Round up Of Today’s Logistics News

Here is a roundup of some of the latest logistics news from around the world:

FedEx to transfer LA airport maintenance to Indianapolis

FedEx will exit a maintenance facility at LAX and send the work to its Indianapolis hub to increase efficiency. The move is part of a larger effort by FedEx to reduce costs and improve customer service.

Teamsters reject Yellow's proposed changes again

The Teamsters union said Thursday it has rejected less-than-truckload carrier Yellow Corp.'s plan to restructure operations at more than 200 terminals. The union said the changes would have resulted in job losses and a decline in service.

Countries Compete to Lure Manufacturers From China

Countries around the world are competing to lure manufacturers away from China, as the country's labor costs rise and its supply chains are disrupted by the COVID-19 pandemic. Countries such as Vietnam, Mexico, and India are offering tax breaks and other incentives to attract manufacturers.

Biden's Push to Counter China Steers EV Investments to Canada

President Biden's push to counter China is steering electric vehicle investments to Canada. The country has a number of advantages over the United States a and includes a skilled workforce and a stable political environment.

European Ports Brace for Cybersecurity Regulation

European ports are bracing for new cybersecurity regulations that are expected to be implemented in the coming months. The regulations will require ports to take steps to protect their systems from cyberattacks.

Stanley Black & Decker to Close Texas, South Carolina Plants

Stanley Black & Decker is closing two plants in Texas and South Carolina, as the company looks to reduce costs. The closures will affect about 200 employees.

Europe Moves to Revive Mining to Cut Reliance on China

Europe is moving to revive its mining industry in order to reduce its reliance on China for critical minerals. The European Commission has proposed a number of measures to support mining, including financial assistance and tax breaks.

South Korea Plans Mega Chip-Making Base to Stay Ahead

South Korea is planning to build a mega chip-making base in order to stay ahead of its rivals in the global semiconductor industry. The base will be located in the city of Pyeongtaek and will cost $20 billion to build.

Japan and South Korea Pledge Cooperation at Summit

Japan and South Korea have pledged to cooperate on a number of issues, including the development of new technologies and the promotion of economic growth. The two countries agreed to work together to develop artificial intelligence and to promote the use of hydrogen fuel cells.

Apple Supplier Foxconn Plans to Rely Less on China for Revenue

Apple supplier Foxconn is planning to rely less on China for revenue in the coming years. The company is looking to expand its operations in other countries, such as India and Vietnam.

And that’s all folks!! 

What is all the Fuss About With chatGPT? My Conversation WITH it…

Yes, I am saying my chat WITH it as I had a very interesting chat about the trucking business. I have a lot to think about relative to chatGPT and one thing is for sure. This is real and I can already think of many use cases for this tool. So, if you are not using it, you may want to think about it. A couple of observations from my conversation below:

1. Think of this as another version of a search tool but rather than giving me a list of websites to go to, this actually answers questions for me in conversational English. 
2. Notice my somewhat random follow on questions. I asked about trucking, then a follow up question on drivers, then e-commerce and then the impact on climate. The responses were perfect and very conversational. 
3. It is not just a screen scrape of another website as it brought disparate information together. 

NOTE: This post is about the viability of this new technology and I am sure people will take exception with some of its answers. That is not the point. The point is that the world is changing and you need to understand it. 

Here is my recent conversation with my new friend:

Me: Is trucking a viable business?

ChatGPT: Trucking can be a viable business, as it is an essential industry for the transportation of goods and materials. However, like any business, it can have its own set of challenges and obstacles to overcome, such as competition, regulation, and fluctuating demand. Additionally, the industry is currently facing a shortage of drivers, which can make it more difficult for trucking businesses to operate efficiently. It is important for those interested in starting a trucking business to conduct thorough research and have a well-crafted business plan in place to increase their chances of success.

Me: Why are they short drivers (I did not use a question mark so apparently punctuation is dead).

ChatGPT: The trucking industry is currently facing a shortage of drivers for a few reasons. One reason is that the job can be physically and mentally demanding, which can deter some people from pursuing it as a career. Additionally, the lifestyle of a truck driver, which often involves long periods of time away from home, can be unappealing to some.

Another reason for the driver shortage is the aging demographic of current drivers. Many experienced drivers are nearing retirement age, and not enough new drivers are entering the industry to replace them.

In addition, the industry has been facing a significant increase in demand due to the e-commerce boom, which has led to an increase in shipping and logistics, putting further strain on the limited pool of drivers.

