Get your customer service and cold chain strategies down cold with this edition on high-impact CX moves and the latest techniques for the transport of food and other temperature-sensitive products. From keeping fruits luscious to maintaining ice cream at ideal temperatures to how to grow your supply chain career, this edition has fresh takes on the most effective approaches and solutions.
DECEMBER 2022
HOW TO HAVE INVENTORY MANAGEMENT DOWN COLD
COLD CHAIN & PERISHABLES TECHNOLOGY &TECHNIQUES TO MAINTAIN THE CHILL
ALSO IN THIS EDITION: FRESH TAKES ON CUSTOMER SERVICE STEPS TO GROW YOUR SUPPLY CHAIN CAREER
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BITE SIZED SUPPLY CHAIN/LOGISTICS INFORMATION Info SNACKS
AS THE WORLD RETURNS Returning items is part of shopping and many consumers expect an easy time of it: 88% of consumers are hesitant to buy from online retailers that charge for returns. 50% of consumers expect free returns on products of $50 or more. 84%
CLOUDY WITH A CHANCE OF DRONE Amazon unveiled the design for a new delivery drone that promises to be smaller, lighter, and quieter than the MK27-2, the drone it uses to make deliveries in Lockeford, California, and College Station, Texas. It’s also capable of flying in light rain. The drone, called the MK30, is due to go into service in 2024. The new design allows for increased range, expanded temperature tolerance, and new safety features.
TGIT Employees get the most work done on the second day of the week. In surveys conducted by Accountemps, 35% of respondents say they are most productive on Tuesday. And despite its reputation, 25% of participants say Monday is the day they get the most done. Unsurprisingly, the study cites the end of the work week as the least productive, with Thursday and Friday gathering 12% and 10% of the responses, respectively. Why Tuesday? Most workers spend Monday catching up on last week’s work and planning for the week ahead, says Max Messmer, chairman of Accountemps. By Tuesday, they have time to concentrate on individual tasks. However, focus dips to its lowest point by Friday as employees start thinking about the weekend. –Thomas Insights
of consumers expect return windows of 30 to 90 days. –FarEye research
– Amazon blog post
CONSUMERS GET THE MESSAGE Amid changing consumer sentiment toward Black Friday and high inflation, retailers have switched their strategies to boost holiday sales and win customer loyalty. Turns out that for most people, however, fast shipping and package updates are really make or break — once again putting the supply chain at the center of the holiday season. For a majority of consumers, mobile communication with retailers is most preferred when it comes to tracking packages and receiving order updates: • 48% of consumers want to receive shipping and order updates via mobile messaging, which is higher than the desire to receive personalized promotions (13%) , information about a product (10%) or connect with a live agent (10%) . • 75% of consumers want to track a delivery through a personalized mobile messaging link. • 69% of consumers would like to receive order updates via mobile messaging channels. – Clickatell’s annual Chat Commerce Trends Report: Retail Edition
NOT SO GREAT RESIGNATION
More than one-third of respondents who regretted quitting their jobs say that in their new role, their work-life balance had declined, their new job was different than what they were led to expect, and that they actually miss the culture of their old job. – Harris Poll, March 2022
December 2022 • Inbound Logistics 1
CONTENTS DECEMBER 2022 | VOL. 42 | NO. 12
32
42 ACE YOUR SUPPLY CHAIN CAREER
Supply chain and business leaders and professionals draw upon years of experience and successes to offer a masterclass in career advancement.
42
38 9 WAYS TO ENHANCE THE CUSTOMER EXPERIENCE E-commerce and omnichannel retailers and brands must provide a stellar customer experience to stay competitive. Here are some tips that will keep your customers coming back for more.
FEATURES 32 STAY CHILL
Maintaining the cold chain for food transportation can pose challenges. These solutions can help.
CONTENT PARTNERS KNOWLEDGE BASE 20 DRIVING THE AUTOMOTIVE INDUSTRY FORWARD WITH COMPLETE SMART FACTORY SOLUTIONS Sponsor: Advantech 21 IS INDUSTRIAL REAL ESTATE RECESSION PROOF? Sponsor: Phoenix Logistics SOLVED 22 CREATING A SAFE, RELIABLE PHARMACEUTICAL SUPPLY CHAIN Sponsor: MD Logistics
38
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 offices. 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
2 Inbound Logistics • December 2022
64
GOOD QUESTION What’s your best customer service tip for supply chain stakeholders?
6
2,000 beads make up this ice cream cup and other cold hard facts
10
INFOCUS 1 INFO SNACKS 12 VERTICAL FOCUS: RAW MATERIALS 14 NOTED 16 TAKEAWAYS 58 IN BRIEF 64 LAST MILE Dippin’ into frozen desserts
12
A look at lumber and other raw materials
INPRACTICE 10 READER PROFILE John Brewer, director of
58
distribution and logistics with CKE Restaurants Holdings, ensures 3,000 restaurant locations receive their products on time, accurately, and cost effectively and works with four partners to manage 19 distribution centers. 49 CASE STUDY: E-TALES Blenders Eyewear meets customer specs by focusing on technology to address shutdowns and other delays that impact inbound and outbound shipments.
