Supply Chain Station summarizes the WERC 2015 conference

werc-01

Courtesy of WERC

The Warehouse Educational and Research Council (WERC) have just concluded their 2015 conference in Orlando, hot on the heels of JDA Focus 2015. It’s business conference season in Orlando, and the supply chain conferences and shows are coming thick and fast. This is the third show in a row to be covered here in Florida by Supply Chain Station.

The WERC conference is a unique occasion in the annual supply chain world calendar. WERC is the sole professional body that is focused specifically on Warehouse Management, and the pivotal role that it plays in supply chain methodology. They offer a set of resources that provide educational events and performance metrics for bench-marking. They conduct practical research, offer expert insights, and peer-to-peer knowledge exchange.

Although not a huge affair, the WERC conference is a significant one. It is relatively low profile by some standards, but it is planned and frequented by people who are dedicated to the warehouse industry. This year’s conference had approximately 850 attendees.

Peer to peer sessions form an important part of the conference, but in order to bring you a flavor of what was new here at WERC 2015, we’re going to focus our summary on the “break-out” sessions that took place.

Horizontal Collaboration in the supply chain

One of the top breakout sessions was given by a company called Tri-Vizor, and focused on something they referred to as “Horizontal Collaboration.” Whereas “Vertical Collaboration” refers to collaborating with trading companies including both suppliers and customers within the supply chain, “Horizontal Collaboration” (HC), refers to the process of collaborating with peer companies, and sometimes even competitors.

HC is something that came out of studies undertaken at the University of Antwerp, and it focuses specifically on logistics collaboration between the resources of warehouses and transportation; typically between 2 or more shipping companies. Whilst this concept is not exactly new, it is something which is now beginning to gain ground and credence within the supply chain environment, in Europe.

Horizontal Collaboration – Sustainability wins out

Transportation costs are a key driver, but so too is achieving a significant reduction in the volume of CO2 emissions. In one example cited within the presentation, Tri–Vizor highlighted a number of projects that went ahead based on the fact that although cost reductions were not significant; the reduction in CO2 was; and that was enough to make it worthwhile rolling the projects out.

Horizontal collaboration – Co-mingling

There were several examples of similar types of horizontal collaboration drawn on too. One related to the co-mingling or combining of loads. In the instance cited, 2 manufacturers were involved. One made dense metal componentry, and one made plastic products that were mostly filled with air. Typically, the component manufacturer loaded their trailers based on weight, whereas the other manufacturer loaded trailers by cube.

Where disparate loads are being shipped to similar geographic locations, the co-mingling of these loads resulted in cost savings of up to as much as 10%. Whilst this practice is becoming more accepted across mainland Europe, it is something that is still unusual in the United States, and therefore something that could be exploited to best use in the future.

Horizontal collaboration – Round Trip Creation

Another type of horizontal collaboration that was referred to something called “Round Trip Creation.” This describes a methodology whereby companies look for partners who are moving shipments around in directly opposite patterns to their own. It’s something that was trialed in the United States several years ago, but at the time it was launched, it did not catch on. Whether or not it was because the market wasn’t ready at that point in time; or whether it turned out to be more difficult in actual practice to find the corresponding loads, is not known. Suffice it to say, that at that particular time it didn’t become popular. But it could be that now, with  improved supply chain communications, and the use of computing in the cloud, that the time has come to refloat this particular methodology once again, this time perhaps to a different outcome.

Horizontal collaboration – Modal-Ship

The next type of horizontal collaboration that was discussed was something called “Modal-ship.” Typically this involves changing from one shipping methodology to another; for example from Less-than-Truckload (LTL) shipping to rail freight; or from rail freight to water transport by canal.

EU regulatory body gives horizontal collaboration the green light

This type of horizontal collaboration has been approved by the regulatory board in the EU. It opens up the possibility of substantial savings to be made. The larger and more effective the collaborative network; the more shipping companies involved, and the more shipping methodologies that are used to expand the size of the potential pool; the higher the saving potential.

The birth of 5PL shipping companies?

In order to reap the benefits of the potentially large savings that are offered by integrating horizontal collaboration into supply chains, it was being said that a new breed of shipping company was required. This new breed is being christened 5PL’s, and they would replace or transform the existing 3PL supplier network. If this does indeed come about, it will have a significant effect on logistics in supply chain methodology worldwide.

