Logistics News September 2014
the independent voice of the
Supply Chain
industry
Materials Handling / WMS
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September 2014
CONTENTS
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Procurement
Avoid Supply Chain disruptions The role of materials handling equipment is often overlooked in supply chain planning and management. When bad planning results in the wrong or insufficient equipment being available, customer service may be negatively impacted – especially in the cold chain.
2
Collaboration 4
A PROBLEM SHARED … is a problem solved
RFID 6
14
SUSTAINABLE SOURCING HELPS … to ‘future-proof’ supply chains
VENDING MACHINES DISPENSE … fresh foods via RFID
Training 8
What are managed mobile services?
KEY WEAPON FOR … maximising training investments
Measurement
Mobility management is rising as a chief priority for CIOs and CTOs worldwide. More than 85% of IT decision-makers expect steady or increased year-over-year mobility budgets, according to a recent survey.
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MEASURING … the unmeasurable
Cold storage 12
16
AVOID SUPPLY CHAIN DISRUPTIONS … with careful planning
Mobility 14
Neglecting distribution can undermine growth Ordinarily, adding sales channels and impressive sales growth make the CEO, sales and marketing executives and other stakeholders very happy. But sales growth does not always translate into additional profits.
WMS 16
COVER STORY A Hyster reach stacker at work in the Durban container yard of freight-handling specialist the Southway Group. Continuing its long-standing relationship with Hyster dealer Barloworld Handling, Southway recently increased its Hyster container-handling fleet to 11 machines.
NEGLECTING DISTRIBUTION … can undermine growth
Materials handling 20
20
WHAT ARE … managed mobile services?
SOUTHWAY ON THE MOVE … with Hyster
Healthcare 22
IMPERIAL HEALTH SHOWCASES … pop-up clinic
Regulars 18 24 31 32
BOOKMARK NEWS FORTHCOMING EVENTS INDUSTRY ASSOCIATIONS & EDITORIAL DIRECTORIES
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Sustainable sourcing helps to ‘future-proof’ supply chains Sustainable sourcing is becoming one of the most important functions of supply chain management, the reason being because of how it grounds itself in future-proofing supply chains. By Michael Fournier, B2C Marketing Insider
WHAT DOES IT MEAN to future-proof supply chains? The process of future-proofing supply chains aims to protect an organisation’s performance in the future against a multitude of potential problems. Whether the future involves loss of access to key production ingredients or logistics providers, future-proofing attempts to mitigate any potential dangers. Trending in the environment towards future-proofing supply chains is sustainable procurement, which has proven that it improves efficiency, effectiveness and transparency for all types of businesses. Furthermore, sustainable sourcing not only improves employee and supplier relationships, it also improves a company’s reputation amongst its customers and its community. Sustainable sourcing can also dismantle poor waste disposal practices and reduce energy waste, so improving company spend management. Beyond the business case towards sustainable sourcing, ecologically friendly procurement practices are necessary for maintaining the environment. What benefits can result? Amongst the numerous benefits sustainable supply chain management (SSCM) can provide, the more important benefits include competing with a green strategy and improving market competitiveness. Green strategy involves reducing waste management costs, trading ethically to attract ethically conscious customers, and reducing energy resource waste. Improving market competitiveness involves reducing procurement delays by adequately projecting future sourcing activities against potential environmental hazards, remaining up-to-date with changing government regulations, monitoring any shifts in customer attitudes towards environmental concerns, and examining changes in supplier relationships. In fact, studies have shown that sustainable sourcing practices can enhance buyer-supplier relationships through increased transparency. Role of e-procurement Before examining why most companies are choosing to optimise their supply chain, consider this single piece of info that emerged from a recent study: “One manual purchase order can cost a company as much as R1 000 to process, even if the purchase order was issued to buy a
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R25 part”. The cost of issuing manual purchase orders add up when considering the time spent sending documents back and forth between approvers, buyers and receivers. To overcome this problem, e-procurement systems have become significantly more popular as a means of removing the tedious travel time of documents. According to another study there are three significant ways that e-procurement improves the purchasing process: Goodbye paperwork: E-procurement systems eliminate paperwork by generating electronic purchase orders that can be immediately routed to the appropriate person, resulting in less paper cost from purchasing paper and disposing of it, as well as less time spent between key personal. Commitment to vendors: E-procurement systems can be used as a means of compelling end users to only purchase
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A problem shared is a problem solved To maintain profitable supply chain networks as customer-centric and serving, synchronised entities with minimum pipeline inventory, planners and operators must collaborate to remove or resolve conflicts and issues together for the better good. By Doug Hunter, doug.hunter@mweb.co.za
COLLABORATION IS A PROCESS we think we understand and are involved in. Dismissing the negative war-time connotations, Wikipedia highlights dimensions of the concept which, to me, show where we may go wrong. Collaboration, they write, is ‘working with others to do a task and to achieve shared goals’. Yes, and making it effective is achieved ‘by sharing knowledge, learning and building consensus’. Great – but many people don’t share and keep needed information close. ‘Most collaboration requires leadership’ to drive the openness and sharing. The result is ‘teams that work collaboratively can obtain greater resources, recognition and reward when facing competition for finite resources’. But it isn’t just to get recognition for good behaviour. For this essential business process to work, it ‘specifically aims to increase the success of teams as they engage in collaborative problem solving’, the emphasis being on problem solving. The SCOR model – plan, source, make, deliver, return, enable – helps define the different functional areas and processes through the supply chain. Many companies emulate this process model and yet still miss delivery promises, have inventory shortages that stop production, and find returns increasing because of quality problems or simply because the wrong products were delivered. Understanding supply chain processes is definitely required but not sufficient. Even if the plan was right when released, execution to it always requires changes, some big but most are small, some local and annoying but most involve more than one area. This is where collaboration comes in. It’s no good solving the issue for just your area. You have to share the problem, discuss and resolve it for the supply chain to deliver on endcustomer service. If not the problem is simply moved to the next person and the supply chain remains sick. The sum of all these shared decisions is the glue that
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transforms a family of good processes to resilient and agile supply chains. That’s what collaboration does. Minimise the issues to collaborate on, identifying them first in the high-level supply chain plan needed to initially synchronise the different areas. Then locally focused operational plans can be created and executed. The idea here is first to identify what must be supplied when to
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Vending machines dispense fresh foods via RFID A Californian company’s refrigerated kiosks employ RFID readers to identify sandwiches and other perishable products stored inside the units, and to track sales and inventory levels. By Claire Swedberg
FOLLOWING TWO PILOTS, a San Franciscobased company began selling its smart sensor-based refrigerated vending machine, known as a Pantry, to enable businesses – such as healthcare facilities, restaurants and other food sellers – to dispense fresh food automatically. The Pantry has a builtin RFID reader to track the items stored inside the unit via tags affixed to food packaging. The solution was developed to allow users to monitor the food inventory inside vending machines, view alerts to restock those machines, and prevent products from going out of stock, thereby reducing sales. Pantry customers “want to extend their reach of point of service” – although they can sell fresh food to workers and visitors during business hours, companies that continue operating throughout the night are often unable to provide the same food service during that time. The Pantry refrigerated vending machine has a built-in RFID reader to identify which food items consumers have removed from its shelves. Initially, a university, a medical centre’s nutrition and food services department, and a health care practice each piloted a refrigerated kiosk to determine whether they could use the Pantry system to provide fresh foods and cold drinks to employees and visitors, even when staff members were not available to sell the product personally. The operations had previously used traditional vending machines for years. The new machines dispense packaged snack foods and beverages. Some trepidation was felt at first as stocking and managing a vending machine with fresh foods can be time-consuming. With the use of RFID tags and the Pantry kiosk, the operations have now been able to expand their vending options to include fresh refrigerated food. That includes sandwiches, salads, fruit and entrées, such as burritos, that can be microwaved. The medical centre is open 24 hours a day, while its café closes at night, leaving personnel and other customers with few food options except those items sold in vending machines after business hours. Then the Pantry, which resembles a refrigerator with a door made of clear glass, was installed.
