Serving up our exclusive market research on shipper-3PL partnerships, a handy list of Top 100 3PLs, and the Top 10 3PLs that rounded up the most reader votes, this edition delivers. Dig into case studies that reveal fresh insights and feature stories loaded with supply chain takeaways. No matter how you slice it, this special 3PL issue helps supply chains get cookin’.
JULY 2022
U.S. CANADA TRADE: SECRET SAUCE
OUTSOURCED LOGISTICS: BY THE SLICE OR BY THE PIE
THEY DELIVER! TOP 100 3PLS SUPREME SERVICE: TOP 10 3PL EXCELLENCE AWARDS
BITE SIZED SUPPLY CHAIN/LOGISTICS INFORMATION Info SNACKS
I Double Dare You to Make a Return Nearly six in 10 ( 58% ) respondents to a Slickdeals survey say they are willing to do “nearly anything” to avoid returning items. 66% say they believe the worst part of the shopping experience is going through the return process. 67% hate returning items they previously purchased. –Survey of 2,000 U.S. adults conducted by OnePoll for social shopping platform Slickdeals
US D&D? OMG! • U.S. ports occupy the top five spots in a list of 60 ports ranked by highest to lowest demurrage & detention (D&D) charges across shipping lines. • Despite increased U.S. regulatory scrutiny of D&D charges, shippers using the Port of New York now face the highest D&D fees on the planet . New York is followed by the ports of Long Beach, Los Angeles, Oakland, and Savannah in the rank list. • All five ports were more than 2-3 times more expensive than Hong Kong in the 7th spot. preferences. Fruit truffles are no longer available as an elegant gift selection, and soda selections have also been changed slightly. Guests with a sweet tooth will be glad to note that both the red velvet and vanilla cupcake selections remain available at press time. –cruisehive BON VOYAGE, CRUISE AMENITIES Global supply chain issues are cited as the reason for temporarily adjusting Royal Caribbean Crown and Anchor Society members’ amenities. For one, Royal Caribbean International told members that it is “currently out of stock for the Crown & Anchor preferred chosen wines.” Supply chain shortages are affecting more than just wine
THE FASTEST FRONTIER The Frontier supercomputer, introduced by the Department of Energy’s Oak Ridge National Laboratory, packs a ridiculous 1.1 exaflops of computing power, making it the first such machine to reach exascale levels of performance. The Frontier has a threshold of one quintillion calculations per second. Oak Ridge puts that in perspective: If each person on Earth completed one calculation per second, it would still take more than four years to accomplish what Frontier can do in one second. –Ben Munson, Thomas Insights LIGHTENING THE LOAD After experiencing a 100% driver turnover rate in 2021, Central Florida Transport (CFT) doubled its human resources department to more fully address driver needs. It also began offering retirement plans for the rst time in its 30-year history. As a new perk for its truckers, the Florida carrier has hired a full-time driver’s advocate who does everything from schedule healthcare appointments to help truckers manage their revenue, as well as get in touch with absent drivers.
EVERYBODY INTO THE CONTAINER! Calaak’Oncept, based in Geispolsheim, France, specializes in cargotecture — transforming cargo structures into products of architecture. In its portfolio are swimming pools carved in shipping containers. Customers can choose an above-ground or semi-buried pool, or even one raised on a cli to aord a view of the landscape. –designboom
– The Wall Street Journal
–Demurrage & Detention Benchmark 2022 report, Container xChange
July 2022 • Inbound Logistics 1
CONTENTS JULY 2022 | VOL. 42 | NO. 7
130 NO MATTER HOW YOU SLICE IT, 3PLS DELIVER By the slice, or by the pie, shippers know that they get the exact supply chain and logistics support they knead from their 3PLs. Through thick and thin, third-party logistics companies are meeting new challenges with updated and expanded menus.
152
85
Takeout section! 3PL coverage starts here.
152 PROJECT LOGISTICS: THE BASICS OF ANYTHING BUT BASIC
FEATURES 86 3PL PERSPECTIVES:
146
MARKET RESEARCH REPORT How do 3PLs and shippers manage challenging market conditions and ongoing uncertainty? Our exclusive market research report takes a deep- dish dive into the dynamics of today’s logistics partnerships. 96 2022 TOP 100 3PL S Inbound Logistics’ annual Top 100 3PL Providers guide delivers the best third- party logistics companies for every pi-zza your supply chain and logistics READERS’ CHOICE: TOP 10 3PL EXCELLENCE AWARDS Inbound Logistics’ readers have dished it out. Here are the top 10 3PLs that made the cut, helping shippers roll with supply chain disruption and upheaval and providing supreme service and support in a pinch. operations. 119
Moving big, bulky, unconventional freight around the globe precisely and eectively in the face of myriad challenges is not for the faint of heart. Here’s how project logistics experts get it done. 160 E-COMMERCE: THE COMPLETE PACKAGE Two and a half years after the pandemic caused e-commerce to accelerate, packaging and shipping methods continue to evolve. There’s a lot to unpack, but one thing is clear: The most comprehensive packaging solutions meld both technology and sustainability .
146 LABOR SHORTAGES:
CALLING IN THE TROOPS The ingenuity of America’s fighting forces has been the deciding factor in the greatest challenges the world has ever seen. Could history’s best-trained military men and women provide the answers to the supply chain workforce challenges we face today?
