Logistics Gets Schooled
The writing is on the wall. Logistics and supply chain companies that invest in ongoing education, innovation, and research can attract new talent and better serve customers.
When Andrew Lynch started in the logistics business nearly 20 years ago, he had to learn the distance between hundreds of routes—say, from Ashtabula, Ohio, to Edison, New Jersey—as well as the cost to move a shipment from one location to the other. Today, logistics professionals like Lynch, president and co-founder of Zipline Logistics based in Columbus, Ohio, can retrieve this information online. Instead, they’re faced with more complicated challenges, such as finding the optimal way to move a shipment when it has to be delivered in the middle of the night, incurring accessorial fees along with standard freight charges.
As logistics challenges become more complex and technology advances, ongoing education, innovation, and research has become a competitive imperative for logistics and supply chain companies.
A commitment to education and innovation is also key to attracting younger employees to logistics. “With millennials making up an increasing part of our workforce, it is critical that we modernize our processes and tools,” says Gina Chung, vice president, innovation, Americas research and development with DHL.
Moreover, attracting and retaining logistics employees remain critical, even as the COVID-19 pandemic has caused soaring unemployment in some sectors. In contrast, many logistics firms are busy keeping supplies moving. “Within the logistics sector, there are still people hiring,” says Gary Allen, vice president of supply chain with Miami-based Ryder Supply Chain Solutions.
Just as important, some shippers do not have the resources needed to develop new capabilities or to monitor technological advances in logistics. Instead, many ask their logistics partners to keep abreast of emerging technologies and then use their knowledge to drive solutions.
Getting Ahead of the Curve
The goal of Ryder’s innovation and product development group is “to get ahead of the curve regarding what’s next,” Allen says. One result is the Coop platform. Developed within Ryder, Coop connects fleet managers who have idle vehicles with businesses interested in renting them. Lenders on the site report average monthly earnings of more than $3,000 per single truck, and $4,000 for a sleeper truck.
Because innovation also occurs outside logistics companies, a number of logistics providers monitor and evaluate emerging technologies. “Our customers don’t necessarily have the time to stay in touch with everything going on in emerging technology, especially in supply chain,” says Andy Moses, senior vice president of global products with Penske Logistics. To assist them, Penske’s emerging technologies team uses both internal and external resources to monitor emerging technologies such as blockchain and 5G.
“Penske doesn’t pick winners and losers,” notes Moses. Instead, they stay up on the key players in each technology sector, potential headwinds, and changes likely to occur in the near or mid term.
Several years ago, customers of Kenco Group began asking the third-party logistics (3PL) provider to look at innovation that might help them. At the same time, Kenco leadership was working to identify the steps needed to remain competitive in the future, says Kristi Montgomery, vice president of innovation, research, and development, and director of the Chattanooga, Tennessee-based firm’s innovation lab.
One result is a 10,000-square-foot working warehouse, complete with racking, a forklift, pick areas, and other features found in typical warehouses. “The lab allows us to test technologies,” Montgomery says, and determine which will likely work for different customers.
For instance, a consumer packaged goods company was considering implementing robotics as the volume of its smaller e-commerce orders grew. Kenco tested various options and concluded that an autonomous tugging solution that could carry a larger product assortment than some other robots would provide the efficiency the company needed.
By design, the lab is not a “showcase, but a working warehouse,” Montgomery says. This allows Kenco to test products in an environment that mimics real life—that is, with noise and fans and other attributes common in warehouses.
The term “research and development” often prompts images of expansive laboratories with equally mammoth price tags. But it’s possible to incorporate innovation on a smaller scale. For instance, conversations with customers prompted Zipline to develop KanoPI, its logistics technology suite.
Many of Zipline’s customers are mid-market businesses, and yet they were competing with firms that had invested millions in transportation management systems (TMS)—an option beyond many budgets. “They need a transportation management partner, and not just software,” Lynch says. While Zipline maintains KanoPI, its customers can access order information, see their freight in transit, and request quotes, among other capabilities.
Ideas received through Zipline’s innovation lab also generate internal efficiencies, such as a suggestion to create an application program interface connection between KanoPI and its less-than-truckload (LTL) carriers, cutting the need to manually update progress on different shipments.
“It saves time for our team and our LTL partners,” Lynch says.
To develop their workforces and enhance innovation initiatives, a number of logistics firms partner with universities and even high schools.
College internships help Gebrüder Weiss (GW) identify talented students while also providing them with opportunity, says Mark McCullough, U.S. chief executive officer; the company’s global headquarters are in Vorarlberg, Austria.