Shipping directly from store to store

Another two of the breakout sessions focused on the importance of retail stores developing their in-store order fulfillment capabilities, as this could result in an immediate effect on bottom lines. It enables the shipping of items from stores where movement is low or non-existent, or stock has run out; to stores in areas where demand is high and items will fetch top price. This sort of flexibility could really impact on a particular retail store’s ability to survive and turn a profit. This methodology can also be used to launch an omni-channel click and collect system.

In order to achieve the maximum benefit from a store fulfillment capability, it is first necessary to understand what it is that is driving the need. It could for example be:

  • The need to reduce costs
  • The need to improve the levels of service
  • The need to maximize sales

The answers to these questions will help to implement the distributed order capability, and determine where the goods in question should be sourced from. The methodology does not yet exist to fully bring this feature of store fulfillment capability into being; but it is something that it being worked on, and when available, it’s something that will have a significant impact on supply chain management.

The use of disabled labor in warehousing

The subject of the use of disabled labor in warehousing was also part of a very interesting presentation. This is a philosophy which was championed in US industry by Walgreens, who it is reputed have a Distribution Centre’s workforce that employs 50% disabled labor, including 40 forklift truck drivers who are deaf, or who have severely restricted hearing.  Unfortunately, progress in this particular area has been quite slow, but it is something that has recently been taken up by organizations including: Kroger, Lowes, Starbucks and Toys-R-us.

Kroger’s current employment record shows their rate of disabled employment to be 1 out of every 1,000. However, they have set a target to achieve 100 out of every 1,000; something which they believe can be done. They insisted however that this can be done without having to lower quality standards; indeed many potential disabled workers have not made the grade through the selection process.

In order to achieve their goals, their training programs have to be remodeled accordingly. This is something that not only applies to the disabled workers themselves, but also to the supervisory staff, who without any additional training, are uncertain of how to manage and motivate disabled labor.

An interesting observation, (one made by several companies that used disabled labor), was that the disabled workers have better retention rates, and improved attendance records. They are less likely to miss work through minor problems, as is often the case in workers with no disabilities.

New Forklift Truck Driver Safety training Program – PEPSICO

PEPSICO did a presentation on their new forklift truck driver safety training program; a program which they have already rolled out to their companies in over 30 countries across the globe. According to statistics, 4% of forklift truck drivers are responsible for approximately 25% of all accidents. The majority of this 4% of forklift drivers comes from just two groups; newly qualified drivers, or repeat offenders.

The PEPSICO driver safety training program was first developed approximately 10 years ago and revolves around 10 key, basic, simple rules. One of the rules for example is that a forklift driver sat waiting at traffic lights, should wait a further five seconds after the lights change green, before actually moving off. This helps to avoid collisions with vehicles that are slow-moving and already in the traffic light corridor, or drivers who are in a hurry having gone through a red light shortly after a change. This five second rule is simple but very effective. Any time that an accident involving a forklift takes place on a PepsiCo premises, these 10 basic rules are considered to establish whether or not the driver followed correct protocol.

The program appears to be working, with PEPSICO reporting that accident claims are down by 50% saving the company approximately $8 million per annum, globally.

Easy teach Baxter Robots

Baxter has launched a new breed of “Baxter Robot” which rather than having to be taught through complicated software programming, are able to learn to visually from the workers they will work alongside, thanks to the high-tech in vision systems that the new robots incorporate. They are causing a great deal of interest. It is worth noting however that the US’s OSHA rules have not yet caught up with this new breed of “Baxter.” Because of this, any companies wishing to deploy these new “Baxters” will have to put some specific safety constraints in place. However, at this point in time, no planned deployment of “Baxters” has yet been overturned.

In the meantime, in mainland Europe, the International Safety Council is currently drawing up plans and guidelines for the use of this new breed of robots in the workplace. At the moment, these robots can only handle loads of 5 or 9 pounds, and are restricted to somewhat slow movements, for the sake of health and safety. It means that their use in distribution centers is somewhat limited and most of the attraction for their deployment is currently in the kitting area.

Although it’s early days for this type of easy-teach robotics, it is something that is likely to catch-on big time as the technology develops.

Conclusion

That brings us to the close of this year’s WERC conference, which was as usual an interesting and innovative event, giving us an insight into what the warehousing and logistics components of supply chain evolution hold in-store.


Which aspects of horizontal collaboration do you think will have the most significant effect on the logistics of future supply chain operation? Have your say at the feedback section below.

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