28 RETAIL RETHINK How to develop a customer- centric supply chain 30 IT MATTERS Unlocking opportunity with a procurement control tower INFO 52 SUPPLY CHAIN INSIGHTS 54 WEB_CITE CITY 62 CALENDAR 63 RESOURCE CENTER
INSIGHT 4 CHECKING IN Attacks on energy attack you 6 GOOD QUESTION What’s your best customer service tip for supply chain stakeholders? 8 10 TIPS Matching inventory to demand 24 FULFILLMENT Logistics tech: the unsung hero of convenience commerce 26 DISRUPTION MITIGATION How SMBs can re-evaluate risk
A 320-foot-tall mobile harbor crane gets cargo operations rolling for a Florida port
49
Eyewear maker sets sights on supply chain improvements
December 2022 • Inbound Logistics 3
CHECKINGIN
Vol. 42, No. 12 December 2022 THE MAGAZINE FOR DEMAND-DRIVEN ENTERPRISES www.inboundlogistics.com
Attacks on Energy Attack You
STAFF PUBLISHER Keith G. Biondo
publisher@inboundlogistics.com
C an you walk and chew gum at the same time? Leaders in the United States and globally cannot when it comes to balancing green energy initiatives with common sense energy requirements. Some of the worst offenders say things like, “I guaran- tee we will end fossil fuels.” Those of us who depend on functioning global logistics networks know how harmful and misleading those positions are. Does anyone say, “I promise we will end all green initiatives”? Of course not.
EDITOR Felecia J. Stratton
editor@inboundlogistics.com
SENIOR EDITOR Katrina C. Arabe
karabe@inboundlogistics.com
MANAGING EDITOR Robert Fee
rfee@inboundlogistics.com
CONTRIBUTING EDITORS Merrill Douglas • Karen M. Kroll
CREATIVE DIRECTOR Jeof Vita
jvita@inboundlogistics.com
Keith Biondo, Publisher
DESIGNER Nicole Estep
nicole@inboundlogistics.com Amy Palmisano apalmisano@inboundlogistics.com
DIGITAL DESIGN MANAGER
Pragmatists know we can walk and chew gum at the same time, so we don’t aim to crush entire economic sectors and the workers who depend on them. To bring a real-politick perspective to this important issue, Power the Future, an energy industry group that began as an advocate for rural energy workers, has released an Energy Policy Roadmap describing 10 crucial steps to “undo the damage that has been done” to our economy. The report is highly critical of the current administration. But after ltering out the polemics, some good suggestions remain: Repeal the natural gas tax, end the oil and gas leas- ing moratorium and return power to states, approve the Keystone XL Pipeline, issue automatic approvals for LNG export terminals, and stop the war on coal. I have two other suggestions. First, build new, ef cient, clean re ning and liquefaction capacity with tax incentives and public/private investments. That will see us through to the day when ef cient green energy replacements are widely and inexpensively available. My next suggestion is cringe-worthy for some, but one I’ve mentioned many times before: Start building new safe nuclear energy plants now. That is some- thing that, despite political fearmongering and grandstanding, the United States should have started years ago. In France, 71% of all electricity comes from nuclear power. French President Emmanuel Macron announced a “renaissance” for the French nuclear industry with a fast-track program to build at least 14 new reactors. He argues it will help end France’s reliance on fossil fuels and make it carbon neutral by 2050. He knows it will raise French economic fortunes for decades. Leaders in China are less vocal about their walk/gum chewing view, but are even more committed to the policies like those in the Power the Future report. China just signed a historic agreement to buy 4 million tons of natural gas from Qatar each year for 27 years. That’s a minimum of 108 million tons of natural gas until 2050 and the largest commitment to un-green power in world history. There’s the question then. What do French and Chinese leaders know about energy’s impact on the economic well-being of a nation, transportation and manufacturing, and its interconnected workforce? Perhaps in 2023, U.S. leaders will ask that same question.
PUBLICATION MANAGER Sonia Casiano
sonia@inboundlogistics.com
CIRCULATION DIRECTOR Carolyn Smolin
SALES OFFICES PUBLISHER: Keith Biondo
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612-234-7436 FAX: 847-305-5890 marshall@inboundlogistics.com SOUTHEAST/MIDWEST/ECONOMIC DEVELOPMENT:
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.
4 Inbound Logistics • December 2022
GOODQUESTION Readers Weigh In
What’s your best customer service tip for supply chain stakeholders?
