Monthly Archives: March 2013

Could You Run Your Supply Chain from Another Country for A Month?

A recent post over on the HBR Blog Network on why we’re relocating our HQ to Dubai for one month about Starwood’s one month move of their HQ to Dubai for one month brings up an interesting question:

Could you run your supply chain from another country for a month?

It’s an important question. Because if you can’t, you’re not prepared for a disaster. And given that the likelihood of a disaster shutting down your primary location is increasing as the number of natural disasters rise each year (thanks to global warming), you should be. While the risk of a disaster shutting down your Supply Management headquarters is likely small compared to the risk of a significant disruption impacting your supply chain (which is approaching 85% for many companies), the risk is there. And you have to be ready.

Furthermore, if you have the right supply management infrastructure, you should be just as capable of running your supply chain from another country as you are of running it from a temporary location fifty kilometres away. If you have a true visibility solution, you just need an internet connection and you know where everything is. If you have a good sourcing and procurement platform, you can source and order whatever you need from anywhere. And if you have a good e-payment solution, you don’t need to pick up a check from a PO Box. Good distributors have their own on-line visibility and transportation management systems, and all of your 3PL and Import/Export Brokers can be connected with an e-Document Management solution. Plus, if you truly are global, you should be able to set up quickly near a major supplier who wants to help you out in the local country to keep you as a major customer.

In other words, if you couldn’t pick up and temporarily relocate your Supply Management headquarters at a moment’s notice, you probably don’t have a modern Supply Management office running on a modern Supply Management platform. And you should. Especially since there might be no better way to really learn a major market that you are sourcing from.

Are Your Groceries Killing the Environment?

According to a recent article on Sustainable Brands, The Co-operative Group, Nestle, and Sainsbury’s say they will improve the sustainability of some of their products in response to research from the Product Sustainability Forum of WRAP (Waste & Resources Action Programme), an independent not-for-profit company funded by all four governments across the UK and the EU.

The Product Sustainability Forum just released
an initial assessment of the environmental impact of grocery products which collates information from more than 150 studies across more than 200 grocery products. The main finding, summarized in the executive summary on page 4, is that the production and sale of grocery products contribute between 21% and 33% to household consumption GHG emissions and approximately 24% to abiotic resource depletion impacts. Wow! (In English, abiotic resource depletion is the deletion of non-renewable resources such as fossil fuels, minerals, etc. One calculation for abiotic resource depletion is given in a Wiley publication on Polymers, the Environment, and Sustainable Development.) In fact, food and beverage products constitute eight of the top-ten product groups from an environmental impact perspective:

  • Alcoholic Drinks
    cider, lager, spirits, wine
  • Ambient
    cereals; canned seafood, meat, veggies, soup, pasta, and noodles; pet food; chocolate; coffee; crisps; rice; sugar (confectionary); and processed snacks
  • Bakery
    (sweet) biscuits; breads; cakes; pastries;
  • Dairy
    butter; cheese; milk; cream; yogurt;
  • Fruit & Vegetables
    bananas; onions; potatoes; tomatoes;
  • Meat, Fish, Poultry, Eggs
    beef, deli, eggs, seafood, lamb, pork, poultry
  • Non-Alcoholic Drinks
    carbonates; concentrates; juices
  • Chilled & Frozen
    Veggie & Potato Products; Ice Cream & Frozen Deserts; Margarine; Pizza; Pre-packed Sandwiches; Ready Meals

The other two groups are:

  • Household
    dishwashing products, cleaning products, laundry detergents, paper products
  • Personal Care
    batch and shower products, deodorants, nappies

What’s scary is that these “Top 50” comprise approximately 80% of all GHG emissions associated with producing, transporting, and retailing the grocery products in the UK and food and drink is 80% of these categories. So, at the current time with current practices, our groceries really are killing the environment and these 50 products are contributing up to 20% of all GHG emissions that are currently produced!

Where’s all that GHG coming from? The worst offenders, according to the initial study, are meat products (at 37.4% of grocery GHG) and dairy and eggs (at 17.3% of grocery GHG). Why? The production process for milk takes a lot of energy. It turns out that the median product embedded energy for liquid milk is 5.1 MJ/kg (Megajoules/kilogram), and at a sales volume of 5,186 Million kg / year, 26,400 TJ (Terrajoules) of energy is required to produce the milk consumed in the UK. Similarly, a lot of energy is required in the fresh poultry production cycle: 40.35 MJ/kg for a total UK market consumption of 17,600 TJ of energy. And, of course, most current methods of energy production emit copious amounts of GHG. And where meat is concerned, many animals produce methane gas, and some in copious quantities. There are other reasons, and some are contained in the report (and the rest of the reasons are in the studies surveyed by the report), but it’s the findings that are important. The current production and distribution methods for many of our staple foods are quite damaging to our environment, and the companies producing and distributing those staples have to shape up. It’s good to see that a few companies have said they will. Let’s hope they follow through.

So What Are You Doing For Your Drivers?

As per our post on Sunday, where truck drivers are concerned, working conditions are bad, getting worse, and you’re on the fast track to not being able to move 10% of your shipments on time as you’re going to be short 10% of the drivers you need within a decade unless you do something to change things.

So what can you do?

1. Make sure you do everything you can to give drivers good working conditions.

According to this post by Peter Moore over on Logistics Management, some distribution centres force drivers to stand in a 10-foot painted circle on the floor near the loading docks while the trailer is being loaded. No restroom, no cell phone signal, and no chair. Are you serious? People charged with crimes get treated better.

2. Make sure your carrier does what they can to give drivers good working conditions.

The carrier should pay them better than average, minimize waiting time by always using dropped trailers for TL, optimize routes to minimize partial loads and stops, and make sure all long haul truckers on routes without an adequate number of safe rest stops have sleeper cabs. In addition, routes should always be planned to ensure that legislative limits are not breached, which will give the driver adequate rest.

3. Make sure the drivers have good medical coverage and care.

Drivers should have a schedule that gives them at least one weekday off a month to schedule a regular doctor’s check-up and should have a plan that allows them to visit a doctor whenever they need to. (In US terms, this means that they should have PPO or POS coverage.)

4. Make sure you support any effort to prevent rest stop closures.

More rest stops are needed. We’re at 90% capacity every night and things are only going to get worse. Support any effort to not only prevent more closures, but to (re)open more rest stops to make trucking safer for all drivers.

And while all of this may not be enough to make a driving career attractive to younger drivers, it should at least stem the surging turnover and buy us the time we need to come up with a better solution.

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Every
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missed
rebates,
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lost
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Most
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audit
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The
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New Estimates Put the Driver Shortage at 240,000 Drivers!

And, if what I’m reading is right, IT’S ALL OUR FAULT!

But before we get to why, let’s spell out that number. Two Hundred And Forty Thousand! That’s almost double what the estimates were as recently as a year and a half ago! That’s one scary number! How are we going to increase the number of drivers by 10% in the next decade when one third of drivers are going to reach retirement age and the average graduate age from driver training schools is 54! (Which means that the percentage of drivers set to reach retirement age in the next decade is increasing every year and it won’t be long before two thirds of drivers will be less than a decade away from retirement age!)

Needless to say if the American Trucking Associations (ATA) is right and the shortage is 240K, we have a serious situation on our hands. And the severity is only increased if the Owner Operators and Independent Drivers Association (OOIDA) is right and that, despite the fact that some 40,000 new commercial driver licenses are granted by DOT annually, turnover is 100+ percent per year due to poor working conditions.

And it sounds like working conditions are getting worse each year. From my research, this is what the reality of the situation is:

  • truck drivers make an average wage of only 38K per year;
    4K less than the per capita personal income and 13K less than the median household income in the US as of January, 2012
  • truck drivers have to drive up to fourteen hours a day
    and receive roughly 10 hours off before their next shift despite the fact that legislation limits the amount of driving a trucker is supposed to do
  • truck drivers commonly have to work 6 day weeks
  • truck drivers have a dangerous job
    as 12% of all work-related deaths in the US are from truck drivers in auto accidents
  • truck drivers are lucky to earn minimum wage
    when you add up all of the time they have to be on the job driving and waiting (in traffic, at warehouses, etc.)
  • truck drivers don’t always get to eat well
    as evidenced by the fact that only 14% of truck drivers in the US are not overweight or obese
  • truck drivers don’t get good medical care
    as they can’t keep regular appointments with regular doctors and can’t always go to the doctor when they should
  • truck drivers often have to sleep in their cabs in unsafe conditions
    as States are continually shutting down designated trucker rest stops along interstates to cut costs and long haul truckers often have to race for a safe position at truck stops, with over 90% of open spots filled on a nightly basis

In other words, working conditions are bad, getting worse, and since we’re not doing anything about it, it’s all our fault. You take the time to make sure there’s no child labour in your supply chain. You take the time to make sure that your suppliers are paying minimum wage. But do you take the time to make sure that your shippers are treating their drivers well and making sure they stay healthy and safe?