3PL Americas - International Warehouse Logistics Association

Transcription

3PL Americas
™
PM 42128520
12
ANNIVERSARY
Founded 1891
w w w. I WL A .c om
I
A W
N L
N A’
IV S
E 12
R 5
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NORTH AMERICA’S WAREHOUSE & LOGISTICS MAGAZINE • WINTER 2016
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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, Canadian Council of IWLA
Copyright © 2016, International
Warehouse Logistics Association
(IWLA). All rights reserved. No
part of this publication may be
reproduced by any mechanical,
photographic or electronic process,
nor may it be stored in a retrieval
system, transmitted or otherwise
copied (except that members of
IWLA may copy all or part of this
publication exclusively for personal
use or use in the operation of that
member’s business, but excluding
any publication) without prior
written permission from IWLA.
For permission, contact the publisher,
J.M. Levi & Associates Ltd.
Consulting editor
David Long
Associate editor
Kim Biggar
IWLA liaison
Morgan Zenner
Sales representative
Cheryl Ezinicki
Design and layout
Pagecraft Computer Services
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
Email: [email protected]
Canada Post
Agreement Number: 42128520
3PL Americas
™
NORTH AMERICA’S WAREHOUSE & LOGISTICS MAGAZINE • WINTER 2016
3PL Americas
North America’s Warehouse & Logistics Magazine • Vol. 8, No. 1, Winter 2016
6
Year End Brings Much to Love
By Steve DeHaan
7Celebrate Our History — and Shape Warehousing’s Future
By Rob Doyle
9Leadership, Innovation and Your Personal Brand
By Kaplan Mobray
11Education Calendar
13125 Years…and “We’re Just Getting Started!”
By Morgan Zenner
15RFQ: Request for Quality — Attaining a Mutually Successful
Outsourcing Relationship
By Will Morgan
19IWLA’s Canadian Council: How the IWLA Got Its “I”
(or Became International)
By Kim Biggar
20Who Wants to Work in a Warehouse?
By Robert J. Bowman
21IWLA Events Calendar
22Future Issues of 3PL Americas
24The Years in Pictures
30The New SOLAS Container Weight Verification Requirement
By John Dimitry
32John McKenna — 2015 Mississauga Business Person of the Year
36Will Emerging Tech Drive the Next Generation of Supply
Chain Success?
By Kristi Montgomery
38Advertiser Index
39Diversity and Inclusiveness: The Path to Innovation,
Collaboration & Growth
By Rob Doyle
41IWLA Partner Member Helps Member Gain Essential Visibility
By Peter Yost
43The Business of Moving Stuff: A Short History of Commercial
Warehousing in North America
PM 42128520
12
ANNIVERSARY
Founded 1891
w w w. I WL A .c om
I
A W
N L
N A’
IV S
E 12
R 5
S t
A h
R
Y
Cover photo:
IWLA archives
By Ken Ackerman
12
ANNIVERSARY
Founded 1891
Full contact information for authors can be
seen on the IWLA website at www.iwla.com/
library/publications.
™
PRESIDENT’S MESSAGE
Year End Brings Much
to Love
T
• You and your warehouse staff have
HE END OF THE YEAR brings
new and expanded opportunities for
busy times. IWLA member com3PL-specific education and informapanies generally handle more materials
tion. IWLA councils have their fingers
in the last quarter than at other times of
on the pulse of developments in rail and
the year, as the holiday season means
trucking, food safety and regulations,
more activity for their customers. At
chemical handling and global harmonithe same time, corporations, and even
zation, and more.
IWLA, are closing out their fiscal years.
• With all of this progress, we don’t
This adds more to that already-fastwant to lose site of the association’s
paced mix. And, of course, the holidays
path: I am happy to report the assobring their own stressors to our perciation is growing in membership. And
sonal lives.
we’re coming off of two good years of
However, I like the end of the year
needed financial performance.
with its hustle and bustle. That activity
You have a great set of leaders in
reflects productivity and, I hope in most
the fellow warehousemen and partners
cases, progress. The close of the year,
you’ve placed on the board of directors.
while really just an arbitrary measure,
It is rare to find so many individuals
brings a chance to reflect and to look
who are able to put aside their personal
forward. And I see a year of progress for
We can celebrate our
interests to focus on the greater good
IWLA and great things on the horizon.
125 years of warehouse
of an industry. Because of this, I think
As I review 2015, I see many great
IWLA is poised for even stronger years
things in our industry – and in your
innovation, but we really
ahead.
association:
are “Just Getting Started.”
The tagline for IWLA’s 125th anni• Our members will be better able to
versary is accurate. We can celebrate our 125 years of wareserve their customers because of the new U.S. infrastruchouse innovation, but we really are “Just Getting Started.”
ture funding bill. IWLA members actively worked to get
I look forward to giving you more details about how I
this bill passed. Perhaps with this, our highways, bridges,
view the state of the association on March 15 at the annual
and rails will be able to handle ever-increasing demands.
IWLA business meeting during the 2016 IWLA Convention
• The regulators and lawmakers whose actions affect
& Expo. Please register at www.IWLA.com.
our businesses every day are coming to understand exactly
If you have specific questions about IWLA, please conwhat 3PL warehouses do and how much we differ from the
tact me directly, at [email protected].
manufacturers, retailers, and other shippers we serve – the
true owners of the materials we handle.
• This evolution in Washington comes, in part, from our
always increasing presence in the capital. We had record
Steve DeHaan, CAE
attendance during the fall 2015 IWLA Council Summit &
President & CEO
Regulatory Fly-in, where many of your peers met personInternational Warehouse Logistics Association
ally with congressmen and regulators.
6
3PL Americas — Winter 2016
CHAIRMAN’S MESSAGE
Celebrate Our History — and
Shape Warehousing’s Future
I
about the creation of the IWLA Trans’M A HISTORY BUFF. I enjoy
portation Advisory Council. This group
learning about how we got where
of members with similar concerns has
we are. U.S. history is my passion, but
parallels in the IWLA Food Council,
reviewing ancient and modern world
the IWLA Chemical Council, and other
history also allows great insights. If it’s
councils.
true that history repeats itself, I want to
• IWLA still educates members about
be ready.
topics and issues that affect their ability
Looking back also gives me an appreto serve customers, create safe working
ciation for how the more things change,
environments, and maximize margins.
the more they stay the same. We’ve
• Never has the spirit of “cooperative
always had conflicts. But great leadcompetition” been more evident than
ers – in industry, in government, in
during IWLA events. Members share
life – have always worked to overcome
ideas and stories – and refer customers.
adversity.
• The association works more closely
For the warehousing industry, leadthan ever with regulatory agencies, to
ers late in the 19th century saw a need to
make sure the Surface Transportation
create a unified voice for their evolving
Board, the Food & Drug Administraprofession. There was adversity to overtion, OSHA, congressional staff, state
come – even then, records show early
IWLA’s ability to adapt
leaders, and other people and agencies
discussions about how to effectively
to changes in the
understand the 3PL perspective and
work with railroads – but they also saw
business.
the promise that shared knowledge and
marketplace helped it
As you can see, we are spending some
“cooperative competition” held.
stay relevant.
time reflecting on the past century-andThe founding fathers created what
a-quarter. This issue of 3PL Americas devotes many pages
would one day be called the International Warehouse
to AWA/IWLA’s history. We’ve already asked for – and
Logistics Association. The association’s (and its leaders’)
received – input and historical documents and items from
ability to adapt to changes in the marketplace helped it stay
you. You have stepped up. IWLA will have a great museum
relevant, as simple public warehousing grew into “wareon display during the Annual Convention.
house logistics,” with all that implies – from pick-packI feel very fortunate to lead the association as we reflect
ship to manufacturing and other value adds.
on the past, and look forward to the great things ahead for
For some reason, we mark significant passage of time in
our industry and our trade association. We are building on
five-year increments. 2016 is the IWLA’s quasquicentenour strong history.
nial: It’s been 125 years since those early warehousemen
I cannot wait to see where it takes us next.
created predecessor association, the American Warehousemen’s Association (AWA). And throughout those
125 years, our aims and goals have stayed true to those
addressed by the original founders:
Rob Doyle
• IWLA still helps warehouses work more efficiently and
Chairman
economically with the railroads. This, coupled with the
International Warehouse Logistics Association
trucking issues that were not yet an issue in 1891, brought
7
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2016 IWLA CONVENTION + EXPO
Leadership, Innovation
and Your Personal Brand
By Kaplan Mobray
T
The key to unlocking the
opportunities that come
from innovation lies
in understanding that
innovation starts with
people, not technology.
KEYNOTE SPEAKER
ODAY, the world’s most profitable companies, entrepreneurs, and
forward-looking organizations understand the need for innovation as a
tool for growth and competitive advantage. Despite this agreement, organizations and individuals often struggle to maintain innovation, given the hurdles
involved in gaining the resources, time and capital necessary to innovate, along
with market acceptance of new ideas. One of the main reasons for these hurdles
is that innovation, while acknowledged as necessary for business growth, is regularly seen as something you implement as opposed to a mindset you embrace.
The key to unlocking the opportunities that come from innovation lies in
understanding that innovation starts with people, not technology. In any organization, people tend to mirror the behavior and mindset of their leaders. So,
to increase innovation in their operations, leaders must, for example, align the
trends that emerge for warehouse-based 3PLs, including big data analytics, mobile warehouse management, the internet of things, and real-time traceability
and custody, with how warehouse and supply chain professionals embrace innovation as part of their personal brand, what they become known for through
their work.
When you lead with an innovation mindset, you focus on:
1. Helping others to see innovation as a way of life, such that it becomes normal behavior and not just for “creative or technology types.”
2. Teaching others how to innovate, enabling them to reorient their thinking
to unleash their creativity, allowing everyone to feel like an inventor.
3. Making innovation a strategic priority that is measured and establishes
personal accountability for continuous improvement for everyone who touches
the supply chain.
At its core, innovation is about redesigning the “how” you do “what” you do
to grow the business, and using resources to implement your forward thinking.
For leaders looking to make innovation a strategic component in efforts to
catapult their organizations to growth and instill an innovation mindset in their
workforce, I offer these considerations.
■ Innovation Starts with Inspired Thinking
Time studies have shown that most people spend about 80 percent of their
day on “non-inspired actions.” This includes everything from responding to
emails, sending emails to avoid being exposed, sitting in meetings and taking
notes, all of which create a backlog of work. Work output stemming from what I
call a “response mentality” becomes a way to establish a sense of responsibility
for work to be done and cements one’s value to the organization.
On the flip side, the quantity of time spent on “inspired actions,” things such
as taking a pause to think of new ideas for business growth, reassessing the
need for redundancies, benchmarking, re-evaluating processes to create more
efficiency, collaborating, and investing in how people feel while they are working
to produce results – the time spent using what I call a “create mentality” – is
for many 20 percent or less. But companies want innovation and, as a leader,
you want your employees to be inventive, to think of the next big thing or how
9
to do the current thing better. The
reality is that organizations want innovation, but don’t often devote time
to promoting the inspired thinking in
their workforce that allows people to
innovate. When this happens, organizations decline, and the “next thing”
that could catapult your company to
exponential growth disappears.
So, leaders who are focused on
growth and embrace innovation as
part of their personal brand look
first at transforming the culture of
their organizations’ workforce from
a “response mentality” to a “create
mentality.” This shift makes everyone an active participant in the systems, collaborative processes and
idea generation that drive continuous
improvement to deliver a competitive
advantage.
Innovation starts by taking something we do every day – that is, work
to create value – and injecting an
element of inspired thinking, such
that our actions and behaviors are
self-directed toward continuous improvement and provide an unex-
125
Congratulations on
125 years, IWLA!
Thank you for your service to the
warehouse logistics industry.
sclogistics.com | 888-878-1177
WAREHOUSING • TRANSPORTATION • PACKAGING • FULFILLMENT
10
pected benefit to the business.
