and where our employees
live, is more than just a corporate
responsibility; I see it as a corporate
necessity.
Companies should share their
success by reinvesting in the communities whose resources – human
capital, infrastructure and professional services – have contributed to
that success. This reinvestment not
only creates stronger communities
for residents; it also establishes the
businesses as trusted, viable members of the communities in which
they’re located.
The key is to be inspired — but not
paralyzed – by assessing the needs
around us, and determining how we
can make a positive impact with what
we have.
David S. Hamilton is founder and
CEO of Impact Logistics, a Memphis,
Tenn.-based logistics, warehousing and workforce company. Since
launching Point of Impact in 2006,
the organization has benefited thousands of children and their families,
in the U.S. and abroad. For more information on the organization, visit
www.poihn.org.
WMS PERFORMANCE IMPROVEMENT
Task Interleaving to
Maximize Your Labor
By Matt Stokfisz
A
“Task
interleaving”
takes the
power of the
WMS taskmanagement
engine to
a new level.
T THE CORE of a warehouse manage
ment system’s ability to improve
throughput and reduce labor costs is the WMS
software’s “task-management engine.”
The task-management engine can be considered the brain of the WMS; it notes what
work needs to be accomplished, and assigns
the work from its queue to specific workers,
typically via wireless RF mobile devices. In
higher-end WMS systems, those tasks are assigned to individuals based on the so-called
“3 Ps”:
Permission: Is the operator permitted
to do a specific task? (E.g., is he or she authorized to access the customer account; does
he have the training/certification to use the
equipment required for the job, and so on.)
Proximity: Is it efficient for the operator
to do a task based on where he or she is in the
warehouse right now compared with others?
Priority: How important is this task?
(For example, is it a “hot” replenishment”?)
Each WMS will have its own algorithms
for how these factors are combined to assign tasks to workers. Generally, the taskmanagement-configuration process will offer
flexibility in how these rules are established.
The system should also allow the generated
task assignments to be overruled in real time
by floor managers if necessary, though the
ease of doing this will also vary from system
to system.
■ Task Interleaving Goes
a Step Further
“Task interleaving” takes the power of the
WMS task-management engine to a new level,
by combining tasks for operators in a warehouse to increase productivity and reduce
equipment “deadheading.” Interleaving isn’t
for every operation, but can drive big productivity gains for those that can make it work.
While put-away and picking are among the
most obvious and generally most critical tasks
to consider for interleaving, maximum value
will be achieved if the task engine is looking
across most or all types of work in its pool of
work to be assigned.
In a warehouse without interleaving, at
any given time, workers typically focus on
single tasks, such as put-away, which leaves
them driving empty forklifts back to the receiving area after each piece of work. With
task interleaving, different types of tasks can
be assigned to a given operator; he or she
might, for example, be assigned to do a fullpallet pick for a replenishment task in the
case pick area after completing a full-pallet
put-away. Assigning this different type of task
to a put-away operator reduces the amount
of unproductive travel. The tasks given to
workers in this scenario are still determined
based on the three Ps, but the pool of available assignments is larger, including several
different types of task.
The broader the list is of possible tasks
in the task-management engine, the greater
the pool of potential work assignments is,
and hence the greater the opportunities are
to efficiently combine tasks and reduce deadheading.
That, however, involves greater operational complexity for operators, who must
master multiple tasks. It is possible to have
your skilled operators take on full interleaved
work, while others are assigned more-limited
tasks that suit their abilities.
Companies often find productivity gains
of 10 percent to 20 percent when moving to
interleaving, and sometimes as high as 30
percent.
While task interleaving was more myth
than reality in terms of real warehouse deployments 13 years ago, today an increasing
number of companies are using the approach.
Matt Stokfisz is business development director for Zethcon Corporation.
29
TECHNOLOGY
The Impact of Robotics and
Automation on Logistics
By John Manners-Bell and Ken Lyon
John Manners-Bell
Ken Lyon
A world
without
drivers or
warehouse
staff?
This may be
some way off,
but certainly
not out of the
question.
30
One of the most-talked-about subjects at
the World Economic Forum annual meeting
in Davos, Switzerland in January 2014 was
the impact that advances in manufacturing
technology will have on production. In the
past two years, much has been written about
3D printing, but less attention has been paid
to developments in robotics, which could have
an equally material effect on industrial practices. This will have undoubted implications
for global supply chains.
Of course, automating production lines is
nothing new. Many industrial-relations battles
have been fought over efforts to introduce robots to the production process, especially in the
automotive sector. However, what is happening now has the potential to go much further.
■ The Supply Chain Implications
of Automation
Logistics companies must take note of
these developments, as they will lead to direct
and indirect transformative pressures on the
industry.
First, the production strategies of their
clients will change dramatically. By adopting
the latest robot technology for such basic and
repetitive tasks as pick-and-place, there is the
opportunity for employers in the West to rapidly reduce labor costs. Robots are especially
good at undertaking functions where precision or consistency is required.
This, of course, would rebalance manufacturers’ labor costs, and reduce the competitiveness of remote markets. This trend would
be reinforced by manufacturers’ increased
awareness of global supply chain risks and
other pressures to near-source. This could
lead to manufacturers preferring to establish
new facilities in or near the major consumer
markets in North America or Europe.
Intuitively, the sectors that are most likely
to lose out from these changing patterns of
upstream and downstream distribution will
be the freight forwarders, shipping lines and
air cargo carriers, focused as they are on
global flows of goods. However, what may
happen instead is that economic growth will
be stimulated by the adoption of these new
technologies. This would have an ameliorative impact on the size of the overall market,
although the fastest-growing segment would
likely be domestic/regional distribution.
■ Direct Impact of Robotics
on Logistics
Second, there is the direct impact that advances in new technologies could have upon
the transport and warehousing industry. The
sector, of course, is very labor-intensive in
terms of both drivers and warehouse staff. In
20 years, however, this situation may well have
changed dramatically. Google is already testing
technology that would result in driverless cars,
and it seems reasonable that, once regulatory
and labor organization barriers are overcome,
we will see a growing number of driverless
trucks on the roads. This would have obvious
benefits in terms of costs, and would consign
tachographs and hours-of-service to history,
thus improving supply chain efficiencies.
In Japan, such tests are already underway,
led by the New Energy and Technology Development Organization (NEDO), which has successfully trialled convoys of driverless trucks
using sensors to identify their position on the
road and potential obstacles. The trucks are
able to brake with a reaction time of just 20
milliseconds and hence can take advantage of
the slipstream of the vehicle in front – traveling in intervals of about 13 feet. NEDO believes this will reduce fuel costs by 15 percent.
Of course, by removing the driver costs, there
will be far greater savings.
Caterpillar already uses six fully automated
and programmed mining trucks at a facility
in Australia. They can run 24 hours a day,
which would normally require a team of four
drivers. They are monitored from a
remote-control center, although they
have the ability to make decisions on
whether to stop at, or go around or
over obstacles themselves.
Although there is a long way to
go before we see driverless trucks on
shared roads, ironically it may be safety that becomes the main argument for
their adoption. Governments are keen
to reduce the numbers of people killed
or injured in bus and truck accidents,
and a large number of these incidents
are caused by preventable driver error. For example, a driverless vehicle
will not be distracted by an incoming
cell phone call and there would never
be a blind spot for cyclists.
Once the truck arrives at the distribution center, it would seem entirely possible for the unloading and
put-away process to be entirely automated. Already in the U.S., Amazon
is using robots in some of its distribution centers; in 2012, it paid $775
million to buy robotics company Kiva
Systems. Its robots bring product
shelves to a human picker, rather
than the human picker walking the
aisles to identify product. According
to the company, this increases productivity by three or four times.
■ The Ethical Perspective
There are obvious social concerns
arising from these advances in technology. Some believe that developments could result in a structural
change in employment, similar to
that seen in the industrial revolution.
The steam engine, and subsequently
tractors, decimated the numbers of
agricultural workers required to work
on the land. At the same time, though,
new jobs were created in factories,
which eventually led to the higher
standards of living seen in the Western world today. Robotics could result, many hope, in a similar pattern
of change, and it has been suggested that a new wave of employment
would be created by the production,
selling and maintaining of robots.
It has been estimated in one study
(“Positive Impact of Industrial Ro-
bots on Employment” Metra Mar-
tech, UK, November 2011) that 2
million to 3 million jobs could be
created in sectors that are presently
uncompetitive in world terms – in
other words, where they are unable to
compete against remote, low-cost-labor markets. This would apply mostly
to the electronics and automotive
industries.
