Imagining the (Near) Future
Guest blog post by MHI member Artemis Vision.
Sometimes in the warehousing and logistics market we are good at imagining a future that’s decades away and missing out on more immediate opportunities to modernize.
Here are some possibilities for those looking for new (but simple) ideas to pursue in a world of uncertainty.
Optimizing the physical reality inside your warehouse or the physical reality of loading trucks generates efficiency whether a tariff rate is 2%, 20% or 200%. It’s also efficient regardless of whether labor is highly available or scarce as can be.
More Labels, Less Labor
Manual scanning is low-hanging fruit in the search for things to automate. Each scan costs money when someone is always having to walk around to the scan points. Once you have a fixed, autonomous scanner, scanning is free. The initial investment pays off quickly because you can scan more with less effort, catch more mistakes, have more data, run faster, and run leaner. You can keep a hand scanner around for when you really need it. But that shouldn’t be plan A.
Sometimes we see resistance to adding another barcode label or changing the placement of the label. I know – there’s a marginal cost to adding each label. But it pales in comparison to the cost involved in walking around a pallet to hand-scan. To the cost involved in unloading and re-loading pallets because you weren’t sure if they were scanned. To the cost of mis-routing a pallet. To the cost of not being able to prove that you scanned a pallet in a certain condition at a certain time. Or losing things because you put them into the pallet racking barcode-first.
Also, unlabeled pallets that show up at your customer’s dock are “free” pallets to them. There are shades of gray to payment on some of this. If they can’t scan it in, do they owe you for it?
If you put more redundancy into labels that you can track-and-trace, then you watch your spending move a little bit to labels while watching the spending on labor, lost pallets, and sorting out snafus go down. I don’t think labor-heavy or inventory-heavy is how you want to be positioned for the future. Label-heavy, I think you’ll make it. And you can always reverse course instantly with labels and only apply 1 per pallet. Labor and inventory-heavy operations take time to change.
Reduce Contracting Complexity
I’m always shocked how many parties there are at a transaction at a dock door. I mean, there’s the real Shipper (product) and the real Recipient (store), but also at that dock door is a trucker who is an independent contractor of the trucking company, who was hired by the 3PL, who is going to take the pallet to a distribution center owned by neither Shipper nor Recipient. The 3PL was hired by the 4PL, who promised to fix all the problems this 3PL model created. Sometimes we lose the point of what’s supposed to happen here. Are you going to get a damaged pallet because no one there directly represents the Recipient? Probably. Can you dynamically make changes in the uncertain world we live in? Probably not, because the physical reality that needs to be efficient is four layers of contracts away from you.
Then there are all the software integrations, and the fact that you have WMS, TMS and ERP systems all from different vendors. Making any changes becomes dependent on whether it can be done across all the software solutions and all the vendor integrations. The answer is likely yes, but which contract will pay for it. In the pursuit of minimal Op Ex (operational expense) there is no Cap Ex (capital expense) in many of these contracts.
The biggest retailers directly hire their truckers (mostly), have their own WMS and other software tools (mostly), own their distribution centers, etc., etc. The point is they have control over their operations. If you don’t control something, and design it towards efficiency, how are you going to do “better than the average bear”. Everyone is shocked Walmart can pay a trucker $110K/year. Where could the money come from? Could it be fewer cost layers than others have created? Do they create more value by minimizing load times, drive distances? They are winning at the physical reality.
Trying to win at top level contracts is tough. There are many other parties involved, they each need to make margins, they each have their own interests. It’s very tough to get so many parties to see any one thing as being in everyone’s best interest. Furthermore, you no longer control the thing that truly drives cost: that truck, the pallets on it, how many miles it’s driving, and what amount of time that will take.
Not to mention that working out new 3PL and 4PL contracts is going to be highly beset by tariff uncertainty. Let alone labor uncertainty.
Seize Optimized Processes to Seize New Technologies
If we put the question another way, how can you seize future technologies like AI when seizing changes to labelling, your WMS, and trucking contracts is beyond reach? If you do seize a technology like AI, and it truly is next-gen AI, would it possibly point out to the human that load time, drive time, miles, and damage are the physical reality that should be optimized? I can hear a Siri-like voice saying, “move the pallets less distance and don’t lose them.” I say this as someone who thinks AI can do awesome things for society, but it can’t make up for real world efficiencies you don’t implement.
Go watch your crew load a truck at one of your warehouses. You may even find there is lower hanging fruit than what we’ve listed here. Look at the labels with the forklift driver and ask, “which one tells me it goes on that trailer?” Ask that question.
You may be surprised at the complexity of the answer. Simplifying the answer to which label goes on the truck will help. There are huge and real language barriers at many dock doors too so little complexities get magnified into far bigger complexities in my experience. Time spent figuring out what to do costs just as much as time spent doing the job. Each contract is implemented across X labelling systems and Y languages at Z dock doors, where real time is spent figuring out what to do. You may not be able to solve short term language barriers, but you can make the system simpler. The simpler the system is, the better it will run, no matter who is doing it and what level of language barrier there is.
If you want to attack the same problem from the top down, the next time a customer takes a deduction on an invoice for OTIF, or something else, ask them: which pallet was damaged? Ask them for the picture. Ask them if you loaded it or they loaded it. Ask them who the driver was. Try to get to real people, real names, a real pallet. Tell them you’re trying to understand how to get more efficient. Delve into the physical reality. That’s where the real product is. That’s where the real money is.