Define the Scope Determine what’s in and what’s out of scope on any business transaction. Frequently, customers are lost because they had unrealistic expectations, usually for something that was out of scope. Setting expectations up front and with all parties will lead to better outcomes and ultimately, greater customer satisfaction. –Kevin Day President, LTL, AFS Logistics Begin your partnership with open communication. Setting expectations and key performance indicators from the beginning allows you to ensure goals are met and more easily measure performance. These can be revisited quarterly as your business evolves. –Amir Ghoddousi SVP, Sales, Parcel & Managed Transportation, Transportation Insight
HELP THEM HELP THEMSELVES. Doing business by email and phone no longer suffices. By empowering customers to do more themselves, like get quotes, track shipments, and pay online, you elevate the customer experience. –Gary Nemmers CEO, Magaya KEEP YOUR COMMITMENTS by managing customer expectations and providing transparency into production, supplier capacity, and inventory. Technology like automated PROCURE A QUARTER ZIP OR POLO with each of your customers’ logos on it. Put them on whenever you’re handling that customer’s freight. You can’t afford to treat your stakeholders’ business as if it’s anything other than your own. Their vendors are your vendors. Their KPIs are your KPIs. Their success is your success. –Whit Smith Director of Operations TA Services
order promising, for example, enables successful customer service, taking the guesswork out of order evaluation and multi-echelon inventory optimization. It ensures products are where they need to be—at appropriate times.
collaboration on pricing, timing, contract length, etc. Suppliers can offer those services proactively as a differentiated service. –Tom McDonough Senior Director of Supply Chain Solutions, Anaplan FIRST, UNDERSTAND YOUR TOTAL DELIVERED COST. Next, having clear metrics on which dollars drive incremental service and better execution is key. Lastly, avoid silos by having shared goals and projects among your supply chain leaders.
–Lachelle Buchanan Vice President, Logility
PROVIDE ACCURATE, REALISTIC LEAD TIMES for orders, be highly responsive, and understand stakeholder requests. Visibility is key as businesses tackle supply chain issues, including shifting demand, labor shortages, and evolving structural and geopolitical factors. –Andrew Billings Vice President & Supply Chain Lead North Highland OFFER SERVICES PROACTIVELY to differentiate your offering, as opposed to waiting for the customer to drive conversations around supplier relationship management, visibility,
–Eric Dunigan President and Co-Founder Arrive Logistics
MAKE IT EASY FOR STAKEHOLDERS TO SHARE THEIR REQUIREMENTS; monitor your supply chain for availability; be ready to find alternate suppliers at a moment’s notice; and make internal purchasing easy. We don’t usually view supply chain
6 Inbound Logistics • December 2022
GOODQUESTION
processes through the lens of customer service, but we should. Internal customers need access to goods and services essential to running a business. –Tony Harris
Anticipate Potential Problems
SVP and Head of Marketing and Solutions, SAP Business Network
Be out in front of every issue. When problems arise such as a delay, customers want to hear from you first, not vice versa. While continuing to navigate staffing challenges, make sure both customers and support teams have the digital tools needed to connect quickly and exchange accurate, timely information. –Jonathan Parks SVP of Supply Chain, iGPS Logistics Run your business. Do not let it run you. Get on top of the situation. Work hard to reduce the issues to a brief list of exceptions. Fix those exceptions with urgency. Ensure they do not get repeated. Repeat daily. Sounds simple—it is not. That said, working with this mindset will prove helpful regardless of where you find yourself working in the supply chain. –Richard Kohn Director, Marketing & Business Development, SeaCube Containers
OFFER DETAILED, REAL-TIME, HONEST COMMUNICATION. Ensure accuracy when setting up and dispatching orders and provide updates. Be honest about what is going on—fake excuses are easy to see through and hurt your credibility. –Adam Putzer
Director of Sales for Permanent Transportation Logistics Services CPC Logistics
LISTEN WITH THE INTENT TO UNDERSTAND, not respond. Having empathy for your peers and customers will support better outcomes.
–Matt Reddington, CPSM, CPM VP Operations, Procure Analytics
BE UPFRONT. With today’s supply chain challenges, being upfront about inventory, shipping timelines, and other order needs is only going to make for a stronger partnership in the future. Building and maintaining trust through frequent touch points can help suppliers address challenges early and anticipate customer needs. –Casey Huffling SVP, Barcode and Point-of-Sale, ScanSource IMPLEMENT COHESIVE PROCESSES that meet customer expectations, while investing in better network design and data systems to drive a streamlined user experience. The current omnichannel revolution impacts all parts of the supply chain, with consumer behavior evolving to
expect a frictionless brand experience wherever they shop. –Steve Sivitter CEO, 1WorldSync EMBRACE COLLABORATION and open communication with your customers. Having customers at the center of your execution strategy ensures not only their needs are met but also opens the gate for knowledge and mindshare, lending way to potential new innovations to offer. –Dr. Thomas Evans CTO, Honeywell Robotics WHEN YOU MAKE A MISTAKE, OWN IT. Commit to resolving it and educate your team to ensure it doesn’t happen again. –Bryn Heimbeck President/CEO, Trade Tech Inc.