■ Innovation Occurs When
You Give Your Physical
Environment a Purpose
“The first step toward success is
taken when you refuse to be a captive of the environment in which you
first find yourself.” – Mark Caine
It is a long-known fact that we are
the product of our environment. We
all have innate capabilities and skills
that can be fostered, or not, to operate
at maximum capacity. Our physical
environment is the catalyst to our
thoughts; it shapes how we see ourselves in the context of our skills and
allows us the freedom to move beyond our capabilities to create something new.
There is a strong connection between innovation and physical environment. Often overlooked, one’s
physical environment has a direct
impact on his or her ability to think
and invent the new. This includes
space vs. clutter, light vs. dark, sun vs.
clouds, color vs. monotone, patterns
vs. plain, open vs. closed, and elevated vs. lower. This impact extends
to customers in how they make purchase decisions and value the experience in a brick-and-mortar location.
To encourage greater levels of innovation in their workforce, leaders should give careful consideration
to the physical environments where
people work, creating places conducive to the type of innovation they
seek. For example, if the goal is to get
workers to be more efficient and to
increase their workload, then a tight
space that forces efficiency is optimal.
If your focus is on warehouse automation, then an environment that
celebrates technology and do-it-yourself applications over physical labor
should direct your space and internal
messaging. If the goal is to expand
new ideas for growth, then a physical
environment that allows people to see
beyond a wall, have open space and
increased lighting will inspire more
creativity and new possibilities.
Aligning your physical environment to your strategic innovation
goals allows your workforce to visibly
be a part of the effort to make your
organization more innovative. It also
allows your physical environment to
have a purpose that connects to your
company mission and business goals.
■ Innovation Survives
2016 Education Calendar
on a Diet of “What If”
Have you ever stopped to analyze
May 11-13, 2016 - IWLA Economics of Warehousing & 3PL Sales Course
how many times a day you ask, “What
Austin, Texas
if…?” Have you ever stopped to count
Learn more at
Sept. 7 & 8, 2016 - IWLA Safety & Risk Conference
www.IWLA.com.
how many “What ifs…” you hear from
Palm Beach Gardens, Fla.
your employees? Think back to early
Sept. 29 & 30, 2016 - IWLA Technology & Operations Solutions Conference
childhood curiosity and how often
Pittsburgh, Pa.
the words “What if” were a part of
Oct. 4-7, 2016 - IWLA Essentials of Warehousing Course
how you experienced and learned the
Tempe, Ariz.
world. Successful innovation thrives
Nov. 3 & 4, 2016 - IWLA Warehouse Legal Practice Symposium
in a culture where people are asking
[email protected]
Rosemont, Ill.
“What if” as a part of how they work,
spectives, courageous curiosity, and a
workforce to start and end work proexperience, learn and complete obhunger for continuous improvement.
cesses with a “What if?” reflection.
jectives. If your people are not asking
These simple words help your organi“What if?,” they are not creating the
■ Innovation and Failure
zation to embed innovative thinking
“What’s next.” And if they are not crePlay on the Same Team
as the norm, and inspire employees
ating the “What’s next,” then you end
The most powerful element of any
to dream, to create the future, and to
up asking, “What happened?” as your
restructure their work habits to focus
effort to drive innovation is failure.
competition moves past you.
activities. From
Failure delivers frequent learning
Leaders gain a competitive
advan- 9:53onAMgrowth-producing
1976.IWLAadMikeMullane
4/7/15
Page 1
“What if” comes new ideas, new perthat creates successful innovation,
tage when they impress upon their
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IDS CONGRATULATES IWLA ON ITS
TH
125 ANNIVERSARY!
IWLA has played a tremendous role in
IDS becoming a premier provider of
fulfillment services.
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IDSFULFILLMENT.COM
11
because it elevates the opportunity that comes from Plan B.
There is a strong correlation between organizational
risk, failure, and innovation. Organizations that have a
high risk tolerance have a high learning tolerance and thus
are able to course-correct and become more innovative
over time. Organizations that have institutional risk avoidance tend to be slower to respond to market conditions
and end up less innovative and less flexible to capitalize on
market opportunities. When leaders celebrate failure, they
create an open forum for innovation that allows employees
to accept the opportunity to fail as a part of the process to
improve. When this happens, bold, big, transformational,
game-changing ideas are born. So leaders who make innovation a priority also make failure a priority. In fact, they
track failure as part of their reward system.
Consider the following:
1. What opportunities and assignments do you give
your employees with the collective expectation that they
will fail?
2. How often do you track and reward failure?
3. What performance management systems connect
inventive failure as part of your employees’ career development plans?
4. Do you have an internal failure lab where process and
continuous improvement ideas can be tested and experiments can occur with minimal risk to business operations?
Creating a destination for failure allows people to play,
experiment, think, and create. It shifts your culture from a
“response mentality” to a “create mentality.”
The key to a successful innovation-failure strategy is
to fail fast, learn quickly, correct accurately, redirect with
focus, and invent for success.
■ Innovation Allows Technology
to Have a Voice
Innovation and technology have long shared a codependent relationship; in fact, there are many who believe they
are one and the same. For example, some say you need
technology to innovate, while others believe that technology is an enabler of innovation. We often make the mistake
of looking for technology to “fix” the problem as opposed
to using technology to address the root of why you need to
innovate. Innovation actually starts well before a technology solution is offered. In fact, innovation, when executed
well, gives technology a voice to demonstrate the impact
of your innovation strategy. Technology allows for greater
collaboration and sharing of ideas with customers, and allows for efficiency of information sharing with colleagues.
But technology itself is not innovation.
Many leaders fail in their efforts to innovate because
they introduce technology too late or too early in the process of getting people first to adapt to change. A successful
innovation strategy, however, will allow people to adapt
to technology and to change separately, before they adopt
both collectively.
Kaplan Mobray is a speaker, consultant and best-selling
author of The 10Ks of Personal Branding.
12
IWLA’S QUASQUICENTENNIAL
125 Years…and “We’re Just
Getting Started!”
By Morgan Zenner
T
The war marked a milestone for warehousing as an
HE GOALS EMBRACED in the earliest days of
industry. The rapid rise in the volume of defense materithe American Warehousemen’s Association (AWA)
als and the influx of government resources translated into
still hold true: Cooperation builds a stronger future for
research, increased hiring, and a focus on new warehouse
warehousing, profitability, and the advancement of the
buildings designed for efficiency. The effort forced the
industry.
industry to experiment and invent new ways to organize
The earliest association records and documents are
the warehouse and to create new mechanical labor mechaeerily familiar and relevant: AWA members came together
nisms. At the same rate, rail trans– as IWLA members continue to do
portation became more reliable and
– to fight adversity and overcome
the use of trucks started to become
challenges. These warehousing promore widespread.
fessionals have always represented
ANNIVERSARY
The AWA’s experience in conductthe industry to the federal and reguing analysis related to warehousing
latory communities, communicating
operations and finding new ways to
the value of warehousing as part of
improve efficiency differentiated the
the fabric of North American ecoWe Believe…that cooperative
association as a supply chain leader
nomic prosperity.
competition is better than
and strategic resource. This research
One early AWA victory was stanantagonistic competition and
and the association’s educational
dardizing warehouse receipts. These
documents established the value of that by its aid we can give better offerings became essential member benefits. AWA produced many
the goods being stored, a process
service to our customers at less
groundbreaking publications on opthat was up to that time inconsistent,
cost to them and greater profit
erations, materials-handling equipwithout a recognized standard. This
to ourselves.
ment, inventory management, and
was a critical step toward establishing “3PLs” and “warehouse logistics” Credo published by the Merchandise modern distribution models. This
information did not exist anywhere
– terms that were decades from being
Warehousemen Division of the
else at that time.
coined – as recognized components
American Warehousemen’s
AWA members quickly realized
in the supply chain.
Association, May 1925
that pooling resources and participatAnother path toward legitimizaing in the association’s education and research improved
tion was through the creation of a glossary of terms. To this
their warehouses. And their customers began to notice the
day, IWLA members – and the broader industry – use the
difference: The AWA-member seal became a mark of disStandard Contract Terms and Conditions for Merchandise
tinction in the warehousing industry – and manufacturers
Warehouses, first put into effect by the AWA in 1968, as a
started to seek out AWA warehouses. Members also saw
standard for use in establishing legality in their warehouse
that customers needed more than storage and pallet-in,
documentation.
pallet-out service. They now add value to their customers:
Another step came when Japan attacked Pearl Harbor:
They pick and pack. They assemble. They conduct light
The U.S. government looked to the AWA for help. The
manufacturing projects.
country and allies needed access to warehousing for storAs AWA evolved, it joined with its Canadian counterpart,
ing surplus defense materials and agricultural products
the Canadian Association of Warehousing and Distribution
being shipped to soldiers overseas, and to optimize the
Services (CAWDS). The resulting association, the IWLA,
limited transportation network. In this way, AWA played
continues to produce educational opportunities for mema critical role in the World War II defense effort. The asbers that are specific to the warehouse logistics industry.
sociation and its members worked closely with the governThe IWLA Essentials Course is the only warehouse-basedment to provide research on space, locations, and other
3PL-specific overview course
Continued on page 22
attributes related to warehousing during that time of need.
12
Founded 1891
13
BUILDING ON THE PAST
12
◆ ◆ ◆
MEETING THE CHALLENGES
OF THE PRESENT
ANNIVERSARY
Founded 1891
◆ ◆ ◆
PREPARING FOR THE FUTURE
S
N
O
I
T
Chairmen of the International Warehouse Logistics Association –
past, present and future
A
L
TU
!
A
L
W
I
ROB DOYLE, CWLP – 2015-16
TOM HERCHE – 2014-15
PA U L V E R S T, C W L P – 2 0 1 3 - 1 4
A RT H U R B A R R E T T, C W L P – 2 0 1 2 - 1 3
LINDA HOTHEM, CWLP – 2011-12
G A RY M AY F I E L D , C W L P – 2 0 1 0 - 1 1
J E R E VA N P U F F E L E N , E W L P - 2 0 0 9 - 1 0
BRUCE ABELS, CWLP – 2008-09
J O H N Z E VA L K I N K , C W L P – 2 0 0 7 - 0 8
A
R
NG
CO
gary
paul
linda & arthur
arthur & sons
Jere
Iwla chairmen - past, present &
future
tom
It’s all about year-round governance, but our photos are from conventions where we meet
with members to exchange ideas, monitor the progress of IWLA’s initiatives and to
ensure continuance of leadership.
A D S U P P O R T E D B Y:
MANAGING PARTNERSHIPS
RFQ: Request for Quality —
Attaining a Mutually Successful
Outsourcing Relationship
By Will Morgan
■Abstract
Outsourcing to logistics service providers (LSPs) continues to be a popular
option, with 81 percent of shippers reporting some outsourcing of domestic
transportation activity.1 The decision
on which LSP to select is managed
through an RFQ bid process in which
of shippers report
both parties place considerable time
outsourcing domestic
and emphasis on the price associated
transportation
activity1
with outsourcing. By continuing to
engage in an RFQ process that focuses
too heavily on the price tag and not the
quality, outsourcers are limiting the benefits of outsourcing to an LSP.
This white paper presents ways in which businesses that are considering
outsourcing can improve the quality of the LSP responses. In doing so, the businesses will make a more informed decision when looking at the price of each response, which will lead to a relationship where outsourcer and LSP are aligned.
81%
This white paper presents
ways in which businesses
that are considering
outsourcing can improve
the quality of the
LSP responses.
■Introduction
In To Sell is Human, Daniel Pink argues that buyers have moved from the
dark ages of the used-car lot, where they were wholly dependent on salespeople
and price when making buying decisions, and can now bask in the glow of the
information age and have access to information that frees them from being “the
hapless victims of asymmetrical information they once were.”2 In the former,
salespeople were perceived as untrustworthy, and the only protection against
poor quality a buyer could invoke was to put downward pressure on the price.
In the latter, buyers expect a hassle-free buying experience in which the playing
field is level between themselves and the salesperson. From buying used cars
to homes, the internet and the information age have given potential buyers
a wealth of information that allows them to evaluate the quality of a product
before ever engaging with a seller to discuss the price of the item. Once a buyer
engages with a potential seller, the discussion can focus on actual information
and not get bogged down in price negotiations.
So how has the relationship between outsourcers and LSPs changed? Are
today’s companies supply chain savvy enough to engage with potential LSP
partners and conduct an RFQ that will reap quality responses? Or do companies
still feel like they have walked onto a used-car lot circa 1985 when dealing with
potential LSP partners? If companies still approach supply chain outsourcing
with trepidation due to the asymmetrical information, then it is no wonder
outsourcers and LSPs dig in and lock horns over the price of a response without
considering the quality of the response.
15
■ Current State
An RFQ is by definition a forwardlooking document. The outsourcer
spells out what it wants in a future
state, and LSPs make projections on
how they would help to achieve that
state and how much doing so would
cost. Then an outsourcer makes a
decision on which LSP to award the
business by weighing the cost and
quality of the response. Therefore,
we can assume the following applies:
A potential outsourcer will select an
LSP when the perceived quality of
an RFQ response exceeds the price.
An LSP will provide a response to an
RFQ where price exceeds the quality.3 To put it another way, buyers in
the LSP market are looking for value
and suppliers in the LSP market are
looking for profit.4 Due to the lack of
attention paid to quality, however,
when evaluating RFQ responses, both
outsourcers and LSPs tend to spend
an inordinate amount of time and energy on the price associated with a response but very little time evaluating
the quality of the response. Ask yourself this: The last time you selected a
hotel for a trip, did you go with the
Figure 1
16
lowest-cost hotel, or did you look into
which hotel chains offer you points or
perhaps map which locations would
suit your needs best for the trip and
then select a hotel? What about when
selecting a health insurance plan:
Was your decision based solely on the
lowest-cost monthly premium, or did
you look at which plans offered coverage and cost savings in areas you felt
would best serve you? As individual
consumers, we regularly evaluate the
quality of an option in addition to
the cost of a particular option before
making a buying decision. More often
than not, though, outsourcers are left
to use cost as the primary metric for
selection because the RFQ process is
not currently designed to provide information that lets outsourcers evaluate the quality of the response. (See
Figure 1.)
This paper posits three ways in
which a potential outsourcer can increase the quality of the responses to
an RFQ and select a provider based
on quality and price, rather than
price alone:
1. Include failures and issues outsourcers are aware of in the current
network.
2. Offer detailed cost information
or illuminate major cost drivers in
the network.
3. Provide change management
and continuous improvement project
(CIP) information to the LSPs.
The benefits to outsourcers go beyond just getting an increase in the
quality of responses to RFQs by soliciting quality responses; both the
outsourcer and LSP align on what
success will look like in the future
state.
■ 1. Past Failures Help
Define Future Success
Of all the information outsourcers can provide in an RFQ, some of
the most important relates, perhaps
surprisingly, to network failures. No
company wants to broadcast its failures, but answer this: Why would a
potential outsourcer with a consistently poor on-time-delivery performance ever consider outsourcing if
the LSP responding did not have an
improvement plan in place from the
start? Outsourcers are content to fill
pages of the RFQ document with instructions on how LSPs can submit
questions for clarification, but they
spend very little time covering what
is broken that is causing them to look
to LSPs in the first place. Some RFQs
will make references to growth in a
new market, product, or distribution
channel as a reason for outsourcing,
but outsourcers rarely discuss current network problems in the RFQ
materials provided to LSPs.
How disclosing challenges
adds to the quality: An LSP responding with a transparent plan on
how to achieve improvement with
regard to a challenge an outsourcer
faces is looking at more than just
the final price; the LSP is attempting to improve the network, even
if it means the LSP will not be the
lowest-cost respondent to the RFQ.
How an LSP presents its plan should
make it clear whether the LSP has
demonstrated experience overcoming the sort of challenge faced by the
outsourcer. A quality RFQ response
by the LSP should include a cost estimate to remedy the outsourcer’s
issue (and it will be up to the outsourcer to decide whether it is worth
the cost). An LSP that cannot provide
a clear plan for success may have
little to no experience with the issue presented by the outsourcer, so,
regardless of that LSP’s final price,
the network may continue to experience the same challenges as before,
only now the outsourcer is paying a
third-party to handle that issue. Or,
in an even-worse-case scenario, performance could drop below where it
was before outsourcing to an LSP, as
was the case with Armstrong World
Industries. After selecting an LSP
to manage transportation in 2007,
Armstrong began to experience an
increase in late deliveries and complaints surrounding the new provider’s service, causing Armstrong to
end the relationship with the LSP and
pursue an in-house solution that they
completed two years later.5
■ 2. Shine a Light
on Your Costs
As stated earlier, outsourcers
are looking for a reduction in supply chain costs as a
result of their partnership with an
LSP, and LSPs are
in the business of
maximizing profitability.6 Yet cost information is often omitted in the RFQ, even though
price is ultimately the deciding factor in selecting the LSP. How can
an LSP provide reliable and achievable savings projections in the RFQ
response if the LSP does not know
the cost of one single activity in the
outsourcer’s current network?
How an outsourcer disclosing cost information improves
the quality: RFQ responses that
focus on cost details should allow
the outsourcer to evaluate which LSP
respondents have cost savings that
can be passed along from the outset, rather than just savings achieved
through continuous improvement
projects (a topic we will discuss a
little later). However, if outsourcers
do not disclose costs in the RFQ, they
run the risk of compounding their
cost overages, because now the outsourcer is continuing
to overpay for a certain
service and paying an
LSP to correct the problem. If an LSP analyzes
a potential outsourcer’s
cost details and cannot
buy better, provide any
economies of scale, or
leverage its core competency in an area, then that LSP is
lacking a quality response to the RFQ,
regardless of the price it associates
with the response.
There may be situations in which
disclosing cost is not possible or is
deemed too much of a risk, but even
then, the outsourcer can provide
qualitative information about the major cost drivers of its network, so that
LSPs can baseline the current costs
and review them with the outsourcer.
If, after receiving good qualitative information, the LSP cannot accurately
estimate costs of the current state,
then the response to the RFQ will be
virtually unusable. In this case, the
lowest price makes no difference, as
the lack of quality determines that the
LSP and outsourcer are not aligned.
■ 3. Talk About Change
As discussed earlier, an RFQ is
designed to allow an outsourcer and
LSPs to collaborate on what the future
may look like for an operation, with
the outsourcer disclosing information that the LSPs will use to project
a future state and costs. To increase
the level of quality in responses, however, outsourcers should also include
historical information on how their
organization has managed change
and improvements to the network.
This is a bit of a role reversal – usually
the LSPs come armed with a stockpile
of case studies and white papers that
demonstrate how they have saved
their customers money through a
variety of supply chain optimization
techniques, but rarely does the outsourcer provide the same.
How an outsourcer discussing change management adds to
the quality: An outsourcer involved
in an RFQ is broadcasting its intent
to change – whether that means its
vendors, processes, locations or providers –
but does not, typically,
provide information
about its change management process and
CIP history. If an outsourcer has a successful
track record identifying and implementing
positive changes to its network, then
that demonstrates to the LSPs in
the RFQ that this outsourcer may
be able to take on some of the morecomplex, collaborative projects required to achieve savings in today’s
supply chain environment.7 An outsourcer, however, that has struggled
to identify and implement changes
will need an LSP with a strong CIP
and project management structure
to assist it with a plan to work on the
low-hanging fruit before continuing
onto the more complex projects more
advanced supply chains have undergone. An outsourcer that illustrates
its supply chain aptitude should avoid
the problem of LSPs recommending A Game of Thrones when the
outsourcer is having trouble finishing Harry Potter and the Sorcerer’s
Stone.
Just because an outsourcer does
not have a great track record with
CIP and change management does
not mean it cannot benefit from outsourcing, but the LSPs with strong
startup and implementation teams
need to be identified in the RFQ
phase. This holds especially true for
startup and high-growth outsourcers that are seeking an LSP to help
logistic the growth of the network. If
the outsourcer relies only on the final
cost, it may select a provider that did
not account for the effort required to
bring the outsourcer to the level of
complexity required to take advan3PL Americas — Winter 2016
17
tage of the savings opportunities in
the RFQ response. When the project
launches, the lift will be heavier than
expected and the chance of success
will drop. By openly sharing some
past experiences with CIP and change
management, outsourcers can evaluate whether the responses from LSPs
include the costs and resources required to successfully implement the
changes that both the outsourcer and
LSP agree are vital to the relationship.
relationship aligned on what success
for the relationship looks like and
what the real costs to achieve that will
be. This prevents the finger pointing
and fire-fighting six months into the
partnership that often results from
an RFQ process in which the low-cost
LSP was selected and the outsourcer
did not promote quality responses by
framing the RFQ correctly.
■ A New Approach
for a New World
Deregulation by way of the Mo■ Quality is the First Stop on
tor Carrier Act of 1980 set off a prethe Roadmap to Success
cipitous drop in the cost of logistics
as compared with GDP that continThe benefits of increased quality
ued for 30 years, but in recent years
in RFQ responses extend beyond the
that percentage has stabilized. Add
evaluation phase. Outsourcers that
to that the rise of e-commerce and
provide information that allows for
globalization in the past 10 years and
a higher-quality response from LSPs
today’s supply chain landscape has
also plant the seeds for success in
changed drastically. 8 For outsourcers
the relationship. In a buyer-seller
relationship that adheres to the old
and LSPs to continue to achieve mumethod of information asymmetry,
tually beneficial relationships, they
price will be the primary criterion an
will need to change the way they do
outsourcer will use to select an LSP.
business – starting with how they
But would a relationship be successconduct RFQs. For instance, when
ful if network failures persist, costs
Procter & Gamble (P&G) sought to
continue to rise, and neither side is
outsource facilities management
able to effect change to alleviate these
for its global operations, it invited
issues? If the price is right, many
potential providers to tour sites at
outsourcers are
award busimultiple locations
onkeen
125toyears
of achievement,
eh! and, rather than
ness to an LSP based solely on which
asking the providers for only a price,
respondent offers the lowest price.
P&G requested a five-year action plan
However, if buyers and sellers in the
on how providers would manage its
LSP market have more-equal access
business. P&G shifted some of the
to information, then the playing field
focus away from price and on to what
TORONTO
– VANCOUVER
will become level and the
responses
the company desired in an outcome,
SE THE 1/6 SIZE.
www.mckennalogistics.ca
can be evaluated on the
quality and
and the results speak for themselves:
the price. If an outsourcer1-800-561-4997
selects
a 33-percent reduction in cost as a
an LSP based on the price and the
percentage of sales and service levels
quality, then both parties enter the
for the facilities have increased 17
Bravo IWLA
Bravo IWLA on 125 years of achievement, eh!
points.9 In order to find a quality provider that aligned with its business
objectives, P&G approached the RFQ
process in a different manner.
The gains an outsourcer can
achieve from shorter contracts and
constant rebidding to leverage competing LSPs is coming to a close. For
outsourcers to avoid the costs and
risks associated with these shortterm price-based decisions, a new
way of looking at the RFQ process
needs to be developed.10 If outsourcers want to create mutually beneficial
relationships with LSPs and see longterm growth and improvement, they
need to start by revisiting how they
conduct RFQs, and focus on quality,
not just price.
Will Morgan is Solutions Manager,
Transportation Management for
OHL/Geodis.
■Bibliography
Akerlof, G. A. (1970, August). The Market
for “Lemons”: Quality Uncertainty and the
Market Mechanism. The Quarterly Journal
of Economics, Vol. 84, No. 3., 488-500.
Holcomb, M. C., Manrodt, K. B., & Clum,
J. (2014, September). The New Tenets of
Transportation. 23rd Annual Trends and Issues in Transportation and Logistics, 1-18.
Langley, J. C., & Capgemini. (2014). 2014
Third-Party Logistics Study: The State of Logistics Outsourcing. Capgemini Consulting.
Pink, D. H. (2012). To Sell is Human. New
York: Riverhead Books.
Schulz, J. D. (2010, October). Armstong
Brings it Back. Logistics Managment, 20-23.
Stifel. (2015, July 30). Takeaways from
CSCMP’s 26th “State of Logistics Report”;
Presented by Penske;. Baltimore, MD: Stifel.
Vitasek, K., & Manrodt, K. (2012). Vested:
How P&G, McDonalds and Microsoft are
Redefining Winning in Business Relationships. New York, NY: Palgrave Macmillan.
■Endnotes
1. (Langley & Capgemini, 2014)
2. (Pink, 2012, p. 49)
3. (Akerlof, 1970)
4. (Holcomb, Manrodt, & Clum, 2014)
5. (Schulz, 2010)
TORONTO – VANCOUVER
www.mckennalogistics.ca
1-800-561-4997
8. (Stifel, 2015)
9. (Vitasek & Manrodt, 2012)
10. (Langley & Capgemini, 2014)
18
IWLA COUNCIL UPDATE
IWLA’s Canadian Council:
How the IWLA Got Its “I”
(or Became International)
By Kim Biggar
I
erational success and training in family-owned businesses.
N 1997, the American Warehousemen’s Association
The Canadian Council gained its own executive di(AWA) and the Canadian Association of Warehousrector, David Long, in 2009 to manage Canada-specific
ing and Distribution Services (CAWDS) merged to form
education and networking events and
the International Warehouse Logisother requirements. The team decidtics Association (IWLA). At that time,
ed to begin publishing a magazine for
CAWDS, together with its predecesCanadian members. After three issues
sors, was nearly 80 years old.
of 3PL Canada were circulated, the
In the late 1960s, movers and
magazine had been so well-received
warehousemen in Canada, until then
IWLA in Canada negotiated
that IWLA asked the Canadian group
part of the same organization, split to
with the Workplace Safety
to rethink it as a publication for the
form two new associations. Key drivand Insurance Board in
full association. 3PL Americas was
ers in the Canadian Warehouse AsOntario to differentiate
launched in 2011; the quarterly prosociation (CWA), one of the two new
vides news and views on warehousing,
groups, were Central Warehouses,
warehouse workers from
logistics, technology, economics, HR,
Howell Warehousing, JD Smith, Kuethose employed in trucking.
general management, IWLA member
hne & Nagel, Livingston Industries,
companies and more.
MacCosham Warehousing, MacPherson Warehousing,
In addition to the magazine, Canadian members receive
McKenna Warehousing, Seaway Midwest, and Sherway.
a monthly electronic newsletter that provides a roundup
The CWA made several important contributions to the
of industry and association news. In some cases, this news
industry in Canada, including establishing a code of ethis critical in helping members remain in compliance with
ics, a warehouse accreditation program known as P.A.S.S.,
evolving government regulations.
and standard terms and conditions for both warehousemen and manufacturers. Membership in the association
■ Activities of the Canadian Council
flourished during the 1970s and 1980s, with more than
Networking and education are the primary benefits of
100 warehouse member companies from all provinces and
membership in the Canadian Council of IWLA, says John
international members in the U.S., England, Greece, Japan
Levi, executive director of the Canadian Council since
and Brazil.
2012. He emphasizes that these benefits have value only to
The CWA changed its name to CAWDS to better reflect
those companies, and their employees, that actively particthe broad nature of its business members.
ipate. The exchange of ideas, sharing of best practices and
The merger agreement between CAWDS and AWA stippassing on of business leads that result from networking
ulated that Canadian members in the new IWLA would alcan be invaluable contributors to business success.
ways be represented on the board with two directors. That,
Chief among the Canadian Council’s events are spring
and the overall increased interaction between Canadian
and fall one-day conferences, an annual golf tournament
and U.S. members, has led to more international business
and dinner, and a December holiday get-together.
ties on both sides of the border, very important given the
Like members throughout the U.S., Canadian members
magnitude of trade between the two countries. The interalso benefit from the advocacy and championing efforts
national nature of the association also provides a different
of the association. IWLA in Canada negotiated with the
perspective on industry-relevant issues related to taxation,
Workplace Safety and Insurance Board in Ontario to differlabor, insurance and workers’ compensation, for example.
entiate warehouse workers from those employed in truckIn 2002, Bob Carwell, then of MTE Logistix, became the
ing, making lower premium rates possible for warehouse
first Canadian to serve as chairman of the IWLA board. In
that role, he helped to establish a program for multigen3PL Americas — Winter 2016
19
EMPLOYMENT
Who Wants to Work
in a Warehouse?
By Robert J. Bowman
S
Make employees an
important part of the
overall mission of the
operation.
Photo from istockphoto
20
TART WITH THE FACT that the national
warehouse workforce is growing older. Many of its
members are approaching retirement, and there aren’t
enough younger workers lining up to take their places,
says Peter Schnorbach, senior director of product management with Manhattan Associates.
By its nature, warehouse work involves tasks that
are numbingly repetitive. The productivity of employees is measured down to the minute. Working conditions can be brutal. So it’s not surprising that many
young people “are frankly not interested in those jobs,”
Schnorbach says. The high-school graduate who might
previously have sought work in a distribution center today has a number of options, such as home healthcare
and customer-service positions.
Those who do choose work within the walls of the
warehouse aren’t especially happy about it. The latest
Gallup survey of U.S. employment engagement revealed that transportation, distribution and production
personnel ranked well below the national average in
that sentiment, with only 23 to 25 percent of employees
declaring themselves “engaged” in their jobs. What’s
more, millennials were the least-engaged generation in
the survey, at 28.9 percent. Together, those numbers
paint a portrait of aging, alienated workers and younger
individuals who aren’t especially interested in performing one of the most vital tasks in the supply chain.
Clearly, warehouse employers need to find better
ways of attracting and engaging workers. The most
obvious step would be to pay them more, but most
distribution operations are low-margin in nature, with
wages reflecting the lack of higher education credentials among job candidates.
Some operations are launching incentive programs
that reward the highest performers. But others continue to keep overall wages low, or depend heavily on
temporary workers that are even less productive than
their full-time counterparts. “Industry still seems to be
throwing labor at the problem, as opposed to figuring
out how to optimize that labor,” says Schnorbach.
One step that employers can take is to make sure that
the full-time labor force is operating at peak efficiency.
Workers need to understand the goals of management,
which should provide both training opportunities and
clear performance metrics. Only then
should the employer be thinking about
bringing in temps or pushing permanent staff for overtime.
Relentless measuring, of course,
can be a big factor in employee disengagement, especially if workers
feel they’re being treated like programmed robots. According to
Schnorbach, though, they needn’t
know they’re being measured. Or
if they do, the information should
be used to incentivize behavior, not
browbeat workers for missing arbitrary performance targets.
“The most successful programs
are the ones that are engaging the
employees,” says Schnorbach. “Make
them an important part of the overall
mission of the operation.”
Then there’s the concept of gamification – applying the elements of
gaming to the workplace in order
to drive desired behavior. Examples
include competitions based on posted results, awarding prizes or other
kinds of recognition as incentives.
Schnorbach cites the example of
workers at the end of a shift writing
down the number of units picked,
as a challenge to the next shift. The
ongoing competition could serve as
a means of ramping up productivity.
At the same time, management
gets valuable data on the efficiency of
the operation. “I don’t think you can
ever collect too much information,”
says Schnorbach. “It’s what you do
with the information that counts.”
The right kind of program will be
driven by the workers, not management. Beyond any incentives that
might be offered, workers get the
benefit of knowing how they’re doing.
“People are starved for feedback,”
says Schnorbach. But the information in question shouldn’t be limited
to the strict number of units picked,
without taking into account individual workers’ abilities and the difficulty
of various tasks.
The concept of gamification is still
young. Schnorbach says Manhattan
considered building a module into its
warehouse-management application,
but ultimately decided that “it was a
little too early to do that.” Most of the
company’s warehouse customers “are
still at the point where they’re trying
to figure out how to expose information to employees in the most meaningful manner.” Options include
bulletin boards and flatscreen TVs,
but most current tools don’t go beyond merely displaying the statistics.
The future might look something
like the social performance platform
originally known as Rypple, acquired
by Salesforce.com, Inc. at the end
of 2011. It morphed into a tool that
provides real-time feedback on job
performance, recognizes high achievers and aids in the recruitment of
talent. “That’s a great concept,” says
Schnorbach, “but I think it’s a little
early for warehouses.”
In the end, the key to attracting and
motivating warehouse workers will
likely center on more traditional techniques: offering fair pay, varying work
assignments, providing adequate
training and getting buy-in from labor
unions. Schnorbach says unions are
open to performance measurements
if they’re applied objectively and can
serve as the arbiter in disputes.
100 FREIGHT INTERMEDIARIES CAN’T BE WRONG
IWLA Events
Calendar
★IWLA Live Webinar:
Getting the Most Out of
Your Staffing Provider
January 28 – Webinar
★Leading for Your
Warehouse’s Future:
An Interactive Webinar
Case Study
February 25 – Webinar
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.
Benesch is proud to be serving as
Outside General Counsel for IANA.
★2016 IWLA Convention
& Expo
March 13 to 15 –
ChampionsGate, Fla.
★IWLA 2016 Legislative
Fly‑in
April 25 and 26 –
Washington, D.C.
MEMBER
MEMBER
Counsel for the Road Ahead
sm
www.beneschlaw.com
21
The problem of attracting young
people to an aging industry might be
tougher to solve. The Gallup results
suggest that employers need to focus
on the issue of engagement. “Companies that want to hire these workers
need to promote the cultural aspects
of the job,” says Schnorbach. “They
need to show how they’re going to
provide value in these people’s lives.”
Robert J. Bowman is managing editor of SupplyChainBrain. This article is republished with permission.
125 YEARS from page 13
in the industry – and many industry
leaders who took the course three
or four decades ago are still sending
promising staffers to the event.
Ever-evolving technology also
shapes the modern warehouse and
its offerings. Over the years, software developers began designing
programs with specific applications
in the warehouse. These systems
would automatically track products
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 •Spring 2016 – The future of 3PLs
(April 8, 2016)
™
NORTH AMERICA’S WAREHOUSE & LOGISTICS MAGAZINE • FALL 2015
• Capital and Lease
Management
• Labor Relations
• Cautionary Tales –
Contractor
Relationships
PM 42128520
w w w.IWL A .com
•Summer 2016 – Legal challenges for
warehouse operators (June 24, 2016) •Fall 2016 – A customer’s view of supply
chain operations (September 16, 2016)
•Winter 2017 – Addressing the worker shortage
(December 2, 2016)
Suggestions for authors, articles and themes can be
submitted to [email protected].
and maintain an accurate inventory
through a barcode system. Today’s
WMS systems not only manage most
warehouses, but they also speak directly with the manufacturer’s management systems as one, through an
integrated data exchange. This makes
communication from one person to
another less frequently required; real-time information is shared automatically between systems.
This automation drives efficiency
to unparalleled heights. And it gives
warehouses the ability to use metrics
to measure and improve their operations. Metrics also have new applications for manufacturers, in terms of
sales trends and inventory management on the production side.
New technologies, such as drones,
GPS systems, wearable technology,
robots, and driverless vehicles, continue to push the boundaries, enabling warehouse optimization and
increasing the velocity of throughput.
And now, in our 125th year, we begin the next chapter in the warehouse
logistics industry. Active participation from warehouse leaders will help
to ensure a resilient, proactive, and
responsive industry. IWLA has grown
because of members’ ability to unite
as one, share new ideas, and foster a
culture of constant innovation. We’re
just getting started.
To the founding fathers of IWLA,
we say: Thank you.
Congratulations IWLA
On Your 125th Anniversary!
22
12
ANNIVERSARY
Founded 1891
Celebrating 125 Years of Warehousing Innovation and We’re
Just Getting
March 13-15, 2016 | Omni Orlando Resort at ChampionsGate | Orlando, Fla.
Early-bird rates expire Jan. 15, 2016. Register at www.IWLA.com.
