Supply Chain: Final thoughts on Supply Chain Reset

Despite signs of improvements, doing business in our space remains a challenge. At the same time, many of the leading customers for our solutions are investing in supply chain software and automated materials handling systems to improve their businesses. That suggests better times are coming.

Those are the two high level takeaways from Supply Chain Reset, the annual logistics conference in Park City, Utah, sponsored by HK Systems, now part of Dematic.

“Lousy,” was the most common response to the dinner-time question: “How’s business?”

At the same time, the roll call of end user companies that said they had projects in the works or on the drawing board was both a Who’s Who of American business, with names like Coca-Cola and Kraft, and companies many of us may never have heard of or think of as customers of our solutions. For example, I sat on the van from the airport with a guy from the Los Angeles metropolitan transportation system looking for a new AS/RS. The Federal Reserve Bank was there, investigating storage systems. I rode in the van back to the airport with a woman from a producer of honey in Texas who had both an AS/RS and automatic guided vehicles in her facility and was looking to expand her system.   

Those are signs of a growing confidence: I don’t think companies plan multi-million dollar investments in automation if they think the apocalypse is right around the corner.

One other anecdotal data point: Marc Ducharme, a vice president and partner with Axium, a supplier of robotic materials handling solutions, told me that 2009 was a dismal year for implementations, but that his company has been swamped with RFPs in 2010. An RFP is not an order, but it’s a sign.

A few other observations:

Retaining labor and talent could be the most important issue facing the industry in the future: A week or so before going to Utah, I had a conversation with a vice president of supply chain for a major retailer who told me he is interested in automation because he simply cannot find and keep enough labor to run his primary distribution center. Two presentations drove this point home. The first was from an executive with Tim Hortons, the Dunkin Donuts of Canada. The company’s beautiful new DC in Guelph, Ontario, is underperforming projections even though the AS/RS is living up to its promises. The reason: The company can’t find enough labor willing to work in its case picking and palletizing operations. The other was by Terra Winston, a consultant, who presented a case study about a project at PepsiCo to develop the next wave of supply chain leaders. Her point: the talent shortage isn’t limited just to the shop floor.

Retrofitting is a viable solution:  You know the old saying: Everything old is new again. Wegman’s, a Midwestern grocer, and Rubbermaid both gave strong presentations about how they replaced aging AS/RS cranes to breath new life into their DCs. Meanwhile, Anheuser Busch gained new efficiencies in its Columbus, Ohio, facility by upgrading a warehouse control system.

Everyone loves pallets: Based in Iowa, Green Line Armor, is offering a heavy-duty hybrid wood/plastic pallet for permanent pallet pools. The 48 X 40 pallet has heavier stringers and more deck board coverage than a grocery pallet. The lead boards on the top and the bottom of the pallet – those most likely to get damaged by a lift truck - are manufactured from heavy plastic. The pallet has a passive RFID tag that is used by Green Line Armor to identify the pallet and manage warranty services. Active RFID tags were installed for John Deere, the company’s largest customer, to track the location of WIP stored on the pallets between manufacturing processes. Eric Renteria, the company’s president, says the pallets, which come with a 10-year warranty, can be purchased or leased in a pooling model.

New players are getting into automation: Kip Tygard, whose company makes the Tygard Claw, a lift truck attachment for mixed case palletizing, is investing R&D money to develop an automated version of the Claw. That’s not a big shock: Tygard is an OEM. But I also had conversations with two very large end users in the wholesale food distribution business that have designed their own automated systems – one has built and implemented it’s own AS/RS design for freezers for years, the other has designed its own case picking application that it intends to put out for bid to the material handling community. Both say they may commercialize their solutions in the future.

Want to learn more about pallets? Join pallet experts as they put context behind the findings of Modern’s 2010 Pallet Usage and Trending Study Webcast on October 28, 2010 at 2 pm ET.