MAKE SURE YOUR TEAM IS SATISFIED WITH THE ROLES THEY PLAY. Your workforce is as important as any other component of the process (trucks, materials, etc). Viewing them this way and keeping them engaged is an integral part of success. –Joe Parisi Strategic Account Executive, Aerotek LEVERAGE THE POWER OF DATA to drive actions that balance cost and service level. Sophisticated providers can deliver data insights that empower shippers. With a data-driven supply chain profile, shippers can challenge providers to identify opportunities that leverage their shipment volumes to everyone’s benefit. –Jim Blaeser Chief Procurement Officer Omni Logistics EXAMINE THE ENTIRE CUSTOMER JOURNEY throughout your supply chain from end to end. Focusing on just a single piece of customer service along the way could prevent you from enhancing the overall experience. –Chris Warticki Vice President, Customer Experience, Epicor
Have a great answer to a good question? Be sure to participate next month. We want to know:
What’s one supply chain misnomer you’d like to point out? What would be a better term? We’ll publish some answers. Tell us at editorial@inboundlogistics.com or tweet us @ILMAGAZINE #ILGOODQUESTION
December 2022 • Inbound Logistics 7
10 TIPS
Demand is a constantly changing variable in any supply chain. Each time the demand tides change, retailers, wholesalers, distributors, and manufacturers must align inventory levels to meet customer expectations. Here are tips for doing it successfully. Matching Inventory To Demand
1 LEVERAGE ADVANCED DEMAND FORECASTING.
combined with real-time warehouse management applications, you can keep a pulse on inventory. 8 IMPROVE SUPPLIER RELIABILITY. Although demand variability is a major cause of service failures or inventory challenges, the pandemic
your distribution center placement to be as close to your customers as possible. Also, review supply and demand exceptions to identify solutions before they impact service. 6 POSITION INVENTORY APPROPRIATELY. Advanced inventory positioning strategies, such as forward logistics processing centers, position inventory appropriately to manage each SKU’s demand variability. These centers can function in a hub-and-spoke model to fill SKU gaps where demand is harder to forecast or where inventory is in high demand and speed is more important. 7 INCREASE INVENTORY AND DEMAND VISIBILITY. You can’t adjust your inventory to shifts in demand without visibility into on-hand and in-process inventory. By leveraging point-of-sale data into your inventory management systems,
Strong processes, advanced artificial intelligence, what-if analysis and other sophisticated software systems can help identify the effects of seasonality, baseline demand changes, and weather-related impacts. These surpass the capabilities of most basic statistical forecasting tools, which require patterns from the past to remain consistent in the future and are not as effective in today’s uncertain environment.
taught us that supplier performance problems impact supply chain
2 IMPLEMENT FORECAST ACCURACY METRICS. While the first instinct might be to buy new demand- planning software, many companies can improve forecast accuracy by implementing stronger metrics. In forecasting, it is especially true that you cannot improve what you do not measure. Consider getting more specific with your metrics. 3 FOCUS ON PROCESS. Many stock-keeping units (SKUs) are highly predictable using the
4 USE SALES AND OPERATIONS PLANNING. Create a robust sales and operations planning (S&OP) process that incorporates demand planning, inventory optimization, supply planning, inventory positioning, product flow, and omnichannel order orchestration. 5 REDUCE VARIABILITY AND LEAD TIME. Longer lead times impact when you receive your inventory. In times of shifting demand, faster cycle times throughout your supply chain are critical. Optimize 10 HAVE AN END-TO-END PERSPECTIVE.
performance. Working with suppliers to understand their capabilities instead of having generic lead times is critical. 9 MEASURE SUPPLIER PERFORMANCE. Holding suppliers accountable to deliver what is requested when it is requested and in the quantity requested is critical. The temptation to allow suppliers to ship what they want when they want can inflate inventory levels and prevent distribution centers from handling critical deliveries.
science of common statistical methods.
Conversely, promotions highly influence other SKUs, requiring the art of forecasting. Dedicating valuable sales resources to tweaking predictable items is not only non-value added, but it also often worsens forecasting accuracy.
A supply chain is only as strong as its weakest link. While fixing issues at various points in a supply chain drives incremental improvement, transformational changes can occur only by taking a holistic end-to-end perspective. While fixing demand forecasts is always beneficial, poor supply performance muddles demand signals to identify real demand vs. “just-in- case” demand. Similarly, filling warehouses with excess inventory creates congestion and operational and cash-flow inefficiencies, and can hurt service in its own right.
SOURCE: PAUL BARIS, VICE PRESIDENT, CONSULTING, enVISTA
8 Inbound Logistics • December 2022
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READERPROFILE Building a Supply Chain Step by Step
as told to Karen Kroll
In supply chain, you need to be resilient and resourceful and have a strong think-outside-the-box mentality. ‘The way we’ve always done it’ may not apply anymore because the environment has changed. RESPONSIBILITIES: Ensuring 3,000 restaurant locations receive their products on time, accurately, and cost effectively. Working with four partners to manage 19 distribution centers, while also managing 250 vendors across the country. EXPERIENCE: Senior manager, distribution and logistics, also with CKE Restaurants Holdings; logistics and distribution manager, and transportation manager with ACH Food Companies. EDUCATION: Studied architecture at the University of Memphis and drafting and design at Northwest Mississippi Community. JOHN BREWER is director of distribution and logistics with CKE Restaurants Holdings Inc., the company behind quick-serve restaurant brands Carl’s Jr. and Hardees.