Keynote Speakers Announced
Branding Expert Kaplan Mobray
Wharton-educated, Mobray draws from more than 15 years of experience leading
corporate marketing, advertising and brand development initiatives for Fortune
500 companies. As the best-selling author of The 10Ks of Personal Branding,
Mobray teaches organizations how to develop inspired leaders, increase
employee engagement and productivity, and unify diverse workforces for greater
teamwork and company growth.
Back by Popular Demand: Economist Brian Beaulieu
One of the country’s most informed economists, Brian Beaulieu researches the
use of business cycle analysis and economic forecasts to increase profitability.
Beaulieu returns with a new data about the current business climate and
planning strategies for growth in the warehouse logistics industry.
Industry Veteran Herb Shear
Herb Shear, former Executive Chairman and CEO of GENCO, shares his story
of how he took GENCO from a $300,000 business to a $1.6 billion company.
Register online and learn more at www.IWLA.com.
12
T H E
Y E A
ANNIVERSARY
Founded 1891
1891
Warehousing industry leaders form
American Warehousemen’s
Association and conduct the
first AWA convention.
1895
AWA drafts the Uniform
Warehouse Receipts Act.
1912
AWA is a founding member of the
U.S. Chamber of Commerce, the
definitive voice for U.S.
business interests.
pr
ware
incre
publ
lar
de
R S
I N
P I C T U R E S
1926
The AWA Household Goods Division
breaks off and becomes part of the
National Furniture Warehouse
Association.
1945
AWA receives citation from President
Truman for distinguished service
in the war/transportation field.
1940s
Federal highway growth
recipitates a decline in public
ehousing in small towns, but an
ease in the number and size of
lic merchandise warehousing in
rger cities. AWA membership
emographics reflect this shift.
1947
AWA and the National Materials
Handling Association introduce the
forklift truck and pallet – a revolution
that provides the basis for the public
warehouseman’s flexibility and
economy of operations.
IWLA — THE YEARS IN PICTURES
1952
AWA leads the charge for
adoption of the Uniform
Commercial Code.
Early 1960s
AWA introduces the
Warehousemen’s Legal
Liability Program.
1976
IWLA creates an intensive, weeklong course in public warehouse
management. This would become
the IWLA Essentials Course.
1978
The U.S. Supreme Court upholds the
warehousemen’s lien.
1991
Public warehousing’s share of market
climbs to 16 percent, up from
8 percent in 1977. It is a $10 billion
subset of a $62 billion industry.
1997
The American Warehouse Association
and the Canadian Association of
Warehousing & Distribution Services
(CAWDS) merge to form the
International Warehouse
Logistics Association.
2004
IWLA works with members to create
the IWLA Insurance Company,
an insurance resource.
12
ANNIVERSARY
Founded 1891
IWLA — THE YEARS IN PICTURES
2011
Linda Hothem, Matson Global
Distribution, is elected the association’s
first woman chairman.
2011
IWLA is at the forefront to fight
demurrage for warehouse operators.
The U.S. Supreme Court sends the
case to the Surface Transportation
Board for consideration.
2012
IWLA introduces the IWLA
Rail Council (now titled Transportation
Advisory Council) and re-establishes
the IWLA Chemical Council.
2013
IWLA recognizes the true
nature of warehouse/vendor
relationships by dubbing
suppliers as IWLA
Partner Members.
2014
IWLA study plays a key role in
repealing warehouse
services tax from the Minnesota
statewide budget.
2014
IWLA introduces a new tagline
that reflects its place in the
industry: The Resource for
Warehouse Logistics.
12
ANNIVERSARY
Founded 1891
REGULATORY UPDATE
The New SOLAS Container
Weight Verification
Requirement
By John Dimitry
T
SOLAS requires that each
packed container’s gross
mass be verified prior to
stowage aboard any ship.
30
HE INTERNATIONAL CONVENTION for the Safety of Life at Sea
(SOLAS) was established to ensure the safety of ships, workers aboard
ships and ashore, and cargo. SOLAS allows for self-executing treaty amendments through the International Maritime Organization (IMO). SOLAS was
amended by the IMO in November 2014 to require that each packed container’s
gross mass be verified prior to stowage aboard any ship subject to SOLAS. The
amended regulation makes the shipper responsible for both verifying the gross
mass of a container carrying cargo and providing this information to the representatives of the ship’s master and terminal operator sufficiently in advance
for use in preparing the ship stowage plan. This container weight verification
requirement is effective July 1, 2016.
The text of the new amended regulation is as follows:
(4) In the case of cargo carried in a container, except for containers carried
on a chassis or a trailer when such containers are driven on or off a ro-ro ship
engaged in short international voyages as defined in regulation III/3, the gross
mass according to paragraph 2.1 of this regulation shall be verified by the shipper, either by:
4.1 weighing the packed container using calibrated and certified equipment;
or
4.2 weighing all packages and cargo items, including the mass of pallets,
dunnage and other securing material to be packed in the container and
adding the tare mass of the container to the sum of the single masses, using a certified method approved by the competent authority of the State
in which packing of the container was completed.
(5) The shipper of a container shall ensure the verified gross mass is stated in
the shipping document. The shipping document shall be:
5.1 signed by a person duly authorized by the shipper;
5.2 submitted to the master or his representative and to the terminal representative sufficiently in advance, as required by the master or his representative, to be used in the preparation of the ship stowage plan.
The term “container” essentially has the same meaning as the term has in the
International Convention for Safe Containers (CSC), 1972, as amended.
The IMO’s Maritime Safety Committee (MSC)1 approved the IMO Guidelines
regarding the verified gross mass of a container carrying cargo (“IMO Guidelines”) proposed by the Sub-Committee on Dangerous Goods, Solid Cargoes,
and Containers (DSC).2 The IMO Guidelines provide interpretations on how to
apply the new SOLAS requirements. The IMO Guidelines also anticipate some
issues that are likely to arise from application of these regulations and provide
guidance on how those should be resolved.
Some of the key points in the IMO Guidelines include:
• The definition of “shipper” 3, which includes NVOCCs when they are
named on the master bill of lading or sea waybill as the shipper (or the party in
whose name the contact of carriage
was made). The importance of this
definition is that the NVOCC becomes
responsible for verifying the gross
mass of the container and providing
this information to the vessel and the
terminal before the cut-off deadlines.
Estimates and unverified declared
weights will no longer be compliant
under SOLAS, which means that cargo is more likely to be at risk of getting bumped once the requirements
go into full effect, notwithstanding
the U.S. regulatory requirements for
weighing all containers before loading under OSHA.4 It is important to
reiterate that the new regulation requires not only the verification of the
gross mass5, but also that verification
must be communicated to the vessel
and the terminal in advance so that
it can be used in the ship stowage
plan.6 Timing will be important for
compliance.
• Responsibility for obtaining and
documenting the verified gross mass
of a packed container is with the shipper.7 The shipper is permitted to have
a third party do the verification on
its behalf, but the shipper remains
responsible for acts or omissions of
that third party.
• The terminal is responsible for
not loading a packed container unless
its representative or the representative of the master of the vessel has
obtained the verification in advance.8
The ship is responsible for not includ-
ing a packed container in its stowage
plan unless it has obtained the verification in advance.9
• The IMO Guidelines set forth
the only two permissible methods
for obtaining the verified gross mass
of a packed container.10 Method 1 is
simple: After packing and sealing the
container, weigh the packed container.11 Method 2 includes a number of
compromises that were made in order
to address industry concerns. Method
2 allows the shipper to take the sum
of the mass of packages, cargo items,
pallets, dunnage, packing/securing
materials, and the container’s tare
mass.12 The use of Method 2 is subject
to certification and approval by the
SOLAS member state responsible for
31
enforcement of the port of loading.13
The shipper will need to document
that it, or the third party weighing
containers for it, is using calibrated
and certified equipment.14
• Individual cargo items that are
in original sealed packages that have
clear and permanently marked accurate weights on their surfaces do not
need to be weighed again under Meth-
John McKenna —
2015 Mississauga Business
Person of the Year
J
OHN MCKENNA, president of McKenna Logistics Centres, a 3PL
and IWLA member with warehouse facilities in the Greater Toronto
Area (GTA) and Vancouver, Canada, was recently named Business
Person of the Year by the Mississauga Board of Trade. (Mississauga
is part of the GTA.) McKenna was recognized for his business leadership, vision and community involvement, in IWLA, Armagh House – a
second-stage shelter for women and children – and Scouts Canada.
In accepting the award, John reminisced about his history with
McKenna Logistics Centres, which goes back to learning about forklift
operations as a toddler. He recounted learning from his parents about
customer service and the value of personal commitment and involvement.
John stressed the importance of mentors and mentoring in his education about business and life. He credited his team and team work
for his success and the success of his business.
But it was his family to whom he attributed the most credit for his
success in life. The love and support of his wife Kim and his children
have been the guiding lights in his life.
He challenged the business people at the awards event to share
their enthusiasm and experience with the next generation, inviting
youth into their businesses and their conversations to learn about
exciting careers available to them. Passing on hopes and dreams will
help prepare young people to take on the future.
L to R: Son Jack, John, daughter Carli, wife Kim, father-in-law Bob Barrett.
32
od 2.15 However, the party stuffing
the container should probably obtain
a representation and warranty that
the clear and permanently marked
weight is accurate before relying on
it under Method 2. It might also be
prudent to conduct some spot checks
if weighing equipment is available.
• If a container is packed by multiple parties (e.g., co-loading) or if it
contains cargo from multiple parties
(e.g., LCL loads) the shipper, which is
likely to be the NVOCC, is responsible
for obtaining and documenting the
verified gross mass of the packed containers.16 Estimates and unverified
declared weights are not sufficient
under the new regulations. With that
being said, we have already seen one
major industry association recommend inserting new SOLAS weight
verification clauses into bills of lading
and general terms and conditions of
service documents.17
• Documentation and timely communication of the verified gross mass
is critical. The verification needs to
be in a “shipping document18” that
can be part of the shipper’s instruction or it can be in a separate document.19 Shippers using a third party’s
weighing equipment can fulfill this
obligation by providing a weight certificate from the weigh station.20 The
document used needs to clearly indicate that it is a “verified gross mass”
or “verified gross weight” in order
to avoid confusion and delays. The
shipping document containing the
verification must also be signed. 21
Electronic signatures and EDI/EDP
transmittals are acceptable.22
• SOLAS has no prescribed deadline for a shipper to provide the verification other than it must arrive
in time to be used in the ship stow
plan.23 This means that the carrier
should be advising its shippers of any
specific time deadlines that they have
for submitting the verified information.24
• Packed containers that are delivered in one port for transshipment
to another port do not have to be
reweighed; the first ship can simply
give the second ship the verifications
that it originally received from the
shipper.25 Empty containers are not
subject to these new requirements.26
• Terminals and vessels may, but
are not obligated to, obtain verified
weights on behalf of the shipper at the
terminal.27 Since the United States
already requires mandatory weighing
at the terminal for OSHA purposes,
this may be a common method of
obtaining verifications. However, the
timing of the weighing will need to be
sufficient for the master of the ship to
use it in the ship’s stowage plan.
As mentioned previously, SOLAS
already requires shippers to provide
a container weight declaration under
Regulation VI/2, but that declaration does not need to be based on an
actual weighing of the container or its
contents. Therefore, it is not uncommon for a container’s declared weight
to be incorrect. The official UK report
on the investigation of the structural
failure of MSC Napoli concluded that
the weights of 137 (20 percent) of
the containers on board that ship
were more than 3 tonnes different
from their declared weights. The larg-
est difference was 20 tonnes, and
the total differential was 312 tonnes.
Other studies, like The Maritime Research Institute of the Netherlands
(MARIN) Lashing@Sea executive
summary report,28 have found similar
abuses across different time periods
and geographical locations.
The Intermodal Safe Container
Transportation Act (49 USC Ch. 59)
already imposes a notification obligation on persons tendering any loaded
container having a projected gross
cargo weight of more than 29,000
pounds. The person tendering such
a container is obligated to provide
the first carrier for intermodal transportation a certification of the actual
gross cargo weight, a reasonable description of the contents, the identity
of the certifying party, and the date of
certification. The new requirements
will go well beyond those contained
in that Act.