160
2 Inbound Logistics • July 2022
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180
INPRACTICE 22 LEADERSHIP
As senior vice president and chief supply chain ocer at Sweetwater, an online retailer of musical instruments and professional audio equipment, Phil Rich spends his days immersed in the music world. 24 READER PROFILE Sherry Liu, vice president of international supply chain with CarParts.com, an e-commerce provider of automotive parts and accessories, takes stock of the management approaches that have served her well. 197 CASEBOOK National Oak Distributors, an automotive paint, body, and equipment warehouse distributing company, reaches more than 95% of the country with next-day delivery. The company had to shift gears to ensure supply chain visibility and timely delivery. 201 I.T. TOOLKIT Starborn Industries, a distributor of fasteners and screws for the deck construction market, expanded and sought to better manage its warehouse operations and increase eciency. The company turned to Sage Group plc to fasten on to visibility and automation benefits.
166 MARITIME CHALLENGES: PORTS SEA IT THROUGH Ports ease rough supply chain conditions with new services, technology, and other initiatives.
180 SPONSORED CANADA-U.S. TRADE: SEAMLESS AND STREAMLINED
With a vital trade relationship aloft, moving shipments between Canada and the United States remains smooth and collaborative—thanks to reliable and experienced providers. 189 Great reads about supply chain and logistics are not all textbooks and white papers. Browse this collection of books, research, and guides that are both page-turning and informative. 2022 SUMMER READING GUIDE
166
205
174 TECHNOLOGY FOR SMB S : NO SMALL MATTER Supply chain technology isn’t just for large companies. It’s possible—and necessary—for businesses to invest in new innovations, no matter what their headcount.
189
205 E-TALES When MJ Holding Company, LLC, the largest North American distributor of trading cards and novelties to retail stores, set out to build a new warehouse in 2019, it decided to augment its ability to ship directly to consumers. Boosting its e-commerce capabilities turned out to be a game changer.
4 Inbound Logistics • July 2022
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CONTENTS JULY 2022 | VOL. 42 | NO. 7 INFOCUS 1 INFO SNACKS 20 VERTICAL FOCUS: OUTDOOR RETAIL 26 NOTED 30 TAKEAWAYS 230 IN BRIEF 240 LAST MILE The world loves its French fries INSIGHT 10 CHECKING IN 3PLs show o-the-chart growth 12 GOOD QUESTION Has the pandemic accelerated logistics outsourcing? 40 SPONSORED Labor shortages and their eect on the supply chain...40 58 REVERSE LOGISTICS AI: the critical returns management component 60 POST COVID How location intelligence improves supply chain management 62 SMART MOVES Why company culture has never Loup transloading network: creative shipping solutions expand market reach...79 Rinchem solves complex supply chain issues...80 Oering turnkey solutions to support transload customers...81 Managing the successful delivery of autoclaves and work tanks...82 Full steam ahead, don’t let ocean costs detain you...83 138 SPONSORED THOUGHT LEADERS Revealing the hidden GOOD QUESTION Has the pandemic accelerated logistics outsourcing? 240
12
been more important 64 SC SECURITY Using AI to crack down on illegal trade and tracking 66 SUPPLIER MANAGEMENT Getting the most value out of your class C suppliers 68 VIEWPOINT Steering the future of autonomous trucks 70 LEAN SUPPLY CHAIN Building the smart supply chain 72 SPONSORED SOLVED Masterful moves: overcoming deadlines, pressures, and the pandemic...72 Responding to capacity needs in the life sciences and pharmaceutical industry...73 3PL outsourcing beyond the initial goals...74 Partnership brings supply chain visibility into the mix...75 Zuum Transportation zooms into high-growth mode with Valoroo’s help...76 Transportation solution opens doors to eliminating product damages...77 Scaling e-commerce operations to meet social media-driven sales spikes...78
The role of your 3PL in dealing with rapidly rising real estate costs...42 44 SPONSORED ABOVE & BEYOND ScottsMiracle-Gro: getting the right logistics players in place 46 DC OPERATIONS AMRs move dock-to-stock metrics in the right direction 48 DISRUPTION MITIGATION KPI best practices to combat supply chain disruptions 50 IT MATTERS The 5 phases of supply chain disruption response 52 GREEN LANDSCAPE Cut carbon emissions with multi-modal 54 RETAIL RETHINK How to compete in the age of instant delivery
advantages and lesser-known facts about automation...138 Ensuring customers’ supply chains run smoothly...139 Should you build to suit or lease your next distribution center?...140 COVID’s impact on warehouse management outsourcing...141 Freight audit and payment solutions bring immediate and long-term benefits...142 Leveraging freight brokerage to solve supply chain disruption….144 INFO 208 SUPPLY CHAIN INSIGHTS 211 WEB_CITE CITY 234 CALENDAR 236 RESOURCE CENTER
14 DIALOG 16 10 TIPS
Leveraging the spot market 18 WHAT’S THE WORD? The language of logistics 34 SPONSORED KNOWLEDGE BASE 5 tips for finding the right retail consolidation solution...34 Top 3 considerations for 3PLs to attract new business…35 6 ways shippers can add confidence and clarity to the RFP process…36 Record demand seems to be easing: What does this mean for the trucking marketplace?...37 Overcoming challenges and increasing supply chain eciency with rail transloading...38 Situational awareness in 3PL warehousing...39
56 SC RESILIENCY It’s time to embrace supply chain chaos
Inbound Logistics (ISSN 0888-8493, USPS 703990) is mailed monthly to approximately 60,000 business professionals who buy, specify, or recommend logistics technology, transportation, and related services, by Thomas, a Xometry company, 5 Penn Plaza, NY, NY 10001. Periodicals postage paid at New York, NY, and additional mailing oces. All rights reserved. The publisher accepts no responsibility for the validity of claims of any products or services described. No part of this publication may be reproduced or transmitted in any form or by any electronic means, or stored in any information retrieval system, without permission from the publisher. POSTMASTER SEND ADDRESS CHANGES TO: Inbound Logistics, 5 Penn Plaza, New York, NY 10001
6 Inbound Logistics • July 2022
LINKS JULY 2022
MORE NEWS ONLINE
DECISION SUPPORT TOOLS Search our databases of the Top 100 providers in key segments of the supply chain industry.
PREPARING FOR THE NEXT SUPPLY CHAIN CRISIS To make their supply chains more resilient, flexible, and robust in times of crisis, business leaders should be more proactive. The first step? Prioritize suppliers as well as their own procurement executives who own the corporate relationship with suppliers. bit.ly/procurement_is_key
Tune in to get insights and diverse points of view from leaders in the industry. bit.ly/ILMagPodcastPage
FIND A 3PL PROVIDER bit.ly/3PL-DST
WHITEPAPER DIGEST Looking for insight into supply chain best practices and trends? Our whitepaper database is packed with information on all aspects of supply chain operations. bit.ly/IL_WPDigest CONNECT WITH US linkedin.com/company/ inbound-logistics twitter.com/ILMagazine facebook.com/ InboundLogistics youtube.com/user/ InboundLogistics For up-to-the-minute information, bookmark the IL news page. Enjoy opinions, commentary, and links to the latest news to help you stay on top of your game. bit.ly/IL-news
ESTABLISHING RELATIONSHIPS WITH TRUCKLOAD CARRIERS
FIND A TRUCKING COMPANY bit.ly/truckingcompany-DST
Shippers that have established strong relationships with carriers and brokers can achieve not only long-term strategic goals but also short-term objectives through regular collaboration and communication. bit.ly/relationships_for_the_long_haul 5 BENEFITS OF REMOTE COLLABORATION FOR LOGISTICS LEADERS Logisticians benefit from remote collaboration because they can tap into a wider range of industry experts and connect more easily to end customers. Here are 5 advantages, from improved workflows to supply chain e ciencies. bit.ly/remote_collaboration_bene ts
FIND A LOGISTICS IT PROVIDER bit.ly/IT-DST
FIND AN AIRFREIGHT FORWARDER bit.ly/airfreight-DST
FIND A LOGISTICS SCHOOL bit.ly/edu-DST
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8 Inbound Logistics • July 2022
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CHECKINGIN
3PLs Show Off-the-Chart Growth
Vol. 42, No. 7 July 2022 THE MAGAZINE FOR DEMAND-DRIVEN ENTERPRISES www.inboundlogistics.com
STAFF PUBLISHER Keith G. Biondo
publisher@inboundlogistics.com
W hat accounts for the explosive growth of the 3PL sector this past year? The results of our 2022 3PL market surveys—through the Top 10 3PL Excellence Awards voting and Top 100 3PL Providers questionnaires—are striking: 84% of 3PL respondents showed signi cant growth in gross sales year over year, with 90% reporting pro ts are up. Nearly 50% showed growth of 20% and some even higher. Many 3PLs increased headcount and facilities to
EDITOR Felecia J. Stratton
editor@inboundlogistics.com
SENIOR EDITOR Katrina C. Arabe
karabe@inboundlogistics.com Chris Cavallo ccavallo@inboundlogistics.com
AUDIENCE DEVELOPMENT & RESEARCH
CONTRIBUTING EDITORS June Allan Corrigan • Merrill Douglas • Karen M. Kroll Helen Mann • Richard Osborne • Amy Roach Conrad Winter • Gary Wollenhaupt CREATIVE DIRECTOR Jeof Vita jvita@inboundlogistics.com DESIGNER Nicole Estep nicole@inboundlogistics.com DIGITAL DESIGN MANAGER Amy Palmisano apalmisano@inboundlogistics.com PUBLICATION MANAGER Sonia Casiano sonia@inboundlogistics.com CIRCULATION DIRECTOR Carolyn Smolin
Keith Biondo, Publisher
match that growth. One respondent recently increased headcount from 101 to more than 250; another 3PL grew from $693 million to $1.7 billion in sales. This year-over-year increase is unprecedented, but it is not the entire story. The growth in the 3PL sector re ects the needs of shippers—both inbound and outbound—who are coping with many new challenges thrown their way. Some are managing disruptions and addressing dif cult demands from their customers while luckier companies have to manage and scale their own growth. They both need logistics and supply chain solutions, and more of them. In addition to serving shippers’ needs, there are other underpinnings of that phenomenal growth. People working in the transport sector stick. Their titles and jobs may change; the companies they work for change, too. They sometimes switch from the shipper side to the provider side and vice-versa, but year after year transport professionals stay in the industry. They like what they do. Who can blame them? They work at jobs where the fruits of their labors are visible and vital. Some say that solving logistics challenges is addictive, something I’ve heard in the past but hear more frequently now. Solutions are more complex. The stakes are higher for customers. The opportunity to drive customers’ growth during transitional times, like now, is greater. Bene ts are large and demonstrable. What about the future? Deep thinkers foretell of a dif cult 2023. If true, logistics providers must take their recent growth returns and invest it now to be ready if it happens. Many are doing that by investing in technology. Good. But let’s not forget those who stick and invest in workforce headcount where applicable as well as training for interns and new hires all the way up the chain to company leadership. For some that training consists of tweaks to supply chain management theory or demand-driven operations. Upgrading customer service skills and cross-functional training to enhance the inertia of a fully integrated operations team bene t all. Perhaps those deep thinkers are wrong and 2023 and beyond will be smooth sailing. Whichever way it goes, one thing is certain: Transport pros will stick and continue to partner with their 3PLs to solve ever-evolving challenges.
SALES OFFICES PUBLISHER: Keith Biondo
212-629-1560 FAX: 212-629-1565 publisher@inboundlogistics.com WEST/MIDWEST/SOUTHWEST: Harold L. Leddy
847-446-8764 FAX: 847-305-5890 haroldleddy@inboundlogistics.com Marshall Leddy
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Joseph Biondo 516-578-8924 jbiondo@inboundlogistics.com NORTHEAST: Rachael Sprinz 212-629-1562 FAX: 212-629-1565 rachael@inboundlogistics.com MEXICO & LATAM: Guillermo Almazo 212-629-1560 mexico@inboundlogistics.com FREE SUBSCRIPTIONS www.inboundlogistics.com/free
Inbound Logistics supports sustainable best practices. Our mission is rooted in helping companies match demand to supply, eliminating waste from the supply chain. This magazine is printed on paper sourced from fast growth renewable timber.
Inbound Logistics welcomes comments and submissions. Email us at editorial@inboundlogistics.com; call (212) 629-1560; or mail 5 Penn Plaza, NY, NY 10001. For advertising or subscription information, call (212) 629- 1560, or e-mail publisher@inboundlogistics.com. Inbound Logistics is distributed without cost to those qualified in North America. Interested readers may subscribe online at bit.ly/get_il. Subscription price to others: in North America: $95 per year. Foreign subscriptions: $229. Single copy price: No. Amer. $10, foreign $19, back issues $15.
10 Inbound Logistics • July 2022
GAIN X-RAY VISION GAIN GROUND You weren’t born with superpowers. But when you work with Penske, our ClearChain® technology suite allows us to see all of your inventory, across every distribution point, all in one place. So you gain total visibility.
GOODQUESTION Readers Weigh In Has the pandemic accelerated logistics outsourcing? Why or why not? Supporting Supply Chain Pivots
340%
In today’s unpredictable market, businesses need to be able to pivot without notice. The problem? It takes time to hire and train new people. Plus, bringing staff onto payroll is a long-term commitment. Outsourcing gives companies the agility and flexibility they need to address unexpected challenges or seize new opportunities. –Gabriel T. Ruz Jr. Chief Innovation Officer, Co-Founder, and Board Member Magaya Quick strategic pivots are critical to navigating freight market volatility, and the pandemic was no exception. Many shippers leveraged 3PLs and 4PLs to harness efficient procurement functions and meet capacity demands. Those who have established successful partnerships will likely lean on these resources moving forward. –Travis Paeth VP, Client Solutions, Arrive Logistics
The use of third-party logistics has accelerated since the pandemic, with new opportunities in last-mile e-commerce and carrier collaboration. We have seen tracked orders between network shippers and logistics service providers (LSPs) grow 340% year-over-year. As markets continue to rebalance, shippers still seek flexibility, resilience, and sustainability from LSP collaboration and innovation.
THE INCREASE IN LOGISTICS OUTSOURCING is due to the continual shortage of drivers and increased consumer demand for deliveries. Outsourcing to a company with more drivers offers businesses flexibility and additional resources to recover when an internal driver is sick or unavailable.
YES, ABSOLUTELY. The pandemic catchphrase has been “capacity issues,” which refers to multiple facets of the supply chain—including staffing, equipment, and business hours—reaching critical capacity. With shortages at every step, almost every company has been forced to reach beyond their comfort levels to rely on other logistics companies to assist and try to alleviate pressures. Our company has been fortunate enough to fill in those missing pieces for many clients that have been hit hard, but even we are at a certain capacity that hinders our rate of growth.
–Tony Harris SVP and Head of Marketing and Solutions, SAP Business Network
YES. THE ORGANIZATIONS THAT RELY ON 3PLs are reinforcing their commitment to outsourcing and concentrating on their core business competencies. 3PLs are investing in modernization efforts to position their clients for success in the marketplace, which is also helping attract new customers to outsourcing vendors.
–Nancy Korayim Founder & CEO MetroSpeedy
ADVANCEMENTS IN TECHNOLOGY have made outsourcing to a trusted network of professionals, especially to those that know your business and customers, easier and more cost effective than ever. –Patty MacIntyre Lead Operations Coordinator, Mickey
–John Wirthlin Industry Principal, Manufacturing, Transportation and Logistics Zebra Technologies
–Eric Vasquez Owner, Veterans Logistics Group
12 Inbound Logistics • July 2022
GOODQUESTION
THE MOVEMENT TOWARD OUTSOURCING IS MIXED and
E-Commerce Acceleration
dependent on the organization, its capabilities, and desire to control its destiny. For businesses that have the capabilities and resources needed to insource, they are doing so. For other organizations, we’re seeing a trend toward outsourcing to acquire the scale, skill, and flexibility needed to withstand the volatility of the market. –Matt Comte Operations Transformation Practice Leader, PwC SHIPPERS HAVE IMPROVED THE FLEXIBILITY AND RESILIENCY of their supply chains. With shortages and capacity constraints becoming a daily issue, using a 3PL is the most effective solution. Instead of relying on their own assets, shippers are partnering with brokerages to provide the capacity needed. –Perry Falk SVP, Carrier Operations Nolan Transportation Group IN THE SHORT RUN, YES. IN THE LONG RUN? TO BE DECIDED. Following the initial shock of COVID, companies increased their use of 3PLs to maintain supply by any means necessary—most even willing to take a hit financially. As supply chain issues prolong, however, and as the pressures of inflation mount, staffing up with internal logistics professionals is likely to be a more systematic and cost- effective response.
E-commerce growth has driven the outsourcing of logistics. Retailers were limiting investment in the supply chain to focus on product and marketing so
when growth spiked in 2020, there was not enough internal talent, process, or capacity. Using a 3PL supported growth while preserving customer experience and maintaining focus on product. –Laura Ritchey EVP and COO, Radial With the massive increase in e-commerce volume , the expectation of consumers to immediately receive their goods has only grown. Small and mid-sized businesses simply cannot manage the logistics needed to match the speed that massive players like Amazon can, so they’ve increased their work with 3PLs. –Josh Dunham Co-founder and CEO, Reveel
THE PANDEMIC ACCELERATED A NUMBER OF TRENDS , including logistics outsourcing. Outsourcing allows shippers to control costs and to increase certainty. By aggregating the purchasing power of their customers, large logistics companies are able to use their scale to deliver better outcomes.
UNDOUBTEDLY . The pandemic impacted the role of logistics professionals. As they’ve contended with major swings in demand, inventory, freight rates, and labor markets, the need for fast, flexible solutions and additional support was paramount. Outsourcing has been a critical way to fill a gap—in people, technology, capacity, or expertise—quickly. And we’ve seen more customers looking for everything from forecasting and RFP management to TMS technology, on-site support, and fully outsourced solutions. –Ben Steffes VP, CTM & Managed Services Coyote Logistics
–JJ Schickel CEO, Omni Logistics
3PLs HAVE STEPPED IN as flexible outsourcing partners, reducing costs and improving visibility and efficiency. Outsourcing logistics has helped companies focus on their core competencies. –Sunil Kardam Analytics Head, Supply Chain and Logistics, Gramener
–John Frechette Director, Founder Sourced Economics
DRAMATICALLY INCREASED. Prior to the pandemic, many companies didn’t have a true understanding of their supply chain capacity and didn’t know how inefficient their operations were. Problems stemming from manual processes, labor constraints, and ineffective systems were exacerbated, and companies turned to 3PLs for faster, more reliable, and less costly distribution.
Have a great answer to a good question? Be sure to participate next month. We want to know: What’s your best tip for retailers pivoting to direct-to-consumer fulfillment? We’ll publish some answers. Tell us at editorial@inboundlogistics.com or tweet us @ILMAGAZINE #ILGOODQUESTION
–Errol Gonzales Account Executive Zethcon, A Made4net Company
July 2022 • Inbound Logistics 13
DIALOG @ILMagazine [ INSIGHT ]
Want to join the conversation? FOLLOW US: linkedin.com/company/inbound-logistics facebook.com/InboundLogistics twitter.com/ILMagazine youtube.com/user/InboundLogistics inboundlogistics.com/cms/podcast DROP US A LINE: editorial@inboundlogistics.com for each of the many companies we have worked with over the years. What a sense of pride you must have in creating and continuing this unique, well-written, polished, and professional publication. You have my admiration. Best wishes for your continued success. —Tom Robertson President, A. Blair Enterprises, Inc. Via email July 13, 2022
WHERE DO YOU READ IL ?
On a hike in Interlaken, Switzerland, with the May 2022 edition.
INSTAGRAM SHOUT OUTS
1990 S THROWBACK
Fast TAKE On retailers having excess inventory The “lifestyle shift” retailers have been reporting is disappointing. It was predictable that when things opened back up, there would be less making bread and more eating bread in a restaurant, for example. While it wasn’t predictable when that shift would happen, retailers took a full- bore approach for pandemic habits until they saw evidence the behavior was shifting—and, for inventory management, that’s way too late. Now they have to deal with a pile-up of inventory. Human psychology is still the biggest driver of supply chain: a tendency to project the current situation forward. Did the AI optimization that companies have supposedly invested in miss the behavior shifts? Or, did humans ignore and override those predictions? —Nikki Baird VP of Strategy, Aptos
Letter to Publisher Keith Biondo Inbound Logistics rst caught my attention while I was sitting in the lobby of a large appliance manufacturing
company in Louisville, Kentucky, in the mid-1990s. The magazine listed the top 100 third-party logistics companies of that year. I don’t believe your publication called these companies 3PLs at the time, but I think many of them were eventually considered as such. Over the years, I saw more and more copies of your magazine in the lobbies of various types of businesses, from two-person small companies to the industry giants. I have found Inbound Logistics to be a knowledgeable source of cutting-edge business trends, IT developments, and amazing new business software programs. To be included in your annual list of the Top 100 3PLs is considered an honor
@elizabdhb The perfect Friday night. bit.ly/IL_May22
@frankmullens Sharky’s half power plate with IL ’s April feature. bit.ly/3PL_April2022_IL
14 Inbound Logistics • July 2022
10 TIPS
When your contracted carrier can’t meet your shipping needs, consider the spot market. Using one-time spot rates typically requires a commitment from the customer to ship within a specific time period. Spot pricing fluctuates depending on multiple factors, so shippers often don’t have a lot of control over the spot market rates quoted. Here are 10 ways to make the spot market work for you. Leveraging the Spot Market
1 DEVELOP STRONG
CARRIER RELATIONSHIPS. Carrier lanes and markets fluctuate over time as their businesses evolve. Working with spot market carriers for exceptional shipping needs might yield a strategic carrier partner for the future.
2 DRIVE DOWN TRANSPORT COSTS. Spot market rates are driven by supply and demand. Consider using the spot market as a financial lever to reduce your transportation costs in down markets. 3 CREATE SUPPLEMENTAL CAPACITY. When outbound shipment volume exceeds your dedicated carrier capacity, turn to the spot market to source additional truck capacity and keep your shipments moving. 4 UNDERSTAND THE SIZE OF THE PROJECT. Not all shipment profiles are the same. As a shipper who may be sending a delivery to a job site or a one-off shipment, you may be able to source a better cost and carrier on the spot market rather than use your core carrier capacity.
5 SHIP FREIGHT CONSISTENTLY. All shippers are not created equal. If your shipping profile is inconsistent and the destination of the next load is unknown until the time the order is placed, it is important to take advantage of the backhaul spot market rather than attempt to work within existing blanket contract rates. 6 KNOW MARKET CONDITIONS. It is important for shippers to keep a pulse on transportation market conditions. Events such as weather, natural disasters, and produce seasons can cause disruptions in load- to-truck ratios. Strategically utilizing the spot market will allow you to successfully navigate these disruptions.
7 MAXIMIZE CARRIER BACKHAULS. Carriers use backhaul freight as a strategic piece of their cost structure and relocation of trucks. Utilizing spot market backhaul demand increases your chances of your shipments moving below headhaul market prices. 8 UTILIZE DIFFERENT EQUIPMENT. Most shippers send out shipments that have similar profiles and equipment needs. When there is an exception—such as an over-sized load or one that requires a flatbed when
all others require a van— then the spot market is the answer. Take advantage of all equipment types that are ready to move your load. 9 EXPEDITE SHIPMENTS TO MEET EXPECTATIONS. There are times when a shipment needs to move within hours. There is no need to wait for a company driver to arrive later in the day or your dedicated carrier to tell you they don’t have enough service hours left to deliver. The answer may be sourcing an expedited carrier on the spot market to meet delivery expectations.
10 ADJUST FOR DISTRIBUTION CENTER CONSTRAINTS.
Dock door space for an additional drop trailer is never a sure thing. If the shipper’s infrastructure prevents drop trailer usage, then exploring spot market live load carriers to haul the freight will prevent congestion and keep the dock flowing. SOURCE: BRIAN KARWISCH, VICE PRESIDENTPROCUREMENT ODW LOGISTICS
16 Inbound Logistics • July 2022
WHAT’S THE WORD
The Language of Logistics
SUSTAINABILITY: COMING TO TERMS 1. Sustainable business model . A business model that prioritizes sustainability, assesses and addresses the enterprise’s environmental impacts, is profitable, transparent, and supports social causes. 2. Sustainable supply chain. Each link in the chain from point A to point B produces the most negligible environmental impacts possible. 3. Carbon oset. To oset their greenhouse gas emissions, some organizations invest in reforestation or land reclamation. 4. Carbon sequestration. Capturing and storing atmospheric carbon dioxide. It is one method of reducing the amount of carbon dioxide in the atmosphere to reduce climate change. 5. Circular economy. In a traditional economy, we make a product, use it, and then dispose of it. In a circular economy, we make a product, use it, and then reuse it or its components. 6. Conscious consumption. Consumers practice conscious consumption by purchasing only recycled products or buying from companies with green and sustainable business practices. – Michael Wilson, Vice President, Marketing, AFFLINK
JIT VS.
EOQ
VS.
To load balance inventory means to distribute inventory across a network of warehouses with the main purpose of positioning inventory closer to the end customer prior to purchase. Retailers load balance inventory to reduce last-mile costs and ensure faster delivery. When leveraging a well-balanced network, it also allows for redundancy in their supply chain. Merchants can outsource their ful llment to a logistics partner that will load balance their inventory and ful ll both B2B and B2C omnichannel orders. —MAGGIE BARNETT COO, ShipHero Load Balancing
MRP
These inventory management techniques are commonly used and selected based on a company’s manufacturing operation and product mix: Just-In-Time Management (JIT) , also known as the Toyota Production System (TPS), was developed by the Toyota Motor Corporation in the 1970s. JIT allows companies to reduce the costs associated with storing and wasting excess inventory by putting processes in place to ensure that goods are received as close as possible to when they are actually needed for manufacturing. This management process requires that goods are received and delivered accurately and precisely. Any miscalculation can have a ripple eect throughout the supply chain. For instance, a critical part or component that does not reach the manufacturer “just in time” can result in delays and losses. Materials Requirement Planning (MRP) . The MRP inventory management method is a sales-forecast- dependent technique; the manufacturer must have precise data regarding sales records and predictions to facilitate accurate planning. For example, an automobile manufacturer using the MRP system ensures that parts required for assembling cars are kept in stock based on forecasted sales demand. Inaccurate sales predictions can lead to erroneous inventory planning and can result in an inability to meet customer demands. number of supplies a company should add to its current inventory with each batch order. Companies that use the EOQ system try to forecast consumer demand while also holding an existing inventory of supplies. EOQ aims to ensure the inventory is optimized per batch order, which minimizes the frequency of orders and the probability of over- or under-stocking. Source: Thomasnet.com Economic Order Quantity (EOQ) . EOQ management systems calculate the
PLAN
SUPPLY CHAIN OPTIONALITY How a company deliberately and surgically eliminates single points of failure by building redundancies in its supply base, internal manufacturing and distribution facilities, transportation modes, and routes to market. By creating optionality, companies ensure business continuity and product availability despite disruptions. With optionality, powered by technologies like digital twins and artificial intelligence, organizations reduce risk and improve resilience by testing scenarios and evaluating the impacts of their decisions.