I grew up with Legos, and own a few adult Lego sets now. Working with them helps me gain a big picture perspective. You’ve got to be able to see everything, and also see things that are not there, like a sculptor sees a monument within the marble. Whatever you’re building may not look like anything until you finish, so you have to take it methodically: step one, step two, step three. That’s how I see a supply chain across the country. If I have problems downstream, this approach helps me figure out where to go upstream to fix it. When I was hired at CKE, the company had just changed distribution partners for Carl’s Jr. One of my initial jobs was to complete the transition and get everything up and running with minimal disruption to about 1,200 stores that were served by five different
accelerated the shipment date by one day and converted a lot of our shipments to intermodal. This gave us the capacity to serve our customers and allowed us to move products at a much cheaper rate. It also balanced the work week at our distribution centers, so they could better plan their labor needs. It was a triple win across the board. In supply chain management, you need to be resilient and resourceful and have a strong think-outside-the-box mentality. “The way we’ve always done it” may not apply anymore because the environment has changed. A lot of our
distribution centers. We finished in about six months. I’m a firm believer in being out in the field at the distribution centers. I make sure things are going well and stand next to the people who make it happen and support them. I answer questions and communicate with our company operators and franchisees, so everyone knows what’s going on. At ACH, a food retail company that sells to grocery and big-box stores, we found ourselves in a capacity crunch in late 2014. Over-the-road trucks were hard to find and expensive. So, we
10 Inbound Logistics • December 2022
READERPROFILE
asi_halfpgIL_1222_final_• 11/21/22 9:57 AM Page 1 day and it’s a different set of problems. I like the creativity and helping people. I was bit by the bug and stayed in supply chain ever since. n internal and external customers look to supply chain professionals as the port in the storm. You need to keep pushing forward and never give up. It helps to be stubborn. I’m not sure if that’s a good trait or a bad trait, but right now it works for me. Before I started in supply chain, I had been working my way through architecture school. I got married and needed to bring in more income. An asset-based truck line in Memphis was looking for dispatchers, and they paid about two dollars more per hour than I was making at a grocery store. I jumped in that seat, and it was a pure adrenaline rush every day. When fires are burning, if you’ve done your job and with a little luck, at the end of the day, you’re dealing with smoldering embers. Then, you come back the next
John Brewer Answers the Big Questions 1 What is your hidden talent?
3 What book has had a personal or professional impact on you? Who Moved My Cheese? by Spencer Johnson, M.D. It sets you up for success in supply chain because this sector evolves at a very quick pace. This book helps you deal with change. 4 What would you tell your 18-year-old self? Drop the attitude. When you’re 18, you think you know everything and nobody can tell you anything. Then you get into the real world, and you find out just how much you don’t know.
In my spare time, I write supply chain parody songs with a guy in Chattanooga. I write the lyrics and he adds music and vocals. For instance, Truck Drivin’ Blues is a parody of Workin’ Man Blues by Merle Haggard. And Long Haul Comin’ is a riff of Long Cool Woman in a Black Dress by The Hollies. 2 What is your favorite band? AC/DC. I am going to be trouble when I get to the rest home. I’ll have a boom box strapped to the front of my walker and blast it as loud as it’ll go.
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2017+2019 EXCELLENCE AWARD WINNER CERTIFIED MEMBER SINCE 2006
December 2022 Inbound Logistics 11
Raw Materials
It's all about the crude, dude. The U.S. crude steel market could reach $110 billion by 2026, according to a ResearchAndMarkets report, U.S. Crude Steel Industry: Insights & Forecast . The report predicts a 6.1% compounded annual growth rate between 2022 and 2026; however, excess crude steelmaking could hinder this growth. “Growth in the U.S. crude steel market has been supported by factors such as a booming automobile industry and accelerating urban population,” the report states. “The United States-Mexico-Canada Agreement also is likely to have a positive impact on the U.S. crude steel market.” In 2021, the U.S. crude steel market reached $82.22 billion. Typical customers include the construction, automotive, machinery/equipment, energy, and appliances markets. Crude steel market production processes fall into two buckets: electric arc furnace, which is the dominant process in the United States, and basic oxygen furnace. The market also can be segmented by chemical composition. In order of market share, these are carbon steel, alloy steel, stainless steel, and tool steel. STEELING FOR GROWTH
GLOBAL BATTERY MARKET CHARGES TO $91.5 BILLION Lithium ion batteries continue to power the market, driven by rising demand for consumer electronics, the automotive market’s push to oer more environmentally friendly options, and an increased emphasis on the waste management of lead acid batteries. In 2021, lithium ion batteries represented about 48% of overall market share and, as technologies advance, is predicted to see the most growth moving forward, finds an Acumen Research and Consulting report. Industry adoption of recycled lithium ion batteries could spur further growth. The global battery raw materials market accounted for $47.3 billion in 2021, and Acumen predicts the market will grow to $91.5 billion by 2030, with a compounded annual growth rate of 7.7% between 2022 and 2030 ( see chart ). “Because of rising environmental concerns, battery-powered lithium particle batteries are increasingly being used in place of traditional lead corrosive batteries,” says the report. “Utilizing sustainable sources of energy, for example, solar, should also result in increased interest in lithium batteries.”