These changes to the SOLAS treaty
are certain to affect the shipping community by changing the level of communication and coordination among
shippers, carriers, terminal operators, and their respective agents and
intermediaries that are tasked with
the smooth and compliant transportation of goods through the supply
chain. These changes will affect some
ports and countries more than others,
and it will be important for all parties
involved to begin the dialogue on how
to address these changes early so as to
avoid issues and delays in July.
John Dimitry is Of Counsel with
Scopelitis, Garvin, Light, Hanson &
Feary, P.C. in Fort Worth, Texas.
■Endnotes
1. MSC 93 (i.e., the ninety-third session
of the Maritime Safety Committee) approved the IMO Guidelines in MSC.1/
Circ. 1475 (9 June 2014).
2. DSC 18 (i.e., the eighteenth session of
the Sub-Committee) drafted and proposed the Annex in MSC.1/Circ. 1475,
which were adopted as the final IMO
Guidelines.
3. IMO Guidelines 2.1.12.
4. OSHA regulations require that containers at U.S. ports are weighed prior to
loading. 29 C.F.R. § 1917.71
5. IMO Guidelines 4.1.
CONGRATULATIONS
IWLA
Success cannot be
found in a box.
OLD
ON YOUR 125 TH ANNIVERSARY
NEW
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.
WHEN IT COMES TO OUTSOURCE LABOR,
PAY F O R P E R F O R M A N C E , N O T H O U R S
Call 704-827-4474
www.scholzandassociates.com
33
9.Ibid.
13. IMO Guidelines 5.1.2.4.
15. IMO Guidelines 5.1.2.1.
17. In October 2015, the National Customs
Brokers & Freight Forwarders Association of America published a revised draft
of its standard terms and conditions of
service and combined transport bill of
lading documents. The new standard
terms and conditions of service document contains the following new clause:
6(c) Customer acknowledges that it
is required to provide verified weights
obtained on calibrated, certified equipment of all cargo that is to be tendered
to steamship lines and represents that
Company is entitled to rely on the accuracy of such weights and to countersign or endorse it as agent of Customer
in order to provide the certified weight
to the steamship lines. The Customer
agrees that it shall indemnify and hold
the Company harmless from any and all
claims, losses, penalties or other costs
resulting from any incorrect or questionable statements of the weight provided
by the Customer or its agent or contractor on which the Company relies.
The combined transport bill of lading
contains this new clause:
(13) Solas Weight Certification: Merchant acknowledges that it is required
to provide verified weights obtained on
calibrated, certified equipment of all
cargo that is to be tendered to steamship lines. Shipper agrees that Carrier is
entitled to rely on the accuracy of such
weights and to counter-sign or endorse
it as Carrier’s own certified weight to the
steamship line carrying the cargo. The
Merchant agrees that it shall indemnify
and hold the Carrier harmless from any
and all claims, losses, penalties or other
costs resulting from any incorrect or
questionable verification of the weight
provided by Merchant or its agent or
contractor on which the Carrier relies.
18. The term “shipping document” is defined
in IMO Guidelines 2.1.13 and means “a
document used by the shipper to com-
municate the verified gross mass of the
packed container.” Warehouse operators will likely want to ensure that they
have an alternative “separate document”
to record weight verifications that they
do on behalf of their customers, who are
the shippers and should be designated as
such on the shipping documents.
19. IMO Guidelines 6.1 and 2.1.13.
20.IMO Guidelines 6.1.
21. IMO Guidelines 6.2. The signatory must
be a natural person and that person
must sign his or her own name, even
though they are acting on behalf of another entity. It is worth remembering
that 18 U.S.C. § 1001 would make it a
crime to knowingly and willfully falsify
these verifications.
22. IMO Guidelines 6.2 and 6.3.
24.Ibid.
28.The Maritime Research Institute of the
Netherlands (MARIN) Lashing@Sea
executive summary report is available
at www.marin.nl/web/JIPs-Networks/
Archived-JIPs-Public/Lashingsea.htm.
Happy 125th, IWLA! The Wilhelm family logistics legacy goes back to a 1960 AWA membership.
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TECHNOLOGY
Will Emerging Tech Drive the
Next Generation of Supply
Chain Success?
By Kristi Montgomery
E
MERGING TECHNOLOGY is presenting us with some exciting options
for supply chain management that will enhance the power of what people
are now doing in the warehouse and on the road. While some of these ideas may
seem to be straight from the fiction of Star Wars or The Matrix, they are either
already available or in advanced development.
The look and operation of warehouses will be changing dramatically during
the coming years. New technologies promise great improvements in productivity, visibility and reliability. These changes will challenge everyone in the supply
chain sector to innovate smartly and successfully. While some jobs may be lost,
others will be created. The opportunities for those who are successful in this
environment will be tremendous. That is why it’s important to stay up to date
on what is available, and to carefully evaluate each new technology in light of
your business model. Here is a look at what’s coming down the road or already
at our doorstep.
The look and operation
of warehouses will be
changing dramatically
during the coming years.
■ Augmented Reality
Imagine walking around the warehouse with a smartphone in hand, stopping
in front of a pallet, and having the correct, detailed picking information pop up
on your screen based on an image captured by the camera.
In addition, there would be a detailed layout of how to pick the product into
your shipping container, with a Tetris-like overlay shown on the screen. Alternatively, you could put on a special pair of glasses or contact lenses that would
project the steps necessary to repair an out-of-service forklift. The reduction
of time to perform a task, with the addition of specific instructions for cubing
containers or repairing equipment, would add efficiency gains and productivity
increases not considered in the past.
This use of head-up display (HUD) could assist workers with everything from
proper pallet and truck loading to a wide variety of training procedures. It could
help supervisors instruct new employees and supplement quality assurance
with virtual displays of product information for picking and put-aways.
Use cases tested in Europe have had strong results for the addition of augmented reality devices such as Microsoft HoloLens, when used in combination
with voice-picking technology. At complex distribution centers, this combination can be used to drive improvements in picking accuracy (head-up display
of exact information and immediate verification), travel optimization (head-up
display of the most efficient route to travel to perform the next task) and pallet
layout (head-up display of how to stack cases) that improves stability and decreases in-transit damage.
■Drones
Unmanned aerial vehicles are currently being tested for various applications
in logistics. Some of the potential uses in supply chain management are:
36
significant efficiency enhancement in
lights-out to clean warehouses.
• RFID yard management using auwarehouse operations.
The automated storage and retomated flights to scan the yard and
Automated forklifts are used for
trieval systems that have been in use
read RFID tags mounted to trailers;
directed loading, unloading and stagfor years are quickly getting smaller
• building/property inspection by
ing at the end of aisles for putmanned or unmanned
Fostering innovation and facilitating change
aways and pick-ups. There are
flights to scan racks, buildis never easy, but it is worth it when we
conversion units for existing
ing ceiling/roof, and tops of
lifts that can be run in autodock doors, for example, for
see cutting-edge solutions developed for
mated mode when needed to
any damage or maintenance
our complex supply chain challenges.
speed up the staging of prodneeds; and
uct. This can provide a huge cost savand smarter. There are already col• activity observations that use video
ing when updating fleets.
laborative robots on the market with
capture to create work measureAutomated tuggers do the work
artificial intelligence components
ments and engineered standards
of transporting empty and full conthat help them adjust to real-life situfor warehouse tasks.
tainers and pallets without pickers
ations and adapt their behavior ac■Robotics
and replenishment staff ever leaving
cordingly.
their assigned area, thus improving
The next phase that is quickly
Using automated devices to manproductivity.
evolving is the combination of robotage routine and repetitive tasks is
ics with automated guided vehicles,
not new in our industry, but the
■ 3D Printing
marrying the best of both technoloways we use robotics are constantly
Advances in 3D printing have been
gies to further propel warehouse prochanging. Some of the newest trends
explosive, and we’re just beginning to
ductivity to new heights.
include the use of self-propelled
explore what it can do for the supply
stretch wrappers that can wrap any
■ Automated Guided
chain industry.
pallet anywhere, rather than movVehicles
Using this technology, we are able
ing the pallet to a central wrapping
to print customized robotic “arms,”
Automated guided vehicles
location. Automation is also be“claws” and “grabbers” – known as
(AGVs) have been around since the
ing explored for maintenance, with
end affecters – to facilitate better pick1950s, but are gaining ground as a
sweeper-scrubbers that can be run
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ADVERTISER INDEX
ASW Global...................................... 31
Ancra International LLC.....................IBC
Benesch, Friedlander, Coplan
& Aronoff LLP................................... 21
Coregistics....................................... 34
Dehnco.............................................. 8
Foreverlamp..................................... 38
Impact Logistics................................ 33
Integrated Distribution Services.......... 11
Intertape Polymer Group.................... 37
IWLA Chairmen................................. 14
IWLA 2016 Conference...................... 23
IWLA Find a Warehouse..................... 35
Konstant Storage Systems................ IFC
McCloud Services.............................IBC
McKenna Logistics Centres................. 18
MercuryGate International.................... 3
Palmer Logistics................................ 45
Parke Warehouses............................. 46
Pro-Line........................................... 37
Redirack Storage Systems................. IFC
Saddle Creek Logistics Services.......... 10
Scholz Leadership Development.......... 33
SleepSafe Driver.............................OBC
Sonwil Distribution Center.................... 4
Southeast Solutions Inc..................... 12
SphereWMS..................................... 11
Tighe Logistics Group........................ 22
ing. We can even print and customize
accessories, such as scanner caddies,
tape containers or ruggedized tablet
holders, for our current inventory of
material-handling equipment. Prototypes of specific parts can be printed
and assessed before spending considerable time and money perfecting the
actual component needed.
■ Smart Sensors and
Self‑Monitoring
Wearable technology and mobile
applications have been revolutionizing supply chain management.
Smart tags – worn as a bracelet
like a FitBit – can be programmed to
monitor activity and safety concerns,
such as improper lifting. Wearable
RF allows for hands-free operation
inside the warehouse, and voice and
wearable devices can be combined
for even higher efficiency. There are
mobile apps being developed that
provide immediate visibility to dashContinued on page 46
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.
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 ad
vertisement, 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.
38
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MANAGEMENT RESPONSIBITY
Diversity and Inclusiveness:
The Path to Innovation,
Collaboration & Growth
By Rob Doyle
T
HE TOPIC OF DIVERSITY may bring to mind affirmative action from
the ’90s or Equal Employment Opportunity Commission (EEOC)-related
issues. But these policies and regulations really have little to do with how diversity and inclusion can play a powerful role in today’s business environment.
When I think about these topics, and look at my company and our association, I see diversity as an opportunity for growth and development. I see that
diversity can increase our competitive advantage.
I write this article as a disabled veteran, married to a person of visible minority, and father to a son who has a hearing disability. It is true that our life
experiences affect our views, but if everyone viewed diversity as an opportunity
to improve our businesses while enriching the lives of our employees, we would
be more diverse and have deeper appreciation for the value that it brings.
If everyone viewed
diversity as an opportunity
to improve our businesses,
we would be more
diverse and have deeper
appreciation for the value
that it brings.
■ Diversity in the Workplace
U.S. workplaces overall are becoming more diverse. According to Forbes,
by 2020, women will outnumber men in the workplace for the first time in our
country’s history. And between 2020 and 2050, 83 percent of workplace growth
will be from immigrants and their children.
So, what is diversity in the workplace anyway? I view it as a workplace that
reflects the community where our warehouses reside and our society at large.
If we think logically, a workplace that matches society at large also matches
the society in which it serves. Furthermore, diversity itself has no boundaries:
gender, race, veteran status, sexual orientation, age, and disabled individuals
all contribute to a diverse workplace. This makes the most diverse workplaces
better equipped to serve a diversified society.
Research is now showing that the definition of diversity is changing, as
younger generations are expanding the definition well beyond traditional demographics to include life experiences, such as where someone was born or
went to school, or the subjects he or she studied. The digital age of social media
has hyper-intensified our concepts of diversity, as each characteristic leads to a
person’s individualism.
