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On Demand News: 06/15/18

DW Morgan Company OnDemand Supply Chain News-The General Theory of Productivity: Coordinating resources to unlock greater capacity at no additional cost.

The General Theory of Productivity

15 June, 2018 // There’s a truism in business: You can’t have incremental responses to dramatic changes. In fact, doing the same thing over and over and just trying to get a little bit better--amid huge, structural shifts--comes pretty close to Einstein’s alleged definition of insanity.

Now, it’s the transportation and logistics world’s turn to put that wisdom to the test as freight economics veer off in a challenging, new direction. A booming economy has created a capacity crunch and rising freight prices. Sysco CEO Thomas Bene recently told his investors, “The more freight on the road obviously creates pressure for everybody.”

Add to that a driver shortage caused by an aging workforce and a truck shortage due to new federal requirements for electronic logging devices (ELDs). The result is a tougher time booking your goods to destination and at much, much higher prices. The American Associate of Railroads reported a year-over-year increase of 6.6 percent in intermodal freight rates in May. And, driver pay went up 7 to 11 cents per mile in the first quarter, compared to the same period last year—with box-truck driver sign on bonuses skyrocketing from $1,500 a year ago to an average of $7,000 this past quarter.

In environments like this, squeezing your suppliers or putting work out to bid simply isn’t going to work. You need a transformational approach, which is where Morgan makes its reputation. Recently, we were called to audit a world-class ground transportation network facing all of the above pressures. In addition to reviewing available data, we deployed our ChronosCloud mobile tools to capture all the offline information that happens in the gaps between ERP and web systems. When we analyzed our data, we found a system that was working very hard but hauling around a lot of air. Overall, utilization for the multi-supplier fleet was stuck in the low 20 percent range. We also were able to document a mis-alignment of production, labor and transportation.

By better coordinating resources with the work to be done, our client’s going to unlock a lot of capacity—at no additional cost. Call us crazy, but that sounds like an Einstein-smart approach to today’s market.

Let us know if you’d like a no-cost and no-obligation review of your own transportation processes!


While You Were Shipping…

More Recent Stories You May Have Missed That Caught Our Eye

Truckers Hit The Brakes. (Wall Street Journal; tiered subscription site) Last year’s pedal-to-the-floor trucking economy is turning into this year’s slowdown according to US Bureau of Labor stats as reported by the Wall Street Journal. In August, truck companies eliminated 4,500 jobs—ending a four month expansion streak. New heavy truck orders also fell 79 percent versus the same period in 2018.

Not So Golden State for Owner-Operators? (Commercial Carrier Journal) A California bill aimed at the ride-sharing economy may end up hitting owner-operator truckers. Under Assembly Bill 5, independent contractors involved in the same business as their customers would be reclassified as employees. The Western States Trucking Association, which opposes AB 5, says that would effectively kill the independent owner-operator structure in California. The state’s legislator has until 13 Sept to pass the bill, or it will be tabled until next year’s session. 

DHL’s Boots On the Ground (Or at least sneakers) (myBudapester) To celebrate its 50th anniversary, global integrator DHL has teamed up with cult fashion designer Hikmet Sugoer and online retailer myBudapester to create a limited edition sneaker, the DHL1. Limited to 300 pairs, the shoe’s polypropylene toe box is made from recycled DHL shipping bags, and a metal merchandise tag attached to the shoe’s tongue comes from the metal skin of a retired DHL Boeing 757. You can have any color you want, so long as it’s DHL yellow and red. But don’t wait too long: Hikmet Sugoer-designed shoes attract collectors and investors. The DHL 1 will set you back 300 euros. The good news is that shipping is, uh, included.

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