—DR. MADHAV DURBHA, VP, Supply Chain Strategy, Coupa
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Outdoor Retail
CHOPPY WATERS AHEAD As goes Colorado, so goes the rest of the outdoor retail world. A recent article in The Denver Post illustrates how local outdoor gear retailers struggle to stock shelves and control costs due to supply chain woes; those challenges signal tough times for the rest of the country’s outdoor recreation retailers as well. The myriad economic and supply chain challenges facing retailers in all verticals also impact outdoor gear stores, bike shops, paddle-sport retailers, and their suppliers. Retailers like Denver’s Confluence Kayak & Ski contend with inventory shortages—though better than they were last year at this time—as well as economic concerns including inflation, the ripple eect of increased taris on goods imported from China, and a huge uptick in shipping costs, according to The Denver Post . Bentgate Mountaineering reports significant price increases at its store in Golden, Colorado. “That’s price increases from the manufacturers, and then price increases in what they are charging us, as well as setting prices for consumers,” says John Weir, marketing manager for the company. Josh Pecaric, founder of Denver-based Verus Kayaks, told the Post he is nearshoring his firm’s supply chain from China to South Carolina in order to cut costs. Container shipping costs increased from $2,800 to transport a 40-foot shipping container (which can hold 120 kayaks) three or four years ago to $54,000 per container now. “And, believe it or not, it costs only $10 more to make a boat here than it does in China,” Pecaric notes. When it comes to inventory, port delays and previous COVID shutdowns at Chinese manufacturing sites have taken a toll on outdoor retailers. At Neptune Mountaineering in Boulder, footwear inventories are still lagging, and Denver-based Elevation Cycles and Peak Cycles in Golden report inventory is better for mountain bikes than road bikes. Overall, with Colorado serving as the bellwether, the outdoor gear industry seems to be bracing for some rough terrain in the future.
VF Corp.—parent company of several outdoor gear brands including The North Face and Timberland—has upped its commitment to supply chain sustainability. David Quass, the company’s new senior director of sustainability for EMEA, has signaled a greater commitment to environmentally friendly concepts such as regenerative agriculture and using recycled materials. The North Face and Timberland are leading the way on these efforts, he says, and will serve as benchmarks for VF’s other brands. VF Corp. needs to look beyond its own operations, invest in alternative materials to bring them to scale faster, and collaborate with competitors to drive progress on sustainability, Quass recently told Vogue Business . In addition to reducing greenhouse gas emissions and addressing other general sustainability issues, the company aims to run all owned-and-operated facilities on renewable energy and to eliminate single-use plastic packaging by 2025. And by 2030, Quass says, VF hopes to source 100% of its top nine materials from regenerative, responsible, recycled, or renewable sources. KICKING UP SUSTAINABILITY
20 Inbound Logistics • July 2022
VERTICALFOCUS
PATAGONIA FIGHTS PLASTIC Leading outdoor and adventure wear
brand Patagonia has long been a voice for environmental awareness and sustainability in its supply chain and product-sourcing eorts. The company’s move away from virgin plastics began back in the early 1990s when it first began producing fleece clothing made from recycled plastic bottles. Patagonia has spent the past two decades honing its supply chain sustainability strategies and maintaining a laser focus on reducing the use of plastics in its clothing. The company acknowledges that plastics are essential to building durable, high- performance clothing, but posits that plastics are accelerating the environmental crisis because they are produced from fossil fuels and contribute to pollution that piles up once that clothing has been tossed. of
OUTDOOR RETAIL CHEERS OCEAN SHIPPING REFORM Given the large percentage of imported goods that sit on outdoor retailers’ store shelves and in e-commerce warehouses, it’s not surprising that the National Sporting Goods Association (NSGA), along with the National Retail Federation (NRF) and the Retail Industry Leader’s Association (RILA), have been outspoken about the need to update legislation around ocean shipping. Outdoor retailers and brands have much to gain from improvements in supply chain legislation, and they haven’t been shy about advocating for it. The House’s approval of the Ocean Shipping Reform Act of 2022 (OSRA) is intended to allow the Federal Maritime Commission (FMC) authorities to better protect U.S. shippers, farmers, and manufacturers from unfair or unreasonable anticompetitive actions by foreign-owned ocean carriers. NSGA, NRF, and RILA praised the passing of the legislation as a positive win for the retail sector. The bill was championed as key legislation to improve ocean shipping costs and conditions for retailers and to help ght against in ation. NSGA indicated its strong support for OSRA by signing a letter sent to Congress urging the bill’s passage. After the bill passed, NRF released an of cial statement: “Retailers depend on the global maritime transportation system to move goods through the supply chain every day and continue to face signi cant challenges, including unfair business practices by ocean carriers. Making OSRA federal law helps address longstanding systemic supply chain and port disruption issues that existed well before the pandemic by providing the Federal Maritime Commission with the additional authority it needs.”
Among other various initiatives aimed at curtailing its virgin plastic use, Patagonia intends to make at least half of its synthetic materials using secondary waste streams by 2025. In June 2022, the company released a documentary stemming from its advocacy, called The Monster In Our Closet , which looks at the clothing industry’s plastics problem. The film, available on YouTube, “uncovers the dangerous threads that connect the clothing industry to the oil and gas industry and what we can all do on the individual, business, and government levels to create the change that our planet needs,” according to Patagonia. Key points from the documentary provide valuable takeaways for the outdoor apparel industry and other clothing brands and retailers: • Our closets are filled with fossil fuels: The UN estimates that 60% of clothing is made with plastic fibers that begin as crude oil, which is distilled into chemicals like ethyne, and then heated and transformed into fabrics like polyester and other products. • Plastics have staying power: According to Patagonia, plastic persists in our environment indefinitely unless it has been incinerated or launched into space via satellite or spacecraft. Less than 10% of plastic in the United States is actually recycled, 16% is burned, and the rest piles up in landfills. • Every business can help: Patagonia encourages other retailers to pitch in by sharing the names of many of its supply chain partners so other companies can invest in those secondary waste streams and amplify the eort. The company also recommends businesses take steps such as eliminating virgin petroleum sources from products, aligning with financial partners who are committed to a global energy transition, and supporting grassroots organizations whose communities are most impacted by the climate crisis.