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The Pantry has an RFID reader module and a reader antenna on each of its shelves. The unit employs a Wi-Fi or 3G cellular connection to the hosted server, where data regarding its inventory is stored and managed. First, users apply an RFID label to each food item. The label’s ID is linked to the food item’s description and expiry date, which employees input into the software, and the item is then placed inside the kiosk, where its ID number is captured and stored automatically in the server’s software. To use the Pantry, a consumer first swipes a credit or debit card through a mag-stripe reader installed on the kiosk’s front, prompting the refrigerator door to unlock. The consumer then opens the door and removes the desired items. Once the door is closed again, the system considers the transaction complete, and the software determines which items have been removed. The total cost is then charged to that person’s credit or debit card account. The service operators can view inventory status on the server, and can thus determine when products need to be restocked, as well as when a particular food item has reached its expiry date and should be removed from the kiosk. In addition, the software provides analytics regarding which products are selling the most, at what times of day and on which particular days of the week. This information can not only help to ensure that the proper inventory is available to meet demand, but also help prevent shrinkage related to food unpopular with J\Z[VTLYZ L_WPYPUN ILMVYL P[ JHU IL JVUZ\TLK
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Avoid supply chain disruptions with careful planning The role of materials handling equipment is often overlooked in supply chain planning and management. When bad planning results in the wrong or insufficient equipment being available, customer service may be negatively impacted - especially in the cold chain. By Tim Osmulski, The Raymond Corporation
ON A COLD WINTER MORNING, the director of operations arrives at his warehouse location for a new customer start-up. He senses something is amiss at the freezer warehouse. This is what can only be described as a major disruption to the company’s supply chain. The culprit – a lack of materials handling equipment. Planning is the first step in identifying vulnerabilities and mitigating risks. Supply chain vulnerabilities may be internal and external and can include demand, environmental, process and organisational control risks. The global economy is reinforced by the strength of supply chains. Moving goods reliably and quickly from the point of production to the point of purchase is what makes large scale retailing, manufacturing, and even some types of farming possible. The supply chain becomes all the more critical when the freight is perishable or delicate, or requires other forms of special handling – especially controlled temperature. Cold chain elements To be effective a cold chain must be comprehensive, taking goods from the manufacturer or processor through to the final point of purchase. Temperature of the freight must be controlled at all times and should be kept within the range established by the shipper. Remote monitoring and adjustment capabilities are instrumental to maintaining continuous control of temperature.
When analysing their supply chains, many operations managers conduct a thorough study of their products, scheduling, transportation, packaging methods and packaging materials. It is advantageous to utilise a provider that can offer all of these cold chain elements or, at a minimum, one that will co-ordinate all of the logistics and vendors and take responsibility for the freight throughout the entire transit process. This practice will shorten time in transit and create efficiencies, and is key to creating the precise mix that will move a given product reliably and within the necessary time frame for maximum shelf life. When analysing their supply chains, many operations managers conduct a thorough study of their products, scheduling, transportation, packaging methods and
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packaging materials. Often, the inclusion of materials handling equipment as part of the supply chain is overlooked. But, with careful planning, operations managers can avoid supply chain disruptions and exceed customer expectations. Acquisition and implementation planning The inclusion of materials handling equipment as part of the supply chain planning process requires both an acquisition and implementation plan. Failure to anticipate the need for materials handling equipment and execute adequate planning methods can result in major supply chain interruptions. Many customers have an in-depth knowledge of their specific needs, while others will engage the dealer in a collaborative process to determine the right truck for the right application. In either situation, the customer determines the best solution to fit their needs. Once the application of the equipment is determined – such as the weight of the pallets, width of the aisles and all freezer space or a combination of dry storage space – the acquisition planning begins. Step 1: When, where and what? The first question in acquisition planning should be – when do I need the equipment? The availability and delivery date of the required equipment is the most important link in the materials handling planning process. The start of the planning process with the materials equipment supplier must be the confirmation of the equipment specifications and the available delivery dates. If the required equipment is not available to meet the needed delivery date, the supplier should immediately make arrangements for the availability of short-term rental units and communicate those plans to the operations managers. Acquisition planning also includes the equipment quantity, and if the equipment will be new or used, purchased, leased or rented and for seasonal or short-term usage. Any combination should be available to satisfy the materials handling requirements for the operation. Used or short-term rented equipment can be combined with new leased equipment to determine the materials handling requirements. Step 2: It’s in the details With the materials handling equipment on order, the team would work with the supplier on a detailed
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A definitive software guide for business executives In the foreword to this book, Tiger Wessels, founder and former CEO of UTi, cautions that being a logistics industry executive can be a challenging experience.
TITLE: The Book on Logistics Software SUBTITLE: The definitive guide for business executives AUTHORS: Martie Bothma, Reggie Pillay, Ralf Rolle, Shermandra Singh PUBLISHER: Dovetail Business Solutions EDITION: 2014 ISBN: 978-0-620-60253-2 FROM: Amazon + Amazon Kindle PRICE: R320
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NOT ONLY DO EXECUTIVES have to worry about keeping costs down, they have to ensure that efficiency levels are up, staff are achieving the goals set out for them and that the company is making a profit. It’s tough, but it’s manageable and sometimes even fun. The Book on Logistics Software gives an overview of all the tasks and challenges that business executives are faced with every day. It also throws some humour on the obstacles that software providers face together with industry stakeholders and provides insight into why software is a necessity and how it can aid logistics processes. The book provides an honest overview of the good, the bad and the really ugly, such as project failures. It sheds some light on the importance that IT plays in business processes and what challenges result owing to the need for information – and the availability, accuracy and the thing most of us are currently faced with: information overload. To be successful in the logistics industry, passion, drive and focus are non-negotiable. The book stresses the need for ensuring your business comprises individuals that will move the company forward and that it has a technical eco system, which will fit your budget and needs, as well as the right systems and procedures. The book is divided into 11 chapters and is very readable. The first chapter starts with the logistics IT landscape. The logistics industry is filled with ever-changing variables and demands, constant innovation, tweaking and configuration from logistics executives. It is crucial for businesses to adapt to change. This does not only apply to new technologies, but to every aspect that affects the business environment – such as social media trends, the pressure to be environment friendly, ethical dilemmas and regulations. If you compare what businesses are today to what they were 50 years ago, it’s hard to fathom how businesses survived without the technology we
have at our disposal today. Businesses no longer have a reason not to adapt to change. With regard to the logistics industry, change is what drives economic development in this sector. In developing countries such as South Africa, much change is still needed in order to ensure continuous growth. The chapters go through the Build vs Buy process; Why projects succeed or fail; Access to information; How to acquire and retain clients; Staffing needs; Job requirements and fulfillment; Technical ecosystems; Technical directions; How to recover from a disaster and the final chapter of What’s next with Logistics. The time has come for the next generation of supply chain executors who will enable 3PL providers and shippers to strengthen their partnerships. According to a 2013 3PL study, only 86% of cargo owners view their relationship with their 3PL as successful, as compared to 94% of 3PLs. While this is an increase over previous years and shippers credit the improvement to the 3PLs finding new ways to improve logistics effectiveness, the discrepancy opens up an opportunity for leading 3PLs to further improve their operations by supporting more innovative technology. By moving beyond tactical and into strategic activities, both parties can reap great benefits. In order to drive innovation and cutting edge technology solutions, shippers are willing to gain-share with 3PLs for investments required to achieve greater performance. A key way for 3PLs to move into the high performance achievement echelon of the industry, is through establishing partnerships that leverage a 4PL model. This 4PL, also known as a Lead Logistics Provider model, will be the catalyst for the evolution to more collaborative and innovative partnerships that will positively impact 3PL and shipper relationships in a significant way.
Forthcoming Events LAA Event: 26th Annual Logistics Achiever Awards 2014 Date: 18 September Venue: Montecasino Ballroom Contact: Dianne Holton, Tel 011-874-7697; www.logisticsnews.co.za
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Outsourcing, 3/4PLs, Sustainability
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LOGISTICS ACHIEVER AWARDS The 26th annual Logistics Achiever Awards 2014 Date: 18 September Venue: Montecasino Ballroom Contact: Diane Holton Tel: 011-784-7697 www.logisticsnews.co.za
Logistics News July 2014
the independent voice of the
Supply Chain
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Logistics News June 2014
the independent voice of the
Supply Chain
industry
Subcribe online for the printed or digital versions
www.logisticsnews.co.za
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