As our countries, cities, and workplaces become increasingly diverse, it is
more important to look at all of the great talent around us, embrace our differences, and surround ourselves with the best and brightest. Building teams with
diversity in mind will increase collaboration and make companies more resilient
to outside factors.
So how do we create a diverse workplace? It’s not about checking a box: It’s
more of a front-end effort, whereby companies deliberately cast a wider net and
consciously develop a workplace that is welcoming and accommodating to a
diverse community. These diversity-minded companies build departments and
teams with a mix of people from veterans groups, colleges, the local labor de3PL Americas — Winter 2016
39
partment, disabled training co-ops,
women, and minority groups. The
process requires adapting to different
qualifying methods that do not rely
on socio-economic factors.
Once the net is wider, the choices
will be more plentiful in our recruiting process and, at that point, the best
person will rise to the top.
■ Benefits of a Diverse
Workplace
According to a January 2015 report, Diversity Matters by McKinsey
& Company, companies in the top
quartile for racial and ethnic diversity
are 35 percent more likely to have financial returns above their respective
national industry medians.
The question is, why?
In bringing the diverse groups
together, we tap in to a potentially
powerful cross-section of life experiences that can lead to successful innovation. Teams made up of unique
backgrounds are much more likely
to enhance their roles and challenge
each other to develop unconventional thinking. The more unique the
group, the more unique the concept
becomes, because there is no box to
step out of. This optimal collaboration is what leads to enhanced revenue and profit.
The statistics clearly indicate that
having diversity at all levels, from
warehouse workers to managers,
can grow our businesses and bottom lines. I view this in more simple
terms, in that most good ideas in our
companies come from those who are
doing the work, and it is our job as
executives to ensure that our boardrooms and warehouse floors have the
diversity of thought that we need to
challenge the status quo and continually strive to improve.
Diversity without a culture of inclusiveness would be missing the
main point: It is only through inclusiveness that real change, innovation, and growth can occur. Inclusion
is what makes a diverse workforce
come together as one. Companies
must promote inclusion in an honest,
open manner to foster creativity and
equality.
40
In bringing the diverse
groups together, we tap in
to a potentially powerful
cross-section of life
experiences that can lead
to successful innovation.
■ Diversity as an Access
Point to the Global
Economy
Beyond how a more diverse and
inclusive workforce will help us internally, it will become critical to our
standing with our customers and suppliers. Just as we cast a wider net
in recruiting talent, that talent also
casts a wider net in retaining new customers. This diverse workforce and
diverse perspective will enhance our
ability to communicate and interact
with a diverse culture. It will create
more depth and knowledge within
our approach to attracting a company
that is as unique as we are.
A recent RFP from a Fortune
100 company asked – as the first
question – if our company was a minority-owned, woman-owned, veteran-owned, or LGBT-owned business.
When I visited the company’s office
weeks later, I was met with a very diverse group of decision makers, from
an age, gender, and ethnicity standpoint. It was clear that this company
valued its diversity and was looking
for a partner with similar values.
■ The Bottom Line
Companies must constantly adapt
to market fluctuations, regulations,
competition, and economies. Why
should changes in society be any different? As societal diversity increases, companies must account for these
changes, too, in their workforces.
These changes are valuable not only
internally, to harness intellect and
experiences, but also to a company’s
ability to attract new customers and
suppliers and maintain a competitive
advantage to increase growth and
profit goals.
These efforts can be large or small:
• They may mean a louder voice for
employees in day-to-day operations.
• They may include a wide-scale strategic recruitment effort.
• They may also entail a new inclusion policy or managerial training
program.
It is only when it identifies a path
toward diversity and inclusion that a
company can truly improve top- and
bottom-line growth while enriching
the work experience of all of its employees.
When we look at IWLA member
companies, what drives our success
and sustainability is the active engagement of all of our members: from
the smallest warehouses to the regional players and up to the large
national and international corporations. IWLA members also represent
a diverse industry of value-added
services, products, sizes, and backgrounds. These collective experiences
and resources of the entire membership allow the association to become
more relevant – and it is this corporate diversity that will sustain us well
into the future.
As IWLA Chairman, I am proud
to see the IWLA taking a deeper dive
into this area in the coming weeks and
months. I look forward to applying
the lessons learned to my company.
Rob Doyle, CWLP, is president of
Coregistics in Atlanta, Ga. He is the
2015-2016 IWLA Chairman of the
Board. He can be reached at Rob.
[email protected].
Note: The IWLA Diversity Council,
led by co-chairmen Andre Thornton,
ASW Global, and Scott McWilliams,
OHL, is working to build a diversity perspective into all of IWLA’s
offerings. In addition, the group is
seeking success stories from IWLA
members whose companies make diversity a priority in their businesses.
To learn more or share your story,
contact IWLA at [email protected].
You should have recently received
a letter from IWLA President & CEO
Steve DeHaan. It outlines the steps
IWLA and the IWLA Diversity Council are taking – and how you can
tap in. If you want to discuss diversity with Steve, call 847.813.4699 or
email [email protected].
CASE STUDY: MEMBER COLLABORATION
IWLA Partner Member
Helps Member Gain
Essential Visibility
By Peter Yost
A
S ONE OF THE TOP 30 largest 3PL companies in the world (number 27
in 2015, according to Armstrong & Associates), Ozburn-Hessey Logistics,
LLC (OHL) offers integrated global supply chain management and transportation services to a diverse group of clients and industries.
Visibility to data is central to all that the company does.
Jeff McDermott, senior vice president of OHL’s Transportation Management
group, says OHL uses a cloud-based transportation management system (TMS)
from MercuryGate, an IWLA Partner Member, to provide complete visibility
and quickly implement cost-saving solutions for customers.
The success of an inbound
management program goes
back to execution.
■ Driving Down Inbound Costs
Two years ago, Brentwood, Tenn.-based OHL began managing outbound
distribution for a large restaurant supplier in the United States. The 3PL also
implemented a new vendor management program for the client.
The restaurant supplier had been issuing purchase orders (POs) to vendors,
but did not have a system to properly manage its inbound freight. Without a
system, the company was missing savings opportunities available through consolidating inbound shipments, lacked visibility, and was making uninformed
choices regarding mode and carrier usage.
To optimize the client’s inbound logistics, OHL needed to see the POs ready
to be shipped, in order to create more-economical truckload movements where
possible. The required visibility came through implementing a vendor-management portal from MercuryGate. The client had more than 1,000 vendors and,
within a few weeks, hundreds had started using the portal to enter and update
shipment information.
OHL’s client gained visibility and control of its inbound planning by using
the portal to drive vendor compliance. McDermott shared that results of the inbound program included better inventory control and management of PO dates,
optimal carrier and mode selection for transportation, and cost savings from the
consolidation of freight.
Overall, the client saw a reduction in its transportation costs of between five
and seven percent.
“The success of an inbound management program goes back to execution.
You have to have the right tools that are user-friendly for vendors, easy to implement to quickly realize savings, and provide visibility in order to make critical
business decisions. Some transportation management systems are good at this,
while others are not,” says McDermott.
■ Leveraging the Tools
Besides helping customers achieve cost savings through vendor compliance,
OHL serves clients who are vendors for large retailers. These customers often
need assistance meeting demanding shipment schedules, strict routing rules,
41
and tight delivery windows. OHL has
many clients that do business with retail giants that charge fees for missing
tight time windows for delivery.
OHL uses the planning and execution tools of MercuryGate’s TMS to
successfully meet appointments. According to McDermott, rules set up in
the planning process ensure that certain conditions
are met, such as
automatically
assigning loads
to specific carriers and allowing
adequate transit
time to meet the
requested date.
The TMS also
identifies daily
Jeff McDermott
cost-saving opportunities for OHL. The 3PL uses
an advanced tool called Mojo to run
various what-if scenarios to assess
the impact of consolidating freight at
different locations.
OHL operates more than 120 value-added distribution centers and
has the ability to quickly adapt these
42
locations to fit customers’ networks.
For what-if scenarios, data from an
existing network can be used to hypothetically route orders to a new
distribution center and determine the
impact on transportation.
“We are always evaluating our clients’ networks,” McDermott says.
“‘Should we move a warehouse from
Memphis to Indianapolis or take
three distribution centers and add a
fourth? What will that do to transportation? Will our consolidations go up
or down?’ Mojo lets us rapidly answer
those questions.”
The modeling and planning functions of Mojo are integrated with
execution functions to realize the
cost-saving opportunities.
“By using Mojo as both a modeling
tool and for execution, you can ensure
that the savings you expected come
true and you are using the same optimization parameters in both scenarios. This makes the implementation
a lot easier and drives the expected
results,” he says.
Similarly, by using other business
intelligence and reporting tools in
the TMS platform, OHL can identify
cost drivers and trends in transportation to keep customers informed.
For example, are costs going up due
to shipment characteristics, market
pressure from carriers or changes in
the network?
■ The SaaS Advantage
As a software-as-a-service (SaaS)
platform, the MercuryGate TMS is
updated continuously with new features and enhancements. McDermott
credits the SaaS model for OHL’s
ability to implement new functions
and value-added services for customers at a fast pace and before its
customers can come up with solutions themselves using their own IT
resources.
Carrier management tools are
some of the latest updates that OHL
is putting to use. The tools are used
to ensure that all carrier-qualification
information, from insurance to safety
records, is kept up-to-date to minimize risk for OHL’s customers.
OHL also leverages Mercury Gate’s
EVOLUTION OF WAREHOUSING
The Business of Moving Stuff:
A Short History of Commercial
Warehousing in North America
By Ken Ackerman
A
FTER A STRENUOUS ENCOUNTER with a journalist who insisted
on knowing the difference between physical distribution, logistics and
supply chain management, he heard my explanation and then said, “So, you are
just talking about moving stuff.” This journalist’s inelegant description comes
close to the mark in describing what we do.
AWA was only six years old
when it filed a complaint
against 52 railroads
to eliminate the free use
of space in freight depots.
The Hepburn Act, passed
in 1906, prohibited free
warehousing by the
railroads.
■ Ancient History
Very few business activities are described in the Scripture that is honored
by the three Abrahamic religions (Judaism, Christianity and Islam). While the
storage of food has been understood since primeval times, the book of Genesis
explains how Joseph became a national hero by showing the king of Egypt how
to warehouse agricultural surpluses to provide sources of food during crop failures. Chapter 14 tells of Joseph’s Egyptian enterprise:
.... And during the seven years of plenty, when the earth bore ample crops,
he collected all the produce of the rich years over Egypt and stored the grain
within the towns... There was a famine in every country, but there was food
everywhere in Egypt. And when all Egypt itself grew famished.... Joseph
opened all the granaries and sold grain.
In case your bible school teacher told you that this was a charitable project,
the last sentence confirms that Joseph was founder of a commercial enterprise.
There are similar traditions in at least one of the oriental religions, Taoism.
Tao temples frequently contain bags of rice. The tradition is called “way of the
five pecks,” describing the requirement that converts to the Tao faith were expected to donate five pecks of rice to the temple.
As centuries passed and transportation systems improved, warehouses were
established at the terminal points for major trade routes. By the Middle Ages,
terminal warehousing was well-established in such trade centers as Venice.
Venetian warehouses were operated for profit by trade guilds, or groups of local
merchants. In northern Italy, the bankers of the neighboring province of Lombardy were the first to employ negotiable warehouse receipts called Lombards,
and to use the paper receipts as collateral for loans.
■ Warehousing in North America
Water transportation was the dominant mode for cargo transport in the early
years of North American settlement. Therefore, the first warehouses were transit sheds located at the docks. As the rail industry developed, depot warehouses
were established to consolidate and distribute rail freight.
In the United States, the emergence of general merchandise warehousing
occurred before the Civil War. An 1840 business directory for New York City
showed 17 entries under “storage.” Directories for other large cities show similar
entries. Some of the first general merchandise warehouse operators were former
forwarding merchants who had been driven out of business by the railroads.