July 2022 • Inbound Logistics 21
LEADERSHIP Conversations with the Captains of Industry
The Music Man
One way or another, Phil Rich was destined for a music career. His military service included nearly seven years as a guitarist and sound engineer in the Navy Band. Back in civilian life, he worked brie y as a studio engineer. When that didn’t lead to a steady living, he took a job at a Guitar Center store in downtown Seattle. “That’s where I was around all the things that I loved, the music gear and the people,” says Rich. “That’s where I wanted to be.” Rich still spends his days immersed in that world, now as senior vice president and chief supply chain of cer at Sweetwater, a leading online retailer of musical instruments and professional audio equipment. Here’s a window into his role. IL: How did an experience early in your career help to shape you as a leader? I’m a competitive guy, and in my early days in music retail, I’d get riled up about things from time to time. The person who hired me for my rst job would smile and say, “Let’s go talk to this customer together.” He would always turn things around. I learned early on that you can have a positive attitude about even the most dif cult things, because we’re all just trying to do good things for our company and for other people. IL: What are the biggest day-to-day supply chain challenges you deal with at Sweetwater? Our daily challenge is customer demand for unique products that are brand-speci c. People often want an exact model and color from an exact brand. Given the global supply chain challenges over the past few years, we have to work extra hard with the manufacturers to help them understand customer demand and get those products into our inventory. One complicating factor is that there’s so much demand for the newest products in the market. It’s like people lining up for the new car that was announced but nobody has yet. IL: How do you match your inventory to that customer demand? We’ve brought on some additional brands, in case there are opportunities for any substitutions. But the key is having access to a lot of breadth in all the brands, so we have as much of the assortment as possible. We used to keep three weeks’ worth of safety stock, but now we keep 90 days. And when we plan our inventory, we program in longer lead times for our orders.
Phil Rich Senior Vice President & Chief Supply Chain Of cer Sweetwater
Phil Rich brings strategy, patience, fundamentals, focus, positive feedback, corrective direction, and celebration of achievements to everything he does—from playing guitar to flying planes.
by Merrill Douglas
22 Inbound Logistics • July 2022
LEADERSHIP
The Virtue of Losing Your Balance
guitars. When I used to ask why our partner companies made certain decisions, he pointed out that every decision is made not by a faceless, nameless bureaucracy, but by an individual. For the past 15 years, whenever I’ve had a concern about a decision, I would trace my way through a company until I got to that person. Every time I do that, I learn a lot. IL: You’re an instrument-rated pilot. Tell us about that. I grew up with my father teaching missionaries how to troubleshoot and repair avionics, so I was always around small airplanes. My rst year in the Navy, I was lucky enough to work on the ight deck on the USS Midway CV-41, an aircraft carrier. When I joined Sweetwater, Chuck Surack, our chairman and founder, had just purchased a ight school a few miles away. I decided to dive in and get my pilot’s license. Flying, like teaching, connects back to my professional career. Pilots need to follow checklists and processes but also need to think quickly and understand the aircraft from nose to tail. IL: How else do you spend your time outside work? I love to sharpen myself in as many ways as I can. For me, that means playing guitar, ying planes, and being the best leader, father, and husband I can be. Writing new music or playing someone else’s is a favorite way to get my mind off work. I’m also a high performance driver education instructor, which means I spend my weekends at tracks around the region teaching drivers how to get around the track faster. All the time and practice I’ve put into being a better teacher has made me a better leader. Strategy, patience, fundamentals, focus, positive feedback, corrective direction, and celebration of achievements—those are just a few of the things from teaching that cross over into my work and life. n “A lot of people say it’s important to have balance in life,” says Phil Rich. “I say to them, try having a little unbalance.” Going all-in on a specific pursuit is the way to become great at something, he says. “Trying to keep a balance can be somewhat like trying to make everyone happy; it just isn’t realistic,” Rich explains. “Achieving greatness requires putting your head down for long periods of time and focusing on one thing. Did Beethoven or Edison have a balanced life? I doubt it.”
IL: What longer-term supply chain challenges are you focused on? We keep an eye on the chip shortage, which has a huge effect on our industry. We work with companies to make decisions about what products they should manufacture given the limited number of chips they have. The other big challenge is the cost of delivery to the customer’s home. Like other e-commerce companies, we wrestle with delivery surcharges and rising fuel costs. IL: How would you describe your leadership style? I try to be warm with people, to give everybody at the company as much love as possible, but also to demand a lot from the team. We need to challenge people in two ways. Data and strategy are important, but people also need to develop the street smarts it takes to understand the competition and make the best decisions for our customers. Teaching is also an important part of leadership. Every senior-level leader should teach something to someone every day: how to crunch a piece of data, how to solve a problem. IL: What are you doing that’s new and interesting? Sweetwater is in the midst of opening a new 350,000-square- foot ful llment center in the Phoenix area. This is the rst time we’ve had an operation outside Fort Wayne, Indiana. We’re setting up the new building to accommodate robotics and other technologies we haven’t used before. Once this second facility is up and running, we expect to be able to deliver any product to any location in the United States in about three days or less. IL: What’s most fun about your job? Music is about bringing people together. It makes me feel good every day that we’re helping people enjoy the power of music. Also, I love to build teams. I love teaching. I love seeing people progress through careers. Mentoring people and seeing how that changes the trajectory of their lives—that’s the fun part. IL: Have you had a mentor? I’ve had several, but the one who comes to mind is Keith Brawley, who was vice president of merchandising for guitars and amps at Guitar Center when I was director of electric
July 2022 • Inbound Logistics 23
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