Finally, the pandemic has also played a role in driver shortage, as many drivers were forced to stay home due to quarantine restrictions, and trucking companies were forced to limit the number of drivers on the road.

All these factors have contributed to the current driver shortage in the trucking industry.

Me: How big is the e-commerce boom (again, no punctuation):

ChatGPT: The e-commerce boom has been significant in recent years. According to recent data, global e-commerce sales are projected to surpass $4 trillion by 2020 and continue to grow rapidly in the coming years. This growth is being driven by factors such as increasing internet penetration, the proliferation of smartphones, and the convenience of online shopping.

In the US specifically, e-commerce sales as a percentage of total retail sales have been steadily increasing, reaching 16.1% in 2021. Online sales growth has accelerated during the pandemic, as many consumers were forced to shop online due to store closures and social distancing measures.

This e-commerce boom has also led to a significant increase in demand for shipping and logistics services, as more goods are being purchased online and need to be delivered to customers. This has put pressure on the trucking industry, which is a key component of the supply chain for e-commerce businesses.

Overall, the e-commerce boom is having a big impact on the economy and the way we shop, and it is expected to continue to drive growth in the coming years.

Me: What are the global warming issues related to e-commerce (The question mark is dead):

ChatGPT: E-commerce has several global warming-related issues associated with it.

1. Increased transportation emissions: The increase in e-commerce has led to an increase in the number of delivery trucks on the road, which contributes to air pollution and greenhouse gas emissions.

2. Energy consumption: Online retailers and delivery companies consume a lot of energy to power their warehouses, data centers, and transportation. This energy consumption can lead to higher carbon emissions.

3. Packaging waste: E-commerce often generates a lot of packaging waste, especially from the use of single-use packaging materials such as plastic bags, bubble wraps and cartons. These materials are not easily recyclable and end up in landfills and oceans, releasing methane, a potent greenhouse gas.

4. Returned goods: A large percentage of e-commerce purchases are returned, which can lead to additional transportation emissions and packaging waste.

5. Air freight: Some e-commerce companies rely on air freight to meet fast delivery expectations, which generates high carbon emissions and contributes to climate change.

To address these issues, e-commerce companies are exploring ways to reduce their environmental impact, such as investing in electric delivery vehicles, implementing more sustainable packaging materials, and increasing the efficiency of their warehouses and data centers.

This is where I ended the conversation.

More thoughts later on the use case for this but let this sink in a bit. The biggest use case I can think of right now is the threat to the google search engine. Rather than me asking for and getting a list of sites that I may have been able to get this information from, the system returned to me, in natural language, the answer to my question.

More to come…

Scenario Planning - Face it You are WRONG!

 I want to discuss some thoughts I have on scenario planning and why I think this skill is the future of supply chain management and planning. But first, let’s cover one thing and that is something you have to come to grips with: YOU ARE WRONG. 

As great supply chain managers, we all like to show how great we are with math and how great we are with developing algorithms to come up with “the number”. “The number” could be an ESOP number showing inventory requirements after detailed and exhaustive analysis of demand requirements or it could be something like what transportation or labor capacity I need to satisfy expected demand in the up coming months. Coming up with these numbers requires a lot of thought, a lot of data collection and the inevitable crunching of numbers. We then like to show everyone that these numbers are “the answer”.  As you can tell from what I titled this entry, I do not believe they are the answer. 

Rather, the supply chain manager should think of the number as the first step in a multi-step process to develop and document different scenarios which could occur. Think of this first number, not as the answer, but rather as the “base case”. It is a hypothesis. If all your assumptions come true then this number will likely be “the number”. Of course, in life, and in supply chain, all the assumptions almost never come true or develop as you planned them. I submit that almost every major event in the last 20 years in supply chain (2008 recession, 2020 COVID, etc.) were not in anyone’s base case assumption. 

Now that you are thinking of this number as just one possible outcome, what do you do next? Well, you build scenarios and you calculate what “the number” will be under all the different scenarios. You assign probabilities to those scenarios and, in some cases, you build out contingency plans to deal with specific scenarios, in advance, in case those scenarios come to fruition. 

There are many documented ways to think about this and for those who are academically inclined, I point you to a great research paper titled, “Next Generation Supply Chains” where they discuss the Gausmeier-approach to scenario planning and the Applied Approach to scenario planning. It is a great read to get the more academic base on scenario planning especially in supply chains. However I would suggest, after reading this article, you discover what will work in your company. How can you simplify it and bring it to the practical level.