Researchers are very well aware,
though, of the sensitivity of the issue,
and tentatively talk of integrating
robots into teams of human workers,
as a sort of collaboration. Google has
created its own ethical committee to
review the impact of its technology.
Robotics companies themselves have
started a “robots=jobs” campaign, arguing that those economies that have
adopted this technology, such as Germany and Japan, have actually created more jobs than have been lost.
However, the longer-term implications are clear. There is no doubt that
improving efficiencies will create value, stimulating economic output and
leading to a demand for higher-valueadding jobs. The trick for politicians
Success cannot be
found in a box.
Work with an executive coach and
look in the right places.
My clients are:
• Clear on what’s important to them
• Focused on results
• Paying Attention to new opportunities
• Intentionally creating the future, not just letting it happen
Is your business where you want it to be? Are you where you want
to be? If not, call Head Coach Chip Scholz or check us out on the
web to learn more about taking your success to the next level.
Call 704-827-4474
www.scholzandassociates.com
31
will be to transfer large manual-labor forces (such as those
in the logistics industry) to these higher-value jobs; otherwise, they risk creating an underclass of unskilled and
unemployable workers. This is a question policy makers
will have to address carefully. A world without drivers or
warehouse staff? This may be some way off, but certainly
not out of the question.
■ How Quickly is 3D Printing Developing?
The development of 3D printing technology (additive
manufacturing) is also continuing at a rapid pace, and serious investment is now being made by global manufacturers into this technology.
In one example, it was announced late in 2013 that researchers at Cornell University had managed to fabricate
a working loudspeaker assembly using 3D printing alone.
Apart from its plastic housing, the speaker includes a fully
functional conductive coil and magnet spun from two specially designed desktop customizable printers. The coil is
created from a silver ink extrusion, while the magnet is
spawned from a high-viscosity blend of strontium ferrite.
It was then used to play back recordings to confirm its
functionality.
Printing items using multiple materials is not new, but
to do so using relatively inexpensive desktop printers is an
interesting example of how the technology is being pushed
forward
by the research community.
1976.IWLAadMikeMullane
4/7/15 9:53 AM Page 1
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32
sion began manufacturing heavy-duty spare parts for its
gas turbines using 3D printing. The company foresaw that
the process would reduce repair time from over 40 weeks
to within four weeks. This massive reduction in repair time
was expected to result in significant cost savings.
General Electric (GE) plans to make extensive use of 3D
printed parts within its commercial jet engines. It expects
to manufacture over 85,000 fuel nozzles for its LEAP
engine orders, entering production in late 2015. The company is significantly increasing its investment in industrial
printers to increase capacity to meet this demand.
The primary attraction for GE is that the 3D printed
parts are lighter and much stronger than conventional
metal parts and can withstand the much higher temperatures (2400°F) necessary. GE has been purchasing 3D
printing manufacturers to accelerate this process and develop new generations of printers.
It seems that the other major aerospace manufacturers
are following suit, with Rolls-Royce, Lockheed and Boeing introducing 3D printed parts into their manufacturing
processes.
Some segments of the aerospace industry have discovered that, by using 3D printing to print complete assemblies in one piece (e.g., reconnaissance drones), they get a
dramatic reduction in weight and tremendous increase in
strength and durability. These developments will help to
increase understanding of the advantages of 3D printing.
United Parcel Service (UPS) also announced in 2013 that
it would install commercial-grade 3D printers into all of
the UPS stores across the U.S. for use by businesses. This is
undoubtedly as much a strategy for the company to understand how this technology could change the manufacturing
landscape and related logistics demands. It also gives UPS
the opportunity to design new service offerings based on
these observations. UPS already has a significant service
parts operation, which we suspect will be the sector most
likely to be impacted by the general adoption of 3D printing.
Despite these developments, industry is continuing
to examine the extent to which 3D printing may impact
global supply chains. The existing economies of scale in
many sectors are unlikely to be threatened by additive
manufacturing in the immediate future. The cost of the
metal powders and plastic substrates used in existing machines is still many times more expensive than the same
compounds presently used in conventional high-volume
production lines. But the raw-material cost will probably
come down and it is not the only significant cost factor in
many supply chains.
No doubt the media hype will fade over time, but we expect to see more developments as this technology enters the
mainstream and existing manufacturers as well as innovative start-ups challenge the conventional business models.
John Manners-Bell is CEO of Transport Intelligence. He
can be reached at jmannersbell@transportintelligence.
com. Ken Lyon is Managing Director of Virtual Partners.
His email address is [email protected].
ENERGY EFFICIENCY
Increasing Warehouse
Energy Performance
with ENERGY STAR
By Clark Reed
T
O KNOW WHERE YOU ARE GOING and how long the journey is, you
must first know where you are and where you have been. In energy management, finding your location and bearing comes from benchmarking against
your peer group.
Over the past 15 years, thousands of commercial organizations have partnered with the U.S. Environmental Protection Agency’s (EPA’s) voluntary
ENERGY STAR® program to adopt best energy-management practices and
demonstrate environmental leadership. EPA created the ENERGY STAR score
to help measure, track and compare the energy performance of commercial
buildings, including warehouses and distribution centers. Warehouses represent one of the largest sectors in the U.S., with energy accounting for 15 percent
of operating costs on average.
EPA has found that newer
buildings do not necessarily
outperform older buildings
in terms of energy
efficiency.
■ Measuring Energy Performance
Many facility managers who replace lights or install efficient HVAC equipment expect that their actions will automatically result in more energy-efficient
buildings. Intuitively, this makes sense, as today’s building components are
more efficient than even a few years ago. However, EPA has found that newer
buildings do not necessarily outperform older buildings in terms of energy efficiency – nor is the presence of more advanced technology sufficient, on its own,
to guarantee superior energy performance. Rather, the key is how the property
is operated, and facility managers need to know how their buildings are actually
performing (as opposed to predicted performance) in order to make the most effective operational decisions, confirm intuitions, and recognize and build upon
best practices.
■ The ENERGY STAR Score
For these reasons, EPA developed the 1–100 ENERGY STAR score to help
building operators understand how their properties are actually performing,
compared with similar buildings nationwide (while accounting for size, climate
and other key operating parameters).
Warehouses receiving a high score are considered to be better energy performers (lower energy use) than those with low ratings (higher energy use).
A rating of 50 is defined as the industry median. A warehouse with a rating of
75 performs better than 75 percent of similar warehouses across the U.S. and
is eligible to receive ENERGY STAR certification from the EPA in recognition
of superior energy performance. Warehouses outside the U.S. cannot earn ENERGY STAR certification currently; however, they can still be benchmarked in
Portfolio Manager®, allowing performance evaluation and identification of opportunities for improvement.
The ENERGY STAR score is about more than just earning certification.
Facility managers at any level of performance can use EPA’s Portfolio Man3PL Americas — Spring 2015
33
ager benchmarking tool to set performance goals, track energy use,
and measure improvement over time.
To date, more than 400,000 buildings – including 3,000 warehouses
and distribution centers – have been
benchmarked in Portfolio Manager.
Given such widespread use, ENERGY
STAR scores have become equivalent to a “miles-per-gallon” rating for
commercial buildings.
■ Behind the Curtain
An ENERGY STAR score is accessible to the public for free through
the ENERGY STAR website (www.
energystar.gov/benchmark), where
people can create their own password-protected accounts in Portfolio
Manager. As they set up their properties, users are asked to describe
basic features of their warehouse,
including:
• Warehouse type (refrigerated or
unrefrigerated);
• Building floor area;
• Number of workers on main shift;
IWLA Events
Calendar
★2015 IWLA Economics
of Warehousing &
3PL Sales Course
May 13 to 15 – Niagara Falls,
N.Y.
★2015 IWLA Safety
& Risk Conference
September 2 and 3 –
Chicago, Ill.
★2015 IWLA Technology
& Operations for
Warehousing Solutions
Conference
September 24 and 25 –
Fort Worth, Texas
★2015 IWLA Essentials
of Warehousing Course
October 6 to 9 – Tempe, Ariz.
34
An ENERGY STAR score
is accessible to the public
for free through the
ENERGY STAR website.
• Percentage of building heated/
cooled; and
• Hours of operation per week.
These values are fed into an underlying scoring model, which allows
the tool to normalize for operating
parameters, weather, and choice of
fuel mix.
Once the warehouse space has
been defined, users enter monthly
energy-consumption data (which
can be gathered from utility bills,
captured from a building energymanagement system, or provided by
energy information service providers). Portfolio Manager requires at
least a year’s worth of data in order
to generate a score.
From here, users can establish an
energy “baseline” from which performance can be measured as subsequent months’ energy data are added.
Although cost is not a required input
in order to obtain a score, Portfolio
Manager allows users to enter this
information in order to track cost per
square foot and total energy expenditures over time.
■ After Scoring Process
Although the 1–100 ENERGY
STAR score does not prescribe specific actions to increase performance
(better left to energy auditors and
other professionals), the score can
help guide property owners and operators towards general recommendations. For owners/managers of
multiple properties, the score can
also be used to help identify those
buildings most in need of immediate
attention.
Low Scores (1 – 49) – Greatest
Opportunities for Investments
Warehouses in this category may
provide attractive returns on capital
investments. Opportunities to upgrade lighting, HVAC, materials handling, and other significant energy
using systems should be explored.
Recognizing that a property is not
performing as well as expected may
also help to gain the attention and
commitment of property- or organization-level decision makers, who
may recognize the need to devote
resources to underperforming properties.
Mid-Level Scores (50 – 74) – Finetune Operations and Maintenance
Warehouses with mid-range
benchmarks should consider
low- or no-cost activities such as
developing and implementing preventative-maintenance plans, reviewing temperature set points
and lighting schedules, increasing
employee training, or re-assessing
incentive, recognition and reward
systems to ensure that they drive
energy performance. Often, these
relatively low-cost efforts can help
shed unnecessary energy use that
can help these facilities become “top
performers.”
High Scores (75 – 100) – Reward
and Learn
Warehouses within this range are
among the highest energy performers
compared with other U.S. warehouses, and may be eligible to apply for the
ENERGY STAR certification. Upon
successful receipt of this recognition,
facility managers may consider sharing their energy-management plans,
operational strategies and other best
practices within their organization –
or even externally, so that others may
replicate their success.
For more information, visit www.
energystar.gov/buildings to find a
registry of ENERGY STAR certified
warehouses, trainings for benchmarking warehouse energy performance, tips from successful leaders
to create an action plan for implementing upgrades, and many other
resources to save energy and reduce
costs.
Clark Reed is National Program
Manager, ENERGY STAR, U.S Environmental Protection Agency.
IWLA Education Helps You
ConneCt, DisCover, innovate
The 2015 IWLA educational offerings will help you continue to evolve to better serve
your customers and succeed as a warehouse logistics professional. Registration is open
at www.IWLA.com for most of these events. (Please note that IWLA has rearranged the
education schedule to better serve members.)
2015 IWLA Economics of Warehousing & 3PL Sales
May 13-15
Niagara, N.Y.
2015 IWLA Safety & Risk Conference
Sept. 2 & 3
Chicago, Ill.
2015 IWLA Technology & Operations Solutions Conference
Sept. 24 & 25
Fort Worth, Texas
2015 Essentials of Warehousing Course
Oct. 7-9
Tempe, Ariz.
2015 IWLA Warehouse Legal Practice Symposium
Nov. 11 & 12
Chicago, Ill.
IWLA has other educational opportunities available on demand or via distance learning.
Watch the IWLA On-demand Resource Center at www.IWLA.com for the latest live webinars
and archived materials.
STORAGE SYSTEMS
Phone: 847-364-2400
Pallet Rack
Push Back Rack
Drive-In Rack
Structural and Roll Formed
Furniture Rack
Pallet Flow Rack
Pick Modules
Mezzanines
Innovative Solutions
for Storage and
Material Handling
Systems
Toll Free: 1-888-566-7826
www.konstant.com
Integrated Systems
Carton & Pallet Flow Rack
Pick Towers
Shelving Systems
Structural & Roll-Formed
Mezzanines
Selective Rack & VNA
Pallet Runner®
Double Deep Rack
Push Back Rack
Drive-In Rack
Supply Chain
Solutions
1-866-473-3472
www.redirack.com

Corporate Profile: ODW Logistics Getting the Most from Your Staffing

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