3pl americas - international warehouse logistics … · your staffing provider ... il 60018 usa...

3PL Americas

Corporate Profile: ODW Logistics

Getting the Most from Your Staffing Provider

www.IWLA.com

PM 42128520

NORTH AMERICA’S WAREHOUSE & LOGISTICS MAGAZINE • SPRING 2015

™

Warehouse, Logistics and Light Manufacturing Labor Specialists

Proven Record of Tangible, Repeatable Cost Control

Award Winning Screening Process

Award Winning Customer Service

Trusted Partner for Government Compliance, Safety, Risk Management, and Quality Control

Warehouse and Logistics Labor Consulting

Multi-Location Management

Process and Productivity Improvement

Labor Cost Analytics

Compliance Audit

Temporary Insanity!Here’s the good news....

You don’t have to take it anymore.

www.AllegianceStaffing.comwww.AllegianceStrategic.com

281-355-9222

Participating Member of Member

MercuryGate TMS Delivers

Lim itless Possib il it ies

Leading logistics companies leverage the world’s only omni-modal TMS to grow in ways never before imagined. Using the MercuryGate single platform TMS, they offer brokerage and freight management services using any mode, anywhere in the world – and beyond. When your customer presents a new logistics challenge, tell them “We can do that. We use the MercuryGate TMS!”

716.684.0555 / www.sonwil.com

A Responsive Strategic 3PL Partner, Working with You! FOUR SCALABLE SUPPLY CHAIN SOLUtIONS!

LOgIStICS to power your distribution

You select the services you need to control your costs and enhance your efficiency. You’ll receive all the benefits of four highly focused, independently managed operations collaborating as your strategic partner.

tRANSPORtAtION services to optimize the movement of your freight

REAL EStAtE mixed use space, adaptable for your needs

tECHNOLOgYto increase your competitive edge

Sonwil is a family owned business headquartered in Western New York for over 70 years with additional operations in Elmira and our newest location in New Jersey. Sonwil provides customers reliable solutions that reduce expenses and optimize growth.

PUBLISHED FOR:

International Warehouse Logistics Association Steve DeHaan, president & CEO 2800 River Road, Suite 260 Des Plaines, IL 60018 USA Tel: (847) 813-4699 Email: [email protected]

Managing editorJohn Levi, IWLA Canada

Copyright © 2015, International Warehouse Logistics Association (IWLA). All rights reserved. No part of this publication may be reproduced by any mechanical, photographic or electronic process, nor may it be stored in a retrieval system, transmitted or otherwise copied (except that members of IWLA may copy all or part of this publication exclusively for personal use or use in the operation of that member’s business, but excluding any publication) without prior written permission from IWLA. For permission, contact the publisher, J.M. Levi & Associates Ltd.

Consulting editorDavid Long

Associate editorKim Biggar

IWLA liaisonMorgan Zenner

Sales representativesCheryl Ezinicki, Jennifer Rezny

Design and layoutPagecraft Computer Services

PublisherJ.M. Levi & Associates Ltd. PO Box 30039 RPO New Westminster Thornhill, ON, Canada L4J 0C6 Tel: (877) 305-6587 Fax: (905) 756-1115 Email: [email protected]

Canada Post Agreement Number: 42128520

3PL AmericasNorth America’s Warehouse & Logistics Magazine • Vol. 7, No. 2, Spring 2015

™

Cover photo courtesy of ODW Logistics

3PL Americas

Corporate Profile:ODW Logistics

Getting the Most from Your Staffing Provider

www.IWLA.com

PM 42128520

NORTH AMERICA’S WAREHOUSE & LOGISTICS MAGAZINE • SPRING 2015

™

6 Two Great Services – Government Affairs and Educational ProgramsBy Steve DeHaan

7 Out of the Gate Strong in 2015By Rob Doyle

9 ODW Logistics: In the Business of DoingBy Kim Biggar

11HowtoGettheMostfromYourStaffingProviderBy Kim Biggar

13 Broken RFPs: Are You Procuring for Success When You Outsource Logistics?By Steve Banker

14 Future Issues of 3PL Americas

16 The 2015 IWLA Convention & Expo: CONNECT, DISCOVER, INNOVATE

21 To Hire a Third Party Logistics Company or Not to Hire a Third Party Logistics Company…That is the QuestionBy Adam Robinson

23 The War for TalentBy Chip Scholz

25 Are Your Background-Check Procedures Placing Your Warehouse at Risk?By Kerryann Haase Minton and Sarah E. Flotte

27 Corporate Responsibility = Community InvestmentBy David S. Hamilton

28 Advertiser Index

29 Task Interleaving to Maximize Your LaborBy Matt Stokfisz

30 The Impact of Robotics and Automation on LogisticsBy John Manners-Bell and Ken Lyon

33 Increasing Warehouse Energy Performance with ENERGY STARBy Clark Reed

34 IWLA Events Calendar

3PL Americas — Spring 20156

PRESIDENT’S MESSAGE

Two Great Services – Government Affairs and Educational Programs

THE BOARD OF DIRECTORS approved a strategic plan at the 2015 IWLA Convention & Expo in Savannah, Ga. That plan calls for our contin-

ued emphasis on both government affairs and education.In the area of government affairs, IWLA is currently dealing with the follow-

ing issues:1. The pharmaceutical licensing of warehouses in California. We are work-

ing with the FDA as it develops regulations and a national standard for phar-maceutical licensing. Currently, the industry contends with individual state standards. In addition, many of our members already have warehouse licenses and are now being asked to also obtain pharmaceutical licenses. IWLA is aim-ing to stop this duplication as soon as possible; our members shouldn’t need to maintain multiple licenses.

2. Standardization – a long-standing issue – of both the storage and trans-portation of chemicals. These have long been regulated, but the regulations have not been updated for years. They include a great hodgepodge of different items. Legislation has been put forward to standardize the regulations; these updates will be performed through the EPA.

A Government Affairs Fly-In will be held on April 28 and 29 at the Omni Shoreham Hotel in Washington. Those interested in government affairs and getting the most-recent information relative to the regulations affecting our industry should plan to attend. Information is available at www.IWLA.com.

Last year, over 50 percent of our member companies participated in IWLA ed-ucation programs. This clearly indicates how well our courses are received, and gives an idea of how much training the association is providing to its members.

From May 13 to 15, IWLA is offering the “Economics of Warehousing and 3PL Sales Course” in Niagara Falls, N.Y. (just across the border from Canada). In this course, individuals will learn about the structures to calculate rates, and how to use that information to write a winning bid for business. For these three days, we bring together operations and sales or finance people – who often don’t understand each other well – because both are integral to having a successful customer relationship.

On September 2 and 3, in downtown Chicago, IWLA will once again offer its annual “Safety & Risk Conference.” Many attendees at this event will be mem-bers of the IWLA Insurance Company and so it will focus on best practices to run safe warehouses and reduce insurance premiums.

Thank you for your membership in the IWLA. We are here to serve you. If you have any ideas regarding group programs that the association might offer to members, please give me a call.

Steve DeHaan, CAE President & CEO International Warehouse Logistics Association

IWLA is aiming to stop the duplication of licensing

requirements; our members shouldn’t need to maintain

multiple licenses.

3PL Americas — Spring 2015 7

CHAIRMAN’S MESSAGE

Out of the Gate Strong in 2015

IT IS AN HONOR to be elected your new chairman at such an exciting time for the IWLA: We are coming off a great year in 2014 and the 2015

outlook is very good.One barometer for a good year is the strength of the IWLA Convention &

Expo. The March 2015 event in Savannah set a record for attendance. Not only that, we had more sponsors and exhibitors than ever before. This is the result of a great effort by IWLA-member volunteers and the amazing IWLA staff.

IWLA takes advantage of the convention to conduct committee and council meetings. I attended as many as I could. It was great to see so many volunteers with a lot of energy. These leaders, your warehousing peers, work hard to deliver valuable education offerings and information.

Of course, the IWLA Convention also allows time to do many other things.We honor industry leaders.• Three worthy individuals received the Jock Menzies IWLA Distinguished

Service Award: Darby Strickland (posthumously), Shippers Warehouse and the dynamic duo of Paul Delp (Lansdale) and Gary Minardi (San Jose Distribution) who have helped so many members with our rail-related issues. Gary and Paul, thank you for your continued service to IWLA!

• Mark DeFabis, IDS, received the IWLA Government Affairs Service Award for his work representing the industry and spearheading the IWLA Congres-sional Contact Program.

We make new friends and connect with old ones.• More than 100 warehousemen, partners and sponsors took to the links for

the Majestic Realty 2015 IWLA Golf Classic.We ensure we understand the business realities facing our com-

panies.• The IWLA Political Action Committee Dinner highlights IWLA’s regulatory

and legislative work – and it gives us a great opportunity to connect and unite.We conduct association business.• We elected new officers and board members and honored outgoing IWLA

Chairman Tom Herche. Tom presided over a record-setting year for the as-sociation and worked very well with IWLA CEO Steve DeHaan during his first full year. Thank you, Tom, for your dedication to the IWLA and your steadfast service of the past several years.

You won’t want to miss the great things in store for IWLA’s 125th convention next year in Orlando. Planning is already underway. We look forward to what we know will be another terrific event under the leadership of IWLA Vice Chairman and 2016 IWLA Convention Chairman Mark DeFabis.

Rob DoyleChairmanInternational Warehouse Logistics Association

We are coming off a great year in 2014 and the 2015

outlook is very good.

W. I. S. E.

Identifying theProcessDetailing theStep-by-StepSequence of tasksrequired tocompletethe speci�c workbeing done inthe area.

Integrating theSupplies andEquipmentRequired toComplete a Task into thework area.

Integrate the Work Area Design with the Process to Maximize the E�ciency of theOperation.

STEP : 2STEP : 2 STEP : 4STEP : 4STEP : 3STEP : 3

Workstation Integration System Evaluation

Let Dehnco Help You Evaluate and Integrate Workstations,Supply Storage and Equipment Needs with Your Automation,

Technology and Material Handling Systems . . . AT A PRICE YOU CAN AFFORD

Dehnco o�ers a simple 4 step evaluation process that:

Puzzled overWorkstation Productivity

and E�ciency?

• Creates E�ciency • Increases Productivity• Promotes Ergonomics

Evaluating Flow

STEP : 1STEP : 1

De�ned as the movement of materials/ products into and out of the work area.

Your Workstation Solution PartnerYour Workstation Solution Partner

• Storage Ideas

• Components

• Products

• Product Literature

• Expanded Website

NEW

• SPACE • STORAGE • HANDLING / DESIGN • ERGONOMICS • WORKFLOW • SPACE

Let Us HELP You De�ne and Resolve These Issues

Contact Us:Call: 847•382•1579www.dehnco.com

Contact Us:Call: 847•382•1579www.dehnco.com

IMPROVEDWORKSTATIONDESIGN

300 Lageschulte St P.O. Box 866 Barrington, IL 60010 • Ph: 847•382•1579 • Fax: 847•382•1615

• Easier to Assemble

• New Color Pallet

SCAN TO SEENEW COMPONENTS


ODW LOGISTICS includes some unusual notions in its purpose statement and values: Love and laugh-

ter aren’t, after all, common factors in corporate visions. ODW claims the importance of those things – along with ethics, candor, spirit, community and family, for example – as fundamentals in its operations. Bring-ing life to these values is part of employees’ day-to-day practice.

John Ness, ODW president, describes the company’s values as near and dear to most people’s hearts. “One of the best things I learned from my father [company co-founder Bob Ness] is that we’re in the people business,” says Ness. Consequently, as the company fo-cuses on attracting, developing and retaining “the best customers, associates and investors,” its values are central; they express both what the company offers and what it expects.

The 3PL business is demanding, notes Ness, and achiev-ing balance can be difficult. Keeping balance in mind is part of the process to maintain it, so it’s talked about a lot at ODW. Recognizing that “people bring stuff from home to work and vice versa,” says Ness, “we celebrate things that happen at home,” as well as at work.

Work achievements are celebrated with awards. Two SCOPE trophies are awarded monthly – one at ODW Logistics, the other at Dist-Trans – to the department or operation that most successfully cultivates safety, custom-ers, operations, people and execution in its domain. The trophies, which Ness says are coveted by employees, are delivered in a suitcase, the cup full of candy, the winning team’s names engraved on a plaque. A third SCOPE tro-phy, awarded quarterly, recognizes the work of support teams, in such areas as sales & marketing, IT, finance & risk management, and human resources.

■ Company History and FacilitiesBob Ness and John Berend started warehouse com-

pany Ohio Distribution Warehouse Corporation in Co-lumbus, Ohio in 1971. By the time Berend retired and John Ness joined the company in 1996, it had expanded to three facilities in Columbus, and included Dist-Trans

MEMBER PROFILE

ODW Logistics: In the Business of DoingBy Kim Biggar

Co., an asset-based carrier and ODW Contract Services, with distribution facilities across the U.S. In 1997, the company rebranded, becoming formally known as ODW Logistics, Inc.

In 2003, John Ness became president. He heads up a full-service third-party-logistics provider that now has three units: ODW Warehousing Group, Dist-Trans, Co., and ODW Logistics and Transportation Services (LTS). The company has more than 1,000 employees, and over four million square feet of warehouse space. Its facilities are located in Ohio, Wisconsin, Illinois and California. Its areas of expertise include food and beverage, health and beauty products, consumer electronics, prepaid debit cards and aftermarket automotive parts.

The ODW Warehousing Group operates both shared and dedicated warehousing sites. It offers turnkey solutions for companies with specific distribution requirements. Dist-Trans, Co. is a regional carrier serving both ware-house and non-warehouse clients. Its truck fleet provides

“One of the best things I learned from my

father is that we’re in the people business.”


regional transportation service, drayage service and yard management services. ODW LTS is a full-service 3PL. Its freight services include transportation man-agement, brokerage, consulting, network analysis, optimization, reverse logistics, freight pay and audit.

The growth ODW has achieved comes down to a few things, according to Ness: great people, hard work, re lent less passion, patience, creativity, di-

versification and an evolving strategy. “Our management team is not afraid to re-evaluate or to back track on bad decisions,” says Ness. “We pursued several freight man-agement strategies until finding the right one and the right partner.”

Taking on the “best customers” – those that meet the conditions defined in a metric used by the company – and sometimes “firing” bad customers has also helped ODW. Doing business with customers that are a good match with its criteria has boosted ODW’s Net Promoter Score: it rose by 58 percent from 2013 to 2014.

■ People in the Business of DoingODW management nurtures an entrepreneurial en-

vironment, says Ness, that employees have the ability to influence. “I love healthy conflict,” says Ness, “when people argue the merits of decisions.” He adds that, in the logistics/warehousing “business of doing,” people doing a job well have a sense of accomplishment. ODW promotes the personal satisfaction employees feel in their work.

Further, the company’s leadership-development program acknowledges the skills and effort of workers, and offers them a path to management roles.

Ness sees the recently installed event-recording tech-nology in its truck fleet as an effective driving-performance program. Reviewing video clips of their performance, driv-ers become more aware of the risks they regularly face and can identify skills that need improvement. This on-the-job training is helping the drivers both gain confidence and reduce their risky and unsafe driving maneuvers.

As well as training and developing current employees to ensure that they’re as effective as possible, ODW es-tablished a logistics staffing company, Staffing Leadership Group (SLG), to improve its recruiting success. Through SLG, the company finds temporary workers to fill entry-level jobs. (With unemployment in the Columbus region currently at just under 4 percent, employers are finding hiring challenging.) While they’re engaged through the agency, workers undergo orientation and training that qualifies them to be hired by ODW for full-time jobs. As workers are hired, their “rollover” from temporary status is celebrated by co-workers.

Thanks to its focus on careful hiring and employee retention, ODW has some pretty committed employees. Ness tells of supervisors making last-minute and holiday deliveries for customers in their personal vehicles. In very cold weather, teams stay on site around the clock to patrol the facility, checking for issues that might arise. When its phone-service provider had a problem that put ODW’s data at risk, IT employees remained at work overnight to deal with any fallout.

As the second-generation leader at ODW, Ness is thankful for having inherited a company with what he considers a great reputation. His dad worked hard, says Ness, to establish a strong brand. While continuing to take care of customers’ needs, growing into new markets and concentrating on team-building, ODW operates with a spotlight on its purpose and values, aiming to maintain that reputation.■


Makeup of a Temporary Bill Rate

Profit

Operating Costs

Burden

Wage

Government Mandates: FICA, FUTA, SUTA, Workers Comp, Liability and Benefits

- Use incorrect workers comp codes - Reduce insurance coverage or carrier rating - Propose, but not pay benefits or vacation pay -Expand recruiter-to-associate ratio -Hire less-experienced, lower-paid operations team staff members -Limit drug testing, background checks & similar to a “by forced request only basis” or less -Eliminate other elements of the vetting process -Reference checking -Second & third interviews

-Testing (aptitude; skills; safety) -Use ‘group’ interviews (code for group lectures)

Transfer a percentage of associates to a 1099 status, eliminating W/C, FUTA, SUTA expense

Negotiate the wage downward with a select percentage of the associates after the bill rate is

established

WITH ITS CHANGEABLE need for labor, the 3PL industry is a big user of temporary staffing ser-

vices. It seems to be, though, that relations between 3PLs and their staffing providers are less than ideal.

Allegiance Staffing, a staffing firm with offices in 14 states, sent a survey in 2014 about the staffing industry to 950 IWLA logistics professionals. If you’re involved at either end of a 3PL/staffing-company relationship, the results of the survey should most likely be considered a call to action.

■ Survey FindingsRespondents to the survey gave the staffing industry

a very poor Net Promoter Score of -24. (According to the Net Promoter Community, at www.netpromoter.com, a company’s NPS is determined by asking customers a single question: “How likely is it that you would recommend [your company] to a friend or colleague?” Compare this negative result with NPS in the range of 60 to 80 for the top 10 U.S. companies in 2013.) In a nutshell, this result indicates that 3PLs are gener-ally pretty unhappy with their staffing providers.

Tom Landry, president of Allegiance Staffing, says that a lot of 3PLs see their staff-ing providers as “a necessary evil.” If that’s the case, there’s clearly something wrong. In the 3PL world – even as the use of automation increases – labor is a critical component in the efficiency of any opera-tion. Skilled, trained and ex-perienced workers produce faster with fewer mistakes. Since the people who do your work obviously have an im-portant impact on the qual-ity of that work, having good people in place is essential. Your HR department works to ensure that your permanent employees have skills and at-

STAFFING CHALLENGES

How to Get the Most from YourStaffingProviderBy Kim Biggar

tributes appropriate to their jobs, but those people are likely only part of your staffing complement. You should be able to rely on the temporary workers you’re paying to engage to also effectively meet your needs.

As the customer in the staffing relationship, 3PLs should expect, says Landry, to receive the best-possible service from their staffing providers, just as they are required to furnish their clients with the best-possible logistics and warehousing service or lose business to com-petitors. Landry makes a strong argument for how such high expectations can be met, but it involves a mindset change on the part of both 3PLs and staffing companies.

■ The State of the MarketLandry knows of one 3PL that spent half a million dol-

lars on a new piece of equipment, then contracted with the staffing company that offered the lowest price to get work-ers to use that equipment. They questioned why they didn’t achieve the return on the equipment they had expected.

In another case, a major international company that


used about 300 temporary workers each day ended up paying approxi-mately $2 million more in a year than it had bargained for. First, the com-pany was taking on 50 more work-ers a day than it figured would be needed to do the work. On top of that, it was paying overtime to many of the 300 work-ers. A high turn-over rate meant that around 20 of the 300 people were new to the facility each week; those people needed to be trained, and took time to reach the standard pace of work. It was obvious that the company needed to make changes.

Part of the company’s problem, says Landry, was that it was paying work-ers about $2 an hour under the area’s average for the kind of work it offered. It may seem counterintuitive, but, ac-cording to Landry, raising the hourly pay rate would almost certainly save this employer a significant amount of money. With the wages it paid, the

company was “an employer of last resort,” says Landry, that essentially trained people who would move on as soon as they could. “It ended up stuck with people without other options.” By paying more, it would hold on to

good employees, and consequently increase efficiency and reduce costs related to turn-over, head count,

rework, scrap and so on.The company’s underpayment of

workers extended to the temporary staff it engaged. It worked with lo-cal staffing companies that supplied workers at the lowest prices; to do so, those companies would have to be pay-ing their people the lowest-possible wages and, likely, skimping on servic-es. Like their permanent counterparts, temporary workers in this situation would either be looking for better op-portunities or staying on because their performance was inadequate to allow for a move to better things.

The problem is that a lot of 3PLs

buy their staffing services based on price, and staffing companies com-pete for business with that in mind.

■ Changing Thinking about StaffingRequirementsIf your company chooses staffing

providers like it does commodities, based on price, you might be missing the full picture.

A good staffing company will screen the workers it sends; it will conduct interviews, test their skills, assess their character and reliability, and check references. In the U.S., it will verify employment eligibility. As allowable by law, it will do back-ground and credit checks, and drug tests. It should be hiring with much the same rigor that your HR depart-ment would use. Careful assessments take time and cost money.

To meet the requirements of the Affordable Care Act in the U.S., staff-ing companies must offer their work-ers a qualified and affordable health care plan, says Landry. If a company

A lot of 3PLs see their staffing providers as “a necessary evil.”

Protecting the food supply chain of custody is our number-one priority. Utilizing a scientific data-driven pest management approach contributes to long-term protection from risk to brand, human health, environment and profitability.

WWW.MCCLOUDSERVICES.COM | [email protected] | 800-332-7805ILLINOIS | IOWA | INDIANA | KANSAS | KENTUCKY | MISSOURI | TENNESSEE | WISCONSIN

FOOD MANUFACTURERS & PROCESSORS | GRAIN INDUSTRY | PACKAGING SUPPLIERS | TRANSPORTATION & LOGISTICS PROVIDERS

OUR JOB IS MITIGATING YOUR EXPOSURE TO PEST MANAGEMENT ASSOCIATED RISK

PROTECTING YOUWHILE YOU FEED THE WORLD

Continued on page 15