In preparation for this post, I asked my fifteen-year old grandson to define product logistics and product supply chain.  He looked at me as though I had just fallen off a turnip truck.  I said you know, how does a manufacturer or producer of products get those products to the customer—the eventual user of the device or commodity.  How does that happen? I really need to go do my homework.  Can I think about this and give you an answer tomorrow?

SUPPLY CHAIN LOGISTICS:

Let’s take a look at Logistics and Supply Chain Management:

“Logistics typically refers to activities that occur within the boundaries of a single organization and Supply Chain refers to networks of companies that work together and coordinate their actions to deliver a product to market. Also, traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply Chain Management (SCM) acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service” – from Essential of Supply Chain Management by Michael Hugos.

“Logistics is about getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost (the seven Rs of Logistics)” – from Supply Chain Management: A Logistics Perspective By John J. Coyle et al

Now, that wasn’t so difficult, was it?  A good way to look at is as follows:

MOBILITY AND THE SUPPLY CHAIN:

There have been remarkable advancements in supply chain logistics over the past decade.  Most of those advancements have resulted from companies bringing digital technologies into the front office, the warehouse, and transportation to the eventual customer.   Mobile technologies are certainly changing how products are tracked outside the four walls of the warehouse and the distribution center.  Realtime logistics management is within the grasp of many very savvy shippers.  To be clear:

Mobile networking refers to technology that can support voice and/or data network connectivity using wireless, via a radio transmission solution. The most familiar application of mobile networking is the mobile phone or tablet or i-pad.  From real-time goods tracking to routing assistance to the Internet of Things (IoT) “cutting wires” in the area that lies between the warehouse and the customer’s front door is gaining ground as shippers grapple with fast order fulfillment, smaller order sizes, and ever-evolving customer expectations.

In return for their tech investments, shippers and logistics managers are gaining benefits such as short-ended lead times, improved supply chain visibility, error reductions, optimized transportation networks and better inventory management.  If we combine these advantages we see that “wireless” communications are helping companies work smarter and more efficiently in today’s very fast-paced business world.

MOBILITY TRENDS:

Let’s look now at six (6) mobility trends.

  1. Increasingly Sophisticated Vehicle Communications—There was a time when the only contact a driver had with home base was after an action, such as load drop-off, took place or when there was an in-route problem. Today, as you might expect, truck drivers, pilots and others responsible for getting product to the customer can communicate real-time.  Cell phones have revolutionized and made possible real-time communication.
  2. Trucking Apps—By 2015, Frost & Sullivan indicated the size of the mobile trucking app market hit $35.4 billion dollars. Mobile apps are being launched, targeting logistics almost constantly. With the launch of UBER Freight, the competition in the trucking app space has heated up considerably, pressing incumbents to innovate and move much faster than ever before.
  3. Its’ Not Just for the Big Guys Anymore: At one time, fleet mobility solutions were reserved for larger companies that could afford them.  As technology has advanced and become more mainstream and affordable, so have fleet mobility solution.
  4. Mobility Helps Pinpoint Performance and Productivity Gaps: Knowing where everything is at any one given time is “golden”. It is the Holy Grail for every logistics manager.  Mobility is putting that goal within their reach.
  5. More Data Means More Mobile Technology to Generate and Support Logistics: One great problem that is now being solved, is how to handle perishable goods and refrigerated consumer items.  Shippers who handle these commodities are now using sensors to detect trailer temperatures, dead batteries, and other problems that would impact their cargos.  Using sensors, and the data they generate, shippers can hopefully make much better business decisions and head off problems before they occur.  Sensors, if monitored properly, can indicate trends and predict eventual problems.
  6. Customers Want More Information and Data—They Want It Now: Customer’s expectations for real-time shipment data is now available at their fingertips without having to pick up a telephone or send an e-mail.  Right now, that information is available quickly online or with a smartphone.

CONCLUSIONS: 

The world is changing at light speed, and mobility communications is one technology making this possible.  I have no idea as to where we will be in ten years, but it just might be exciting.

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OFF-SHORING

December 27, 2012


Logistics Management, April 2012 was used as one resource for this posting.

Off-shoring is a word that has recently “popped up” in literature to describe moving jobs from one country to another, generally countries with lower cost of labor.   I retired from a Fortune 500 firm that mandated 33 % of all components and assemblies be purchased from LCCs; i.e. low cost countries.  The meaning was obvious, LCCs operated with labor rates significantly lower than those rates found “at home” and the company wanted to capitalize upon those low rates to increase profit.   The “going rate” for an engineer in India–$15,000, Mexico– $12,000, whereas in the United States—approximately $83,000.  Similar situations exist with CAD operators, draftsmen, assembly workers, etc.   This trend will not be reversed easily or soon.  Corporations in the United States and Europe will move an additional 750,000 jobs in IT, finance, and other business related services to India and other low-cost geographies by 2016, according to new research from The Hackett Group, Inc.   As noted in Supply Chain Management Review last year, researchers were trying to determine if levels of additional off-shoring in these areas would begin to decline by 2014.   That group’s off-shoring research, which examined available data on 4,700 companies with annual revenue over $1 billion headquartered in the U.S. and Europe, found that by 2016, a total of 2.3 million jobs in finance, IT, procurement, and HR will have moved off-shore.  This represents about one third of all jobs in these disciplines.  India is by far the most popular destination, with nearly 40 percent of the jobs being off-shored headed there.  The Hackett Group’s research sees additional off-shoring levels in business services, which are currently at around 150,000 new jobs each year, leveling off or declining after 2014.  They also found  that of the 5.1 million business services jobs remaining on-shore at U.S. and European companies in 2012, only about 1.8 million have the potential to be moved off-shore with  750,000, as mentioned above, moving by 2016.   Within the next eight to ten years, the traditional model of lifting and shifting work out of Western economies into low cost countries will cease to be a major factor driving business services job losses in the U.S. and Europe.  Automation and other productivity improvements will have caused the elimination of 2.2 million business services jobs at these companies between 2006 and 2016 and these factors are currently driving the elimination of round 200,000 jobs annually.  Companies must improve processes and to a great degree automate those processes in order to survive.  Our tax codes are not favorable to companies within the U.S. and companies must compensate for that fact.  “In the U.S. and Europe, off-shoring of business services and the transformation of shared services into Global Business Services, have had a significant negative impact on the jobs outlook for nearly a decade”, said The Hackett Group Chief Research Officer—Michael Janssen.  “That trend will continue to hit us hard in the short-term”.            

What we are saying—don’t’ look for much relief, if any, for the next few years.

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