I believe if you do this work, in advance, you will be much quicker in executing well thought out plans for each scenario that could develop. You will have thought about it in advance when you were not under undue pressure, you will have documented the assumptions and potential scenarios, you will have assigned responsibilities and tasks. All when you could think much more clearly. 

After all this is done, just like a great NFL quarterback, you can call the play and audible out of it with confidence and conviction that you have planned for the change of events and you have practiced it. 

Yes, getting “the number” is important. But, what is more important is that you admit that the number is wrong, and you plan for it. 

Go to Market Strategy before Supply Chain Strategy

This article is directed mostly towards practitioners who operate supply chains within companies which market and sell products. I have done a lot of thinking recently about the discussions going on concerning "is just in time dead" or "on-shoring / near shoring" etc. There are a lot of conversations happening relative to all sorts of strategies for supply chains (and no lack of consultants who want to sell you on the latest and greatest ideas). My thesis here is that the first thing you have to develop and fully understand is your business' go to market strategy. Then, after that is completely articulated and written down, you can discuss your supply chain strategy. 

So, what is a go to market strategy? It is simply writing down what products you will provide, what markets will you provide them into, who are your competitors, who are your customers and how will you compete? In a 1993 Harvard Business Review article (and subsequently in his book Double Digit Growth) Micheal Treacy and his co-author Fred Wiersema argue that most companies have to pick one strategy they will really excel at and exploit it. The three strategies, from which a company picks are: 1) Customer Intimacy 2) Operational Excellence 3) Product Innovation. It is a fairly rare unicorn which can "master two".

Just by the names of these strategies and without reading the book (Although I highly encourage you to read it) the reader can understand the implications for your supply chain strategy:

1. Customer Intimacy - High service is the calling card. Maybe not service at any cost, but high service nonetheless. The thesis here is that if you provide a truly differentiated and incredible service level, customers will be loyal and they will buy more from you. You will also keep your competitors away as they likely cannot functionally or financially compete against you. 
   
   
2. Operational Excellence - This is low cost. You will compete on cost and every nickel counts. Your customers do not want (and certainly will not pay for) extra bells and whistles. Just do what you say you will do. At this year's CSCMP Edge conference I attended a great presentation with one of the returnable pallet providers. Their strategy was all about efficiency and low-cost. 
   
   It is not "bad" to be in a low cost industry. You have to know it and embrace it and that is what this person did in his presentation. The company's network design, systems and operations were totally geared towards efficiency. They will do exactly what they say they will do with no frills, bells or whistles and they will do no more. The customer gets what they need at rock bottom prices. 
   
   
3. Product Leadership - Think Apple. This is where the product is so good that customers, while they want efficiency, will actually "pay up" or even wait for the product because that product is so good and desirable. Everyone uses the iPhone as an example of this and so some may think only Apple can do this. Let me use another example: The Kitchenaid Standmixer. I worked specifically for this division of Whirlpool for over a year and I can tell you, people will wait for that product. It is iconic. Everyone wants one. Mother's took bus tours of the plant with their daughters before they got married. So, yes, if you truly do have an exceptional and differentiated product, you do not need to be Apple to win. 

So, what does this have to do with supply chain? My submission is it has everything to do with supply chain because you first have to understand which of the three your company is doing to determine what your supply chain strategy will be. Imagine if the person from the pallet company decided his supply chain strategy was going to be "Customer Intimacy" and he built a highly responsive, high service and high cost supply chain. This would be a complete mismatch to the customer's desires and expectations of a low cost and highly efficient supply chain. The supply chain leader needs to fully understand the "go to market" strategy of the company before s/he can build out the supply chain strategy. 

One last bit of advice and warning: Be very leery of a company that wants to be one of the strategies above but is in an industry that demands another strategy. For example, many sales and marketing people want to be in a customer intimate industry because that is what they do. It is fun and energizing. But, this what they want. What do the customers want? If the customers want operational excellence or product leadership then what you will have is chaos. You will never get the supply chain strategy right.

In conclusion:

• Understand your company go to market strategy before you do anything.
• Ensure that stated strategy matches up with the industry you are in. 
• Then, and only then, develop and implement your supply chain strategy. 

After two years of supply chain disruptions and craziness, I tend to think I am Napoleon at Waterloo so tonight, I offer ABBA singing Waterloo: