Subscribe to our free, weekly email newsletter!


Materials handling matters

By Bob Trebilcock, Editor at Large
October 22, 2013

“We are on the cusp of real transformation in retail distribution and manufacturing.”

That was one of two quotes I highlighted in my notebook during Kevin Gue’s introduction of the Material Handling & Logistics U.S. Roadmap at MHI’s fall meeting in Orlando earlier this month. Gue is a professor at Auburn and the editor of the Roadmap.

Based on two stories that appeared in the Wall Street Journal this week, the transformation is already in motion. Both pieces highlight how leading companies, and their C-level executives, are recognizing the value that logistics and intralogistics brings to their organizations. 

The first was GM Cuts Costs for the Long Haul, by Jeff Bennett. The story describes how GM’s Chief Executive Dan Akerson plans to boost North American profit margins from 8% to 10% by, in part, focusing on logistics. “We spend billions a year on logistics,” Akerson told the WSJ’s reporter. “…Any savings I can get by cutting my logistics bill goes right to my bottom line.”

One of the first examples of this focus is a new plant to manufacture hoods, fenders and doors for its Tahoe and Yukon models that GM is opening next to an assembly plant in Arlington, Texas. Prior to this, those components were shipped from plants located more than 1,000 miles away in Ohio and Michigan. Now, the parts will travel 20 feet from machine to welder. GM estimates the savings at about $40 million a year in shipping costs, according to Bennett.

The larger point is this: having closed unprofitable plants and reset labor costs, GM realizes the next opportunity to improve its operations is by focusing on logistics.

Story number two is on the front page of the Wall Street Journal on October 14: Soap Opera: Amazon Moves In With P&G. Serena Ng reports how Amazon has set up a direct-to-consumer order fulfillment area inside a P&G warehouse. P&G passes the inventory over to Amazon, and the internet retailer packs, labels and ships “items directly to the people who ordered them.”

“Logistics have long been crucial to success in retail,” Ng writes. Amazon’s strategy, she adds, “offers a rare glimpse at how [Amazon] is trying to stay ahead of rivals … By piggybacking on [its suppliers’] warehouses and distribution networks, Amazon is able to reduce its own costs of moving and storing goods.”

That reminded me of the other quote I highlighted from another panelist during the Roadmap presentation. She wondered how much we’re doing as a whole to promote our industry. She asked: “How many of us go to our kids career days and tell their classmates what we do?”

It’s a good question. Clearly, innovation is happening in our industry by our customers right now. Materials handling, and the broader logistics industry, has a great opportunity to help them reach the next level of cost efficiency and optimization. In other words, what we do, really does matter. Let’s make sure our customers know the value we bring to their businesses.

About the Author

image
Bob Trebilcock
Editor at Large

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484 and .(JavaScript must be enabled to view this email address)


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

ISI is comprised of Integrated Services, ISI Logistics and ISI Logistics South and is focused on the warehousing and transportation needs of automotive shippers. RRTS said that in 2013, Integrated Services generated revenues of approximately $21 million adding that Integrated Services is expected to be accretive to Roadrunner’s earnings in 2014.

The market for supply chain management software continues to expand, highlighting the importance of software in today’s supply chains.

Amid the talk and coverage about things negatively impacting the trucking industry like increasing regulations, tight capacity, and equipment-related issues and challenges, there is one thing to always remember about the sector: it moves a lot of freight, make that more than a lot, actually.

In an effort to increase territorial coverage, improve transit time, and augment service quality in Brazil, UPS recently announced it has made significant service expansions with the opening of nine new operating facilities in the state of São Paulo.

Article Topics

News · Materials Handling · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA