Category Archives: Logistics

The Logistics Industry Talent Shortage Is Its Own Fault

For years we’ve been hearing about the logistics industry worker shortage which, over the years, has had the worker shortage projection increase from a little over 100K when the shortage was first reported as bad in the mid 2000s to 1.4M jobs in 2018 according to a 2014 Fortune article. Now, not all of this is a driver shortage — some of this is a shortage of talent in high tech, analytics, robotics, engineering, seasoned managers, marketers, data analysis, and even human resources — but a significant portion of this shortage *is* a driver shortage.

But why is there a driver shortage, especially when the “un”official U-6 unemployment rate in the US, which includes all unemployed persons as well as persons marginally attached to the labor force plus persons employed part time who would like to be employed full time, is still 9.9%? (If you do the math, that’s over 31M people looking for at least some work … should be easy enough to fill a few hundred thousand driver jobs, right?)

Wrong. The shortage keeps getting worse. But why?

The answer is multi-faceted but one of the big problems is the double-edged sword of perception. How the general populace outside of the logistics industry views logistics and how the workforce inside logistics views the general populace. We will discuss both of these.

The first problem is that, in the US in particular, truck driving is seen as an unglamorous blue-collar job for those who are average, lack drive, and live in a trailer park. It’s not a job for the middle class or those who are part of the respectable community. It’s hard to get truckers if you can’t even get applicants.

But this is only half the problem. The other half is that truckers believe that their brethren should be like them — middle-aged men who like to share crude jokes in old-school truck stops and who fit the stereotype of the trucking industry. If a young women were to apply for the job, she’d have to put up with funny looks and crude, disrespectful jokes, on a daily basis. This is a shame, because now that the job no longer requires brute strength, it can be done by anyone, including a woman — who probably has better time management skills, a calmer head during traffic jams, and less tarnishes on her record (which is a statistical fact).

But, as per this great article over on the BBC on why don’t women become truckers, no matter where you go in the world, it’s the same. A woman driving a lorry gets funny looks and has to listen to unfunny jokes and has to listen to things like wow, I didn’t know women could drive trucks. But a woman can like driving a truck just as much as a man. And a woman who needs a job can be just as willing to drive one as a man. Especially if it was to be again seen as a respectable profession (which first requires people in the industry to treat others with respect).

If the perception improves, the industry can attract more truckers. There might still be a worker shortage, but it would not be nearly as bad if the industry was attracting applicants of both sexes on a regular basis.

3 Reasons STEM Education is the Future of the Logistics Industry

Today’s guest post is from Lauren Willison, the Director of Admissions at Florida Polytechnic University.

Today’s logisticians require more than a just basic planning and routing skills to succeed. This is due in large part to the continued development of cutting-edge technology such as robotics and automated machinery, which requires logistics employers to look for professionals with advanced technical expertise. Universities are matching this demand by offering logistics degree programs that focus on STEM subjects — science, technology, engineering, and math — in a hands-on learning environment.

A higher education in STEM offers the best training for the logistics field because it offers students tactical knowledge to improve logistics management and adjust to an evolving industry landscape. Here’s how:

Extensive Training in Technology

The STEM disciplines are unique in the academic world because they are quick to change and adapt to evolving industries and careers. STEM-focused institutions stay up-to-speed by offering students exposure to emerging technologies such as 3D printing. According to EFT’s 2015 3PL and Contracting Report, 19.2 percent of manufacturers and retailers use 3D printing in their businesses; however, only 1.5 percent have the expertise, knowledge and services to use these technologies effectively. STEM students have the opportunity to use 3D printers, for example, and practice producing exact replicas of parts and products. Increasing proficiency with new technology allows STEM-educated logisticians to make faster, cheaper, more reliable and more sustainable deliveries.

Cross-Disciplinary Education

An interdisciplinary education builds well-rounded logisticians and supply chain professionals who can eliminate the skills gap in the field. Although STEM focuses on four subjects, a STEM education provides in-depth training in a wide range of technical subjects that logisticians should know. With courses ranging from hazardous materials management to Six Sigma applications, students can apply textbook concepts to in-class activities modeled after real-world problems.

Logistics is no longer a field where employees can rely on just hard skills. Soft skills, such as time management and leadership ability, is essential to move forward in a logistics career. A STEM education develops a healthy combination of both skill sets, and provides a more managerial perspective on production and services in logistics. Students in STEM learn to efficiently manage logistics processes by studying concepts such as product design, inventory control and capacity management. During the process, they also learn how to work in teams, balance heavy workloads and think strategically to improve shipping and distribution processes.

Low Student-to-Faculty Ratios and Internships

Universities wholly dedicated to STEM often boast better student-to-faculty ratios. This means students receive more individualized attention from their professors, from extra help on assignments to career advice. Students who take advantage of this dynamic gain a more wholesome perspective on the logistics industry.

Additionally, some STEM universities will partner with key players in the logistics and supply chain industry. This opens up research and internship opportunities and allows students to gain valuable field experience. An internship, particularly one with a prominent or well-respected logistics company, gives students the chance to apply new skills, excel in the field and play an active role in improving the way society manages logistics.

Thanks, Lauren.

Procurement Sustentation 11: Postal Services

As per our infrastructure damnation post on Postal Services, public postal services, even though not widely used by most large enterprises, are necessary to prevent private monopolies and to force the private enterprises to be more competitive than they would otherwise have to be.

More importantly, they are often vital for large retailers that depend on direct to consumer sales (and shipping) as, sometimes, public sector service prices (for large retailers who cut good deals) are better than private sector prices, and just as quick (as many postal services have enough carriers to cover every door 5 days a week without having to add staff or miss promised delivery dates in peak seasons).

But the costs might skyrocket as many postal services go deeper and deeper into the red, and look to stabilize themselves through increased package costs (and USPS rates recently went up rather significantly in the US for parcels), and those retailers not ready for this may find themselves losing customers hand over fists who balk at shipping prices that dwarf the costs of the products they are buying. Even if the retailer has the volume to negotiate only a slight increase, any increase can be devastating.

So what can a retailer do?

The first thing it needs to do is try to lock in long term price agreements with the public sector postal services it is dependent on. That way, if prices do rapidly rise, it has the time to negotiate the best deal it can with private carriers if it has to go the private route.

The next thing it needs to do is start negotiating with multiple private carriers that can handle its volumes and try to negotiate deals as good as it has in the private sector and switch about half of it’s volume to the private carrier who wins. That way it has both options, and can even switch back to the public sector if the private sector option because more costly or risky.

Finally, it has to explore in-store or near-store pick-up options. For example, Amazon is exploring locker pick-up in urban locations that can be as fast, or faster, than direct-to-door shipping, and cheaper too. Multi-channel delivery options are the key to perpetual success.

Provider Sustentation 69: 3PL Firms

Just like 3PL firms were the first provider damnation we covered, they are also the first provider sustentation we are going to cover. For many under-staffed, under-supported, and under-platformed logistics departments, 3PLs are a blessing because, without sufficient staff to analyze options or modern technology platforms to crunch the numbers, 3PLs offer the organization an instant cost savings, a substantial time savings, flexibility, and, presumably, focus. But, as we said, these advantages are there for a reason — to cloud the disadvantages that 3PLs also bring. 3PLs are a true double-edged sword that, depending on the angle you see it from, shines as bright as the sun or drowns you in the darkest night of the abyss.

As we clearly said in our damnation post, in exchange for:

  • cost savings, the organization gets IT headaches
  • flexibility, the organization gets a loss of visibility
  • focus, the organization gets a complete loss of control

Why?

  • the 3PL uses its own TMS, and doesn’t give a damn whether or not it integrates with any of your systems
  • the 3PL contracts the carriers, and if it the carrier gives you sucky service, too bad as you’re stuck with them until the contract is over (which could be a while if it services the 3PL’s bigger clients good)
  • the 3PL manages the carriers it contracts, the lanes they take, the cross-docks they use, and so on and as a result your visibility into where your stuff is at might be limited to expected ship date, current status, and expected delivery date

But all is not lost. If you properly pre-qualify, properly pre-nup, and properly (pre-)define the commitments, you might only see the bright and shiny side of the double-edged sword — the side that cuts through your problems and leaves only cost savings, flexibility, and focus in its weight. Of course, to do this, you have to make sure that:

  • during the pre-qualification phase you
    • be sure to dig-deep into the TMS, out-of-the-box integration support, data import/export options, and timelines for custom integration
    • be sure to ask a lot of questions about standard carrier contracts, common carriers, selection process, and the input you can have over it
  • during the proposal phase you
    • make sure the provider gives commitments on system integration timelines, carrier selection process, issue response and resolution times, and support availability
    • make sure the 3PL provides active references of a similar size, proof of necessary insurance or regulatory approvals, and other documentation that will be needed upon signing
  • during the final contract pre-nup phase you
    • make sure the carrier agrees to penalties if integration dates are missed, deliverables are late, or promised performance never materializes
    • make sure the organization can back out if problems persist or go beyond a certain point of severity

As we said before, the right 3PL, that is properly selected, agrees, and adheres to the right terms and conditions, will be a lifesaver for many companies, but the wrong one could bring the organization to its knees. So it’s critical to select the right 3PL.

Organizational Sustentation 58: Logistics

While Logistics should be Procurement’s best friend, as per our original damnation post, Logistics can be one of Procurement’s worst enemies. Remember, Procurement has to negotiate the deal with the best overall value, but Logistics is generally responsible for minimizing transportation cost. They may decide to change routes, which lengthens delivery time or puts the cargo at increased risk of theft, select a new carrier, with a lower quality of service and on-time delivery record, or stop using a carrier that will only deliver the organization the promised discount when it gets a sufficient volume of business.

And if Procurement can’t convince the C-Suite that Logistics should be a sub-department of Procurement, what is Procurement to do?

First of all, it has to make friends with Logistics and make sure that Logistics understands that it’s not there to step on Logistics’ toes but simply make the best decisions for the organization overall.

Secondly, it has to accept that Logistics might be better at identifying better carriers and negotiating lower rates and leave it to logistics to oversee the logistics part of any tender and make sure that each invited supplier submits their absolute best bid.

Thirdly, it has to take the time to explain that shifting transportation from the winning supplier to another supplier at a later time not only risks increasing costs (though missed rebates, stock-outs from delivery delays, etc.) but tarnishes the organization’s reputation, which means, in the long run, suppliers will not be as incented to provide their absolute best bid as they know that even if they are awarded the volume, they might get it taken away from them three months down the road. Then it has to get Logistics to agree that the winner, based upon the scoring formula or award methodology that Logistics was aware of (and agreed to) as a stakeholder, will be the winner for the length of the contract (unless the carrier fails to honour its commitment, which allows the organization to terminate the contract).

Fourthly, at review time, it has to work with Logistics to create the reports that demonstrate that Logistics’ decisions, and efforts, have not only decreased overall organizational costs but increased organizational value (through cost, and loss, avoidance).

Most organizational departments want to do the right thing, and Logistics is no exception, so if you work with them (and teach them best practices to enable them to do even better), instead of trying to work around them, you’ll have more success and the damnation they can cause might be minimized. (Or they might secretly hate your guts because they feel you should report to them and stab you in the back at first opportunity. You are in Procurement Hell, after all.)