43
■ The Rise of the
Independent Warehouse
Operator
Early railroad practices favored
large shippers. The history of American railroading is filled with examples of such favoritism. One was the
offering of warehousing as a free service for major customers.
In the U.S., the decade of the 1880s
saw a social and legislative revolution. The Populist Party was formed
in the 1880s and its efforts bore fruit
in 1887, when Congress passed the
Interstate Commerce Act. The act
created the Interstate Commerce
Commission, designed to watch over
the practices of the railroads. It was
the first such interventionist act in
American history. Some call it the
first consumerist law in America, designed to protect the public from the
abuses of major corporations.
It is no accident that the American Warehousemen’s Association
(AWA) was established just four
years after the Interstate Commerce
Act. This trade association, one of the
oldest in the U.S., was organized by
independent warehousemen. They
were small-business operators who
needed to protect themselves against
free warehousing offered by the rail
carriers. AWA was only six years old
when it filed a complaint against 52
railroads to eliminate the free use
of space in freight depots. The Hepburn Act, passed in 1906, prohibited
free warehousing by the railroads.
This legislation defined “storage and
handling of property transported” as
part of the transportation function,
and required the application of published tariff rates for every service
furnished by railroads. Scholars consider the Hepburn Act the most important piece of legislation regarding
railroads in the first half of the 20th
century. While AWA was influential,
the Hepburn Act was also endorsed
by another consumerist, Theodore
Roosevelt.
While the industry would have
grown without the ICC and the Hepburn Act, the independent warehouse
operators grew more rapidly after
railroad activity was brought under
government control.
AWA frequently sought legal review when transportation companies
were discovered using warehousing
as a “loss leader” in order to attract
new business.
COUNCIL from page 19
operators. It also consulted with the
Canada Border Services Agency to
help the agency define when the ownership of goods shipped into Canada
transfers from the exporter to the
importer, and at what point duties
are to be applied. Canadian members
learn about changes to international
regulations through IWLA’s efforts in
the regulatory arena.
While it is one of IWLA’s six coun-
cils, the Canadian Council is different
from the others; it has an executive
director and its own steering committee, and is representative of all
members within Canada.
Like the other five councils,
though, the Canadian Council focuses on the needs of its constituents
under the overall umbrella of the association, and shares its concerns
and accomplishments with the full
membership.
The use of freight cars as rolling warehouses was a common practice in the
early days of this industry. During
grain harvest, every available freight
car was used to store the crop. As
the railroads experienced shortages
of freight cars, a separation of the
functions of transportation from storage became necessary. To discourage past practices, railroads began to
charge their customers when freight
cars were used for storage.
In the middle of the 19th century in
the U.S., customs bonded warehouses
were established to store goods before paying customs duty. The U.S.
Congress tried to abolish customs
bonded warehousing in 1861. That
attempt failed, and bonded warehousing has continued to the present
day. The bonding of warehouses was
extended to include other commodities, like alcohol and tobacco, that
carried special taxes.
44
■ The Role of Warehousing
in the Industrial and
Agricultural Revolutions
The industrial revolution brought
about a conversion of craft shops into
factories, and one result was mass
production. When production exceeds demand, warehousing is used
as the safety valve. When goods are
produced to meet a sales forecast,
sometimes they are held in storage to
meet peak demand. When the forecast is wrong, the warehouse can provide first aid. At first, warehousing to
handle production overflow was handled at the factory. As distribution
patterns developed, overflow warehousing moved to public warehouses
located closer to market areas.
Similar developments happened
in agriculture. There was a time
when the great majority of the North
American population was engaged
in farming. Today, huge farms produce agricultural surpluses with a
tiny fraction of the labor used a century ago. Like mass production, warehousing provides the surge tank to
hold the surplus when it occurs. As in
Egypt in Joseph’s time, warehousing
in the fat years (or months) ensures
an adequate supply at a later time.
■ From Terminal to
Distribution Center
In the early years of commercial warehousing in North America,
nearly all companies in the industry
were family-owned and -managed. As
recently as 1970, a report compiled
by McKinsey showed that the average company in the industry had an
annual revenue of $235,000 and a
total storage space of approximately 100,000 square feet. About three
quarters of the companies that used
public warehousing services were
firms that distributed their products
nationally. There were very few multicity warehouse operations, and no
service providers with national coverage. Very few were large companies or
subsidiaries of major manufacturers.
Two notable exceptions were Gulf
Atlantic, a Houston-based subsidiary
of Anderson Clayton, and a Canadian
subsidiary of Molson Brewery. Many
warehousing businesses started as
an outgrowth of trucking companies.
Warehousing was offered as a supplemental service to transportation, and
the warehouse was part of the drayage terminal. The word “terminal”
still exists in the company names of
some warehouse firms. The terminal
warehouses were typically located in
the center of the city, close to the railroad depot and the wholesale market
district. As demands increased and
property values rose, multistory warehouses were put up to provide more
space on the same amount of land.
Until World War II, the most common material-handling methods involve the use of hand trucks. Cases of
merchandise were stacked using pyramid piles for heights of more than 8
feet. However, most warehouse buildings were designed to allow stacking
of only 8 to 12 feet high. The first
forklift trucks were developed early in
the twentieth century. However, their
use did not become common until the
World War II mobilization effort. A
principal factor in war production was
use of forklift trucks and pallets. This
equipment allowed the pile heights of
merchandise to be greatly increased.
The forklift also allowed merchandise
to be efficiently hauled over a much
wider area of floor space. Two factors
made multistory warehousing obsolete: the substantial increase in cost
of warehouse labor, and the increased
availability of forklift trucks. Multistory warehouses were replaced by
single-story ones on large land areas.
Since those large tracts were not available downtown, warehousing moved
from terminal and market areas to the
outskirts of each city. Ceiling heights
increased from 12 feet up to the capacity of the forklift truck, generally
from 20 to 30 feet. While the forklift
truck played a major part in the warehousing revolution after World War
II, other material-handling improvements included specialized lift trucks,
unitized loads, and conveyors.
An even greater change occurred
in the handling of information. Until
the 1970s, computer data processing
was exotic and expensive. The development of the desktop computer
allowed data processing procedures
to be affordable for even the smallest
of warehouses. While the cost of material handling has risen, the cost
of information handling has gone
down. Therefore, warehouse operators sought ways to use information
to reduce or avoid material handling.
Throughout the 19th and most
of the 20th centuries, the terminal
warehouse was an operation dedicated to storage. At some point, the
flow of goods became more important
than storage. The warehouse was re-
placed by the distribution center. The
functions of the two were similar, but
in business vocabulary, the DC was a
value-adding tool where merchandise
moved quickly from receiving dock
to shipping dock. Efficient material
handling became more important
than effective storage.
VISIBILITY from page 42
connectivity with a very large carrier
community to make electronic data
interchange (EDI) a fast and efficient
process. The connectivity tools save
time and money that otherwise would
be spent on EDI setup and ongoing
maintenance.
One of the most important features
of the software, McDermott says, is
the continuous enhancements that
improve workflow for the end user.
OHL is migrating more processes to
an “easy click” model, he says.
“The user interface allows you
to configure easy-to-use screens in
order to create efficient workflow
processes to meet the needs of the
business,” he says.
With the MercuryGate TMS platform, OHL has a complete picture
of visibility to manage entire supply
chains for customers, no matter the
size or complexity.
Palmer Logistics
congratulates
IWLA on 125 years of
serving and bettering
our industry!
■ The Evolution from
Physical Distribution
to Logistics to Supply
Chain Management
In 1963, 13 executives met in a hotel
bar in upstate New York to discuss the
establishment of the National Council
of Physical Distribution Management
(NCPDM). Most were transportation
managers, but the group included
two professors and a journalist. Their
goal was to spread the word that the
process of moving stuff required collaboration between transportation,
warehousing, inventory management
and customer service. Their desire
was to create an umbrella organization that would recognize the several
stages of moving product from pro-
Peter Yost is Vice President of Marketing at MercuryGate International, Inc.
Palmer Logistics congratulates
IWLA on 125 years of
serving and bettering
our industry!
45
duction line to consumer. They also
sought increased recognition of their
occupations and, from the beginning,
they sought to attract the attention of
journalists and corporate strategists
who were exploring similar processes. The group emphasized education
and idea exchange, and its membership policy was designed to embrace
any individual with a sincere interest
in the field.
In the 1980s, the group changed
its name to the Council of Logistics
Management. Logistics is a military
term that includes the process of
moving stuff, from its earliest origins through the manufacturing process to the final user. In the 2000s,
the name was again changed to the
Council of Supply Chain Management
Professionals (CSCMP). This name
change recognized that supply chain
was quickly replacing logistics as a
description of the field. Some would
argue that there is little difference, but
supply chain is readily understood,
while logistics has never been part of
the broader business vocabulary.
In 1977, a similar professional society was established for warehousing. The Warehousing Education
and Research Council (WERC) was
formed to provide a professional society for those who have a primary
interest in warehousing. Unlike the
trade associations that require corporate membership, WERC is open
to any individual with an interest in
warehousing.
Other transportation trade associations, such as the National Industrial
Transportation League (NITL) admit
warehousing executives as members
and provide an interface between
warehousing and transportation.
Countless other trade associations
for a variety of manufacturers include
warehousing as part of their committee functions. In the middle of the last
century, those warehouse companies
that specialized in temperature control broke away from AWA to form a
trade association for their business.
The International Association of Refrigerated Warehouses (IARW) has
international membership. It provides shared knowledge in several
languages to help its members.
■ From Single-City
Warehouses to Providers
Who Span the Globe
While publicly owned multi-city
warehousing firms were rare in
the 1970s, freight deregulation in
the 1980s encouraged major carriers to get involved in warehousing.
Improvements in communication
TECH from page 38
boards to facilitate data-driven decision-making.
Virtual digital assistants, such as
Apple’s Siri, that use voice recognition and artificial intelligence can research needed information and carry
out electronic tasks. Imagine sitting
at your desk and querying any information you need from your supply
chain execution systems (WMS, TMS,
OMS and YMS, for example) or your
supply chain intelligence systems,
and receiving that information immediately, rather than asking a customer
service representative or combing
through spreadsheets to find the right
and transportation made control of
multicity and multinational operations far easier than it had been in
the past. Today, multinational warehouse service providers include railroad companies in Europe, at least
two national post offices, ocean shipping companies, and multinational
air express carriers. While the multinationals have developed high profiles, the great majority of warehouse
service providers are smaller organizations, many of which are still familyowned and family-managed.
As IWLA celebrates a major anniversary, recognizing its role as
one of North America’s oldest trade
associations, its members include
representatives of the largest multinationals, as well as the many smaller
firms that are the backbone of the
warehousing industry.
Kenneth B. Ackerman is President of
K. B. Ackerman Company.
piece of data.
While these technologies seem
limitless, there are still many questions to be answered about practicality, cost and regulatory issues.
Fostering innovation and facilitating
change is never easy, but it is worth
it when we see cutting-edge solutions
developed for our complex supply
chain challenges.
Kristi Montgomery is Vice President,
Innovation, Research & Development
at Kenco Management Services, LLC.
This article was originally published
on SupplyChainBrain.com. It is republished with permission.
Congratulations IWLA
on 125 years of service to the warehousing industry!
PARKE WAREHOUSES • PARKE TOLL PROCESSING
Your 3PL partner in Central Illinois
46
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WHILE YOU FEED THE WORLD
OUR JOB IS MITIGATING YOUR EXPOSURE TO PEST MANAGEMENT ASSOCIATED RISK
Protecting the food supply chain of custody is our number-one priority. Utilizing a scientific
data-driven pest management approach contributes to long-term protection from risk to
brand, human health, environment and profitability.
FOOD MANUFACTURERS & PROCESSORS | GRAIN INDUSTRY | PACKAGING SUPPLIERS | TRANSPORTATION & LOGISTICS PROVIDERS
WWW.MCCLOUDSERVICES.COM | [email protected] | 800-332-7805
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LOGISTICS

3PL Americas - International Warehouse Logistics Association

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