BATTERIES RAW MATERIALS MARKET 20182030 USD BILLION
Source: Acumen Research and Consulting
12 Inbound Logistics • December 2022
VERTICALFOCUS
CHECK THE OIL Oil demand and prices are a particular concern in the transportation sector. With a weakened economy in China, the European energy crisis, production dierentials, and a strong U.S. dollar, demand for oil will weaken in 2023— from 2.1 million barrels per day (mb/d) in 2022 to 1.6 million barrels per day, predicts The International Energy Agency. In the near term, Q4 2022 is expected to show a decrease in oil production by 240,000 barrels per day (kb/d). Although world oil supply rose by 410 kb/d in October 2022 to 101.7 mb/d, forecasts call for drops up to 1 mb/d for the remainder of 2022, prompted by OPEC+ cuts and bans on Russian crude. This situation could impact an already delicate diesel market. In October 2022, diesel prices and cracks (dierential to crude oil price) rose 70% and 425% higher, respectively, year-over-year— representing record levels. Compounding the problem, distillate inventories are the lowest they’ve been in decades. And worker strikes in Europe, combined with impending embargoes, drove prices past $80/bbl above North Sea dated crude oil price assessments, a benchmark to measure the price of North Sea crude against other grades of crude around the world. Prices also rose in the United States ahead of the winter heating season. Price increases fuel inflation and raise pressure on world oil demand. Despite the projected downturn in production, there could be growth in jet fuel and LPG/ethane for petrochemicals markets. This could drive even higher prices. “Competition for non-Russian diesel barrels will be fierce, with EU countries having to bid cargoes from the United States, Middle East, and India away from their traditional buyers,” notes the report. “Increased refinery capacity will eventually help ease diesel tensions. However, until then, if prices go too high, further demand destruction may be inevitable for the market imbalances to clear.”
OUT OF THE WOODS Despite well-publicized shortages during the pandemic, the North American wood products marketplace, including softwood lumber and engineered wood products, will trend upward between 2022 and 2026, with a 6.75% compounded annual growth rate (CAGR), predicts a ResearchAndMarkets report. Current estimates value the wood product market at $187.8 billion in 2022 ( see chart ). At the projected CAGR, the wood product market will grow to $243.9 billion by 2026. Population growth and new residential construction are primary drivers of this growth, but price fluctuations and increased availability of wood alternatives could provide challenges, the report warns. The United States represents the fastest-growing market in North America due to consumers' fondness for home repair and remodeling, increased new residential construction, and abundant forest reserves. Wood is also perceived as an environmentally friendly material, which may also spur manufacturing increases. Additional growth drivers include consumer preferences for engineered wood and increased investment in tourism infrastructure, according to the report.
NORTH AMERICAN WOOD PRODUCTS MARKET
USD 243.9 Billion
USD 187.8 Billion
2022
2026
Source: ResearchAndMarkets
December 2022 • Inbound Logistics 13
NOTED [ IN FOCUS ]
The Supply Chain in Brief
> GOOD WORKS
> M&A
n Werner Enterprises acquired Reed Transport Services and RTS-TMS , doing business as ReedTMS Logistics, an asset-light logistics provider and truckload carrier based in Tampa, Florida. n AGX Freight purchased the business assets of A-Logistics, LLC, a provider of supply chain management solutions. The acquisition allows AGX to expand its less-than-truckload service capabilities across its national transportation platform. n Aqua Power Systems entered exclusive negotiations to acquire all outstanding shares of Tradition Transportation Group, an Indiana- based logistics company. n In its fourth acquisition since launching in January 2022, Ascend LLC purchased Fuchs Trucking LLC . Ascend expects to oer additional capacity and services and deepen its footprint in the upper Midwest. n Ruan, a provider of integrated supply chain solutions, acquired National Truck Brokers (NTB) , a dedicated carrier in Grand Rapids, Michigan. NTB will operate as an independent member of the Ruan family of companies.
• DHL Express and the Van Gogh Museum launched the Heart for Art educational program, which provides children in communities with limited access to cultural education opportunities to learn about and engage with Vincent van Gogh’s artwork. • The estate of Dunavant founder William B. “Billy” Dunavant gifted $5.5 million to the University of Memphis to establish three Dunavant Chairs in supply chain management, one in agritech and regenerative agriculture, and the Laura Butler Ford Chair in nursing.
> UP THE CHAIN
• Keurig Dr Pepper (KDP) realigned its supply chain structure and promoted three KDP senior supply chain leaders into new roles, including naming Roger Johnson as the company’s new chief supply chain of cer.
> IN MEMORIAM
• AFS Logistics appointed Micheal McDonagh as its president of parcel. McDonagh will focus on pricing, strategy, and customer satisfaction. • Trailer Bridge named Eric Masotti president of its logistics division. Masotti now oversees the strategic direction of the company’s domestic transportation solutions.
n George Bell, founder of B&B Attachments, passed away on October 5, 2022. Bell founded B&B Attachments, an independent supplier of forklift truck attachments in the UK, in 1980 with his wife, Irene.
14 Inbound Logistics • December 2022
NOTED
> SEALED DEALS
> GREEN SEEDS
• Mars signed an agreement with Accenture to apply
n Samskip signed a new agreement with GoodFuels that will enable a 90% cut in ship carbon dioxide emissions. Samskip also calculated that it will save 45,000 tons in additional CO2 emissions by the end of 2022.
digital twin technology and models to the candy maker's manufacturing facilities and provide its factory line operators real-time insights into current and predictive performance. • JCB , a manufacturer of construction equipment, appointed Maersk as its global lead logistics provider. Maersk will provide end-to-end supply chain management services and manage JCB’s third-party warehousing. • Third-party logistics provider Kenco Group will work with Interstate Batteries a provider of automotive batteries, to implement a network of ful llment centers to reduce the number of distribution points from more than 250 to eight. • USA Luge and Team Worldwide extended their partnership through the Milan/Cortina Olympics Games in 2026. As the of cial cargo carrier of USA Luge, Team Worldwide transports equipment to and from events around the world. • Piggly Wiggly Midwest will pilot the Focal Operating System in its stores in Wisconsin and Illinois. The grocer will use the system to automate and optimize ordering, inventory management, merchandising, and workforce management.
n The Rhenus Group plans to neutralize the carbon emissions of all global full containerload products by 2045. The company previously announced a commitment to carbon neutrality for all its less-than-containerload products by 2030. n J.B. Hunt Transport Services set a goal to reduce its carbon emission intensity 32% by 2034 by incorporating alternative powered equipment, expanding biogenic fuels usage, and improving fuel economy.
> RECOGNITION
• The Women In Trucking Association recognized CPC Logistics as a 2022 Top Company for Women to Work for in Transportation. The non-profit organization encourages the employment of women in the trucking industry, promotes their accomplishments, and minimizes the obstacles they face.
• PMMI, the association for packaging and processing technologies, named Alison Zitzke, senior product manager for ORBIS, a 2022 On the Rise Award winner. This award recognizes 10 young professionals who have demonstrated leadership qualities in the packaging and processing industry.
• Arvato Supply Chain Solutions will manage the online business of Rituals
Cosmetics in Germany, Austria, Switzerland, and Poland from a newly opened 505,904-square- foot distribution center in the Bemerode district in Germany.
• The Tennessee Trucking Association presented its Clean Diesel Award to Averitt Express for its commitment to environmental responsibility. The award is given to a Tennessee transportation
• Sinocare, makers of blood glucose meters in Asia, teamed with Hai Robotics to implement autonomous case-handling robot systems into its warehouse in Changsha, China. • Crayola enhanced its omnichannel strategy by partnering with Distribution Management, a national third-party ful llment and distribution provider, and Deck Commerce, a provider of order management solutions for direct-to- consumer retailers.
and logistics provider for e orts to improve fuel conservation and sustainability within its fleet.
December 2022 • Inbound Logistics 15
TAKEAWAYS Shaping the Future of the Global Supply Chain
Five Trends That Will Shape Logistics in 2023
Amidst concern over the economy and ongoing geopolitical issues, 2023 promises to pose challenges to managing logistics and supply chain operations. To help companies prepare for the new year, Anaid Chacón, head of product for Nuvocargo, a digital platform focused on U.S.-Mexico cross-border trade, identifies five trends to be aware of. 1. Digitization, data, and visibility: The ongoing shift from manual to digital methods in supply chain processes will continue. Potential benefits to making this shift include increased access to insights through data mining, which can lead to better decision- making and increased supply chain visibility. 2. Reshoring and nearshoring for manufacturers: As the U.S.- China relationship continues to deteriorate, manufacturers are re-examining production strategies. Near the beginning of the pandemic, 64% of North American manufacturers responding to a Thomas Industrial Survey said they were likely to return manufacturing production and sourcing back to the Americas. As shipping costs from China increase, this trend should continue in 2023. 3. Rising diesel prices: Diesel fuel prices rose 55% in the first half of 2022. The war in Ukraine and implementation of International Maritime Organization 2020 regulations drove this growth, but no relief is on the horizon. Expect rising diesel prices to continue into 2023. 4. Sustainable shipping and environmental regulation: Driven by new regulations and consumer demands, logistics companies face significant pressure to create sustainable business practices. Given that the U.S. Securities and Exchange Commission now requires public companies to include climate-related disclosures, including risks associated with climate change, in their annual report, this trend should continue into 2023 and beyond. 5. Automation: Transportation and warehousing often are cited as two sectors with tremendous potential to benefit from automation. The promise of artificial intelligence, machine learning, and connected internet-of-things networks, for example, show promise to optimize logistics. Companies will continue to examine these processes in 2023.
TURNING THE TIDE ON TURNOVER The pandemic’s effect on inventory turnover was significant, but more recent data suggests that the situation may be improving for e-commerce brands. Using customer data, ShipBob aggregated average inventory turnover rates from 2020 to 2022 to examine how quickly e-commerce brands sell through their inventory. The report finds that overall average turnover rate rose to 0.85 in 2022 compared with 2.04 in 2020. In the three years examined: • Average turnover rates were highest (2.04) in 2020 at the beginning of the pandemic as more shoppers turned to e-commerce options due to lockdowns. • As lockdowns began to ease in 2021, average turnover rates began to drop (1.59). However, supply chain delays prevented quicker recovery. • The first half of 2022 saw turnover rates decline significantly (0.85) as inventory delayed from Q4 2021 began to arrive. In each year studied, mid-market/enterprise merchants performed significantly better when compared with all merchants overall, perhaps due to more sophisticated forecasting and higher technology adoption.
16 Inbound Logistics • December 2022
TAKEAWAYS
Waste Eats Away the Bottom Line Overproduction and waste may push margins in the wrong direction. A recent Avery Dennison report finds that 8% of stock perishes or is discarded before it reaches consumers–inventory losses worth up to $163.1 billion or 3.6% of annual profits. Of the 8% waste, slightly more than half (53.8%) is lost in the supply chain before products reach store shelves. The report, The Missing Billions: The Real Cost of Supply Chain Waste , examines data from 318 companies and centers on issues of waste in supply chains in the United States, the UK, France, China, and Japan ( see chart ). Although the companies surveyed say they are aware of the waste issue, study authors contend that the needed budgeted funds to address the issue are lacking. “The current supply chain disruption is leading to a waste crisis, making the case for sustainable practices even more urgent and necessary,” says Francisco Melo, senior vice president and general manager, Avery Dennison Smartrac. Some companies turn to technology to help implement the measures needed to reduce supply chain waste. For example, 61% of organizations surveyed have deployed tracking solutions at the item level, with another 34.6% exploring options to implement this technology. Nearly all responding companies are embracing technology: 97% plan to invest in blockchain applications for the supply chain, 99% plan to increase smart device usage, and 97% say they will use industrial IoT, all within five years, The report also surveys consumers and finds their main concerns are cost and quality. But consumers do show interest in the journey taken by the products they purchase. For example, more than half of consumers (52%) agree that “transparency about a product’s journey to the consumer is important to me” and they are “being more transparent about materials/ingredients used” when buying clothing.
AI AND ML IN RETAIL: HELP OR HYPE? Top-performing retailers are bullish on artificial intelligence (AI) and machine learning (ML), with 71% of respondents to a Retail Systems Research report saying AI-enabled analytics will fundamentally change their merchandising forecasting by 2025. outperforming the norm.” Key reasons these retailers are considering AI and ML include the technologies’ potential to guide decision-making processes, including supply chain planning and management, and store performance evaluation methods. The report defines top-performing retailers, or “winners,” as “those whose sales are already “There is a veritable ocean of external data available from an increasingly digitized global marketplace, and the hope is that AI/ML technology can be used to turn that data into insights, and help retailers better understand the environments they operate in,” according to the report. Many retailers seek game-changing technology to improve business analytics, which bolsters their ability to respond to marketplace change. But the signals are mixed for retailers’ expectations for AI and ML. The report shows that retailers expect AI and ML to provide much-needed analytics for supply chain planning and management within three years; however, they don’t expect this process to come easy. Although more than half of all “winners” say they agree that AI-enabled analytics will significantly impact demand forecasting, supply chain planning, and customer interactions, just more than half (52%) say their company has a good idea of how AI-enabled technologies would impact operations over the next three years, while 37% describe AI’s value as “overblown.” Change management seems to drive this cautious optimism. Interestingly, retailers not labeled as “winners” are more optimistic, with 71% saying they know how AI would affect operations and just 15% not buying into the hype.
WASTE DUE TO OVERPRODUCTION IS LARGEST IN THE US AND THE UK
US 4.9%
UK 3.7%
JAPAN 3.5% FRANCE 3.5%
CHINA 1.8%
Source: Avery Dennison
December 2022 • Inbound Logistics 17
TAKEAWAYS
Taking the Temperature on Sustainability Many companies will continue to take sustainability seriously over the next 12 months. A recent Honeywell survey of 600 business leaders finds that 90% are pleased with their sustainability efforts over the prior 12 months, and 97% plan environmental, social, and corporate governance (ESG) budget increases in the next 12 months. Honeywell’s Environmental Sustainability Index is a newly launched quarterly indicator of trends centering on corporate climate priorities and approaches to environmental sustainability. The Index breaks sustainability into four categories: energy evolution and efficiency, emissions reduction, pollution prevention, and circularity/recycling. Nearly all respondents (97%) say that they’ve budgeted increases for at least one category, while nearly 75% say they plan
Source: Honeywell
to increase budgets for all four categories. More than half of respondents say that their efforts over the previous 12 months were “extremely successful” for each category. Segmenting the results by industry paints a different, though still generally optimistic, picture. Responses from transportation and logistics professionals, for example, are generally positive when asked how their efforts to reduce emissions are going, but fewer than half (40%) say these efforts were going “extremely well.” What’s more, 10% state they were not successful in meeting their emissions reduction goals for the prior 12 months. The good news: 73% of respondents working in logistics are optimistic they will meet emissions reduction goals by 2030.
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18 Inbound Logistics • December 2022 FOOD AND BEVERAGE • PARCEL SHIPPING • AUTOMOTIVE • MANUFACTURING • HEALTHCARE CONSTRUCTION MATERIALS • RETAIL/CONSUMER PRODUCTS • ELECTRONICS • PAPER PRODUCTS
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