Advisory Board: Resolutions
Members of Modern's Advisory Board suggest a fresh agenda for a new administration.
By Staff -- Modern Materials Handling, 12/1/2008
With a new presidential administration set to take office next month, you can bet the chief executive elect is immersing himself in advice from a variety of sources. Modern's editors thought we'd ask our Advisory Board to advise him and other CEOs starting fresh in the new year on some of the strategic issues that will drive U.S. industrial productivity through the tough economic times ahead. Those issues are technology, the workforce, security and productivity.
Modern hosted an Advisory Board roundtable Webcast recently to discuss these issues in detail. It is available online at mmh.com. Here are some of the highlights:
Technology
Ken Ruherdanz: There's more emphasis on buying performance vs. having your own staff worry about how to operate a system. It started with maintenance contracts and is now moving to having a service provider operate the system for you. We're seeing the start of contracting for performance.
There's also a financial component. Because we're in a financial crisis and money isn't as available as it was, companies can now say “I'm going to buy it by the caseload or order load” and you treat it more as an expense.
John Hill: One thing that will be increasingly important is supply chain visibility software or systems—engines that capture and distribute information on network performance in real time. It will be critical for companies to track materials from where they're made to where they're delivered to continue to fuel the levels of customer service they need to differentiate themselves in a down market.
Workforce
John Hill: The workforce is changing dramatically. We have more than a million people working in warehouses and DCs in this country. Many of them are approaching retirement age, although those retirements may be deferred as a result of the current crisis. But we are facing a crisis in replenishing the logistics workforce, and we have to take a new look at how we profile the environment in which each of us currently works to make it more attractive to young people coming out of high school and vocational technical schools.
Col. Alan Will: Technology is an important selling point with both the military and non military. Today's kids are intrigued by iPods and Blackberrys, and materials handling has moved down a more technological path. Whether you're talking about WMS, GPS tracking, controls or visibility throughout the supply chain, that kind of technology should be attractive to young kids. They can dovetail their personal love of technology with these jobs. On the military side, we have emphasized the use of technology and have tried to educate our personnel to the new technologies out there as we implement them. We must advertise that materials handling is not just pushing a forklift around the shop.
Ken Ruherdanz: We have to take these environments out of the horse-and-buggy days by using voice-directed technology, for example, or using software to optimize flow through the system. What I see coming down from the next administration is more government regulations protecting workers in the warehouse. Worker compensation claims are extremely costly. Technology is making the distribution environment more acceptable for the worker.
Ron Giuntini: One of the greatest challenges is with the job description. While we're upgrading the technology and the requirement for additional education to manage that technology effectively and efficiently, human resources departments still treat the job as if it were one level above a clerk's position. That makes it more difficult to staff positions that need more sophisticated personnel. The HR department needs to be involved from the very beginning to ensure their knowledge about the change and the type of person they'll need to fill that position.
Security
Col. Alan Will: The threats driving security today can be grouped into three categories: theft, terrorism and piracy. Firms should have a security plan addressing at least the following elements:
Credentialing those working in the supply chain, establishing clearances to various access levels.Trading partner security, extending to suppliers and customers. All links in that supply chain must be strong from a security standpoint.Employee security awareness, including screening of shipment contents and security of items while in transit. That includes lock seals, tamper-proof containers, GPS and RFID technologies.Information security to make sure that information on contents and movement is maintained.
John Hill: We ask our clients about conducting security vulnerability assessments. Most of them need us to spell those words for them. Security risk mitigation plans, or continuity of operations plans, have to be put in place. If you visit the typical company in the private sector and ask them if they could bring their risk manager into a meeting, the vast majority don't have one, nor do the HR programs focus on elevating awareness of security considerations among employees in general.
Productivity
Ron Giuntini: Six Sigma and lean initiatives are wonderful, but our form of capitalism and wealth creation has always involved constant, ongoing productivity improvements. But what is productivity? It's basically output over input. If the results of an output over an input increases, you've increased productivity—tons moved divided by manhours expended in moving those goods, for example. Efficiency and effectiveness are two major subsets of productivity. Efficiency is the quantity of throughput and the effectiveness is the quality of throughput. There's always tension between the two. You can increase your quantity of throughput dramatically on a per-person basis but you can have all kinds of safety issues as well. They have to be balanced.
Ken Ruherdanz: The companies I work with as far as metrics go seem to focus on logistics cost as a percentage of sales. However, what I see when I visit customers in the private sector is it starts to evolve around operational drivers like what do I do with increasing SKUs but less quantity, and I want to be much more accurate in my inventory, or we want more speed in the processing time. We need more throughput but we need to deal with wide fluctuations in the throughput and then deal with it effectively at both extremes. Or we want to reduce the turnover of labor in our facility because it's very inefficient, or we have problems with seasonal labor. How do we use space more effectively in my four walls? How can I reconfigure, expand and contract because I don't know what our business will be like in six months?
Changes coming next year
11/30/2007Advisory Board: A cost we must afford
01/31/2009Go on green
12/31/2007
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