Subscribe to our free, weekly email newsletter!


Viewpoint: “More with less” is here to stay

By Michael Levans, Group Editorial Director
March 01, 2013

This month we dive into the details of Logistics Management’s 2013 Warehouse/DC Equipment and Technology Survey our annual study conducted by Peerless Research Group (PRG) that offers a comprehensive snapshot of the investment plans of managers involved in the purchase decision process of materials handlings solutions.

As we’ve illustrated in retail case studies over the past year (Asics, Best Buy, Tuesday Morning), online and brick-and-mortar retailers are working feverishly to re-invent distribution operations and revolutionize their business models based on the application of materials handling systems and how they interrelate with their transportation networks and operations.

The new standard is distribution networks closer to population centers, 99.99 percent picking accuracy, lightning fast turn around on all orders, and same-day shipping for most—goals that can only be hit through enhanced communication across the supply chain.

And while our study over the course of 2011 and 2012 revealed heightened investment in equipment and systems to help reach these new ambitious standards, this year we find that spending has cooled. In fact, analysts say that our findings further validate that the recession-era mantra, “doing more with less,” has not only stuck, but it has become the new mindset of U.S. business.

As Editor at Large Josh Bond deftly reports this month (page 24), investment inside the four walls is steadying and will be readjusting to a new, slower pace of growth over the next two years following the release of pent up demand after the downturn. At the same time, “facility activity as a percentage of capacity” numbers have jumped up by as much as 10 percent in one year following six straight years of decline.

According to John Hill, director at supply chain engineering firm St. Onge, percentages between 60 percent and 70 percent are traditionally a sign that investment is not only imminent, but necessary. When they rise above 70 percent, Hill tells Bond, it’s often mandatory to spend on materials handling equipment just to keep up.

“In the past couple years, we saw the effect of delayed spending,” says Hill. “Now, many have caught up; and unless growth is phenomenally good, there won’t be as much pressure to spend.”

And this year’s respondents feel confident in their ability to keep up with whatever volumes are thrown their way. In fact, 95 percent told us that they expect their activity to increase or stay the same over the next two years—validating that they are ready to do more without further investment.

According to our analysts, many operations put their investment dollars to good use inside the four walls over the past two years. They’ve upgraded weakened systems, pulled the trigger on more sophisticated automation, and have concentrated on keeping labor engaged through technology that makes them more productive.

But for this overall confidence level to be maintained without hearty investment, Hill suggests warehouse/DC decision makers now focus on the technology necessary to improve trading partner collaboration in order to harness the data and work toward real-time visibility—the holy grail of supply chain management.

About the Author

image
Michael Levans
Group Editorial Director

Michael Levans is Group Editorial Director of Peerless Media’s Supply Chain Group of publications and websites including Logistics Management, Supply Chain Management Review, Modern Materials Handling, and Material Handling Product News. He’s a 23-year publishing veteran who started out at the Pittsburgh Press as a business reporter and has spent the last 17 years in the business-to-business press. He’s been covering the logistics and supply chain markets for the past seven years. You can reach him at .(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

With NFL training camps in full swing, it stands to reason that Congress must be replete with football fans, given how it basically has elected to punt on federal transportation funding yet again, with the Senate yesterday signing off on a ten-month bill to keep federal surface transportation funding intact through May 2015 through a nearly $11 billion stopgap measure.

Carload volumes were up 4.3 percent at 306,988, and intermodal volume for the week ending July 26 was up 3.3 percent at 264,809

Lyon, France-based Norbert Dentressangle, a $5.5 billion global third-party logistics (3PL) services provider focused on global logistics, transport, ocean, and air services, said today it has acquired Des Moines, Iowa-based Jacobson Companies, a value-added warehousing (VAW) company, for $750 million from private equity firm Oak Hill Capital Partners.

Download the newly released research report, "Transportation Management Systems" conducted by Peerless Research Group (PRG) on behalf of Supply Chain Management Review and Logistics Management magazines. Learn what logistic experts are saying about their current supply chain technology infrastructures, how they tackle the transportation component, and revealed the gaps that still need to be filled in order to attain end to-end visibility of a streamlined supply chain.

From cost center to growth center. Get insightful opinions on changes in the marketplace from this independent survey of warehouse personnel. Motorola Solutions examined the current warehousing marketplace in our 2013 Warehouse Vision Report, conducted April-May of 2013.

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