Students typically remain with GW for about six months, working around their class schedules. On the job, they’re “diving into real-world logistics, managing their own accounts and addressing actual logistics challenges,” says Sandra Musielak, human resources manager. “They’re not just going for coffee.”
GW also offers Orange College, an interactive mini-university available to all employees. Subjects include freight forwarding basics, customer service, and compliance with different regulatory bodies.
At Georgia Tech, university-business partnerships tend to fall into several groups, says Tim Brown, managing director of the school’s Supply Chain and Logistics Institute. One-to-one collaborations between the university and a company can range from one semester to several years. A company might partner with the school for several years, for instance, to conduct an in-depth study of a new containerization approach across a 3PL network.
An increasingly popular approach is what Brown calls the “cohabitation of industry and academia.” Georgia Tech’s Advanced Technology Development Center, a business incubator, provides space and expertise to startups in a range of industries. Nearby, a growing number of established companies are building offices.
“It creates an intermingling of faculty, students, researchers, startups, and established companies,” Brown says.
What distinguishes a university partnership from a traditional consulting arrangement? Yossi Sheffi, director of the MIT Center for Transportation and Logistics, points out a few differences. “If we know the conclusion to the problem, the school won’t work on it,” he says. For instance, organizations shouldn’t expect to partner with the university to help with a software installation.
The students are always involved in these collaborations. “It’s part of their learning,” Sheffi says. In addition, a researcher needs to be interested in the problem. “There are more problems than researchers,” he adds.
Finally, MIT never commits to delivering a specific solution. “We promise our best effort,” Sheffi says. “But there may not be a solution.”
A few logistics firms are reaching out to high schools. A group of high school students helped Kenco improve dock door turn time and reduce detention charges stemming from drivers who had to wait to load or unload their trailers.
Their solution? Place large television sets that act as monitors at each dock door and display data, such as order number and due-out time. The background color changes from green to yellow when the due-out time hits 30 minutes, and a red background means due-out time has passed. A supervisor at a facility with dozens of doors can easily see which are bumping against deadlines. Among other benefits, the solution has reduced detention charges and boosted performance.
While innovation and education are key to advancing technology, they’re also critical to enhancing skills such as leadership and quality management. “We need engaged workers,” says Hiram Hartnett, executive vice president of sales with Pegasus Logistics, based in Coppell, Texas. He adds that 80% of most problems are people related.
Pegasus Logistics’ Leadership Training Program extends for eight months, during which students participate in workshops on leadership effectiveness, retention and talent development, and delegation. “The focus is on leadership, learning, and management,” Hartnett says.
Another program, Level Up, will launch later in 2020 to prepare participants to “better understand the levers used to manage the business,” Hartnett says. To that end, it will offer exercises in managing conflict and analyzing financial statements, among other subjects.
Research, education, and innovation are helping logistics firms advance both their technology and their workforce. All parties involved—the logistics firms, their employees, and their clients—benefit.
From Economic Development to Talent Development
Several years ago, when leadership at KC SmartPort talked with different companies, they learned labor and workforce concerns had risen to the top of the list when evaluating new markets, along with real estate and the cost of doing business, says Elli Bowen, KC SmartPort’s vice president of business development.
In response, KC SmartPort, a nonprofit economic development organization working to attract freight-based companies to the Kansas City region, increased its focus on workforce development.
To address the skills and interests gaps, the organization reached out to universities, community colleges, and even high schools. A number of these institutions now offer supply chain programs. One example is a range of programs in railroad conducting offered through a partnership between the National Academy of Railroad Sciences, Johnson County Community College, and BNSF Railway.
These initiatives reach students who may not have been aware of the opportunities in the supply chain field. “We’re shifting the mindset of what it means to be in supply chain,” Bowen says.
Driver Training Gets Real
About 15 years ago, faced with older drivers retiring and other drivers using increasingly advanced technical tools, UPS started examining its driver training procedures, says Jon Bowers, director of learning technology at UPS.
By leveraging a $1.8 million grant from the Department of Labor and collaborating with the Massachusetts Institute of Technology, Virginia Tech, and the Institute for the Future, UPS built a high-tech, next-generation training facility: UPS Integrad. Ten Integrad sites are now located across the United States, along with two international sites.
A key feature is Integrad’s replica outdoor city, Clarkville, which boasts real streets, street signs, sidewalks, and simulated commercial and residential delivery and pickup sites. Students maneuver their trucks and pick up and deliver packages throughout the city.
This “experiential learning” has helped boost safety, performance, and employee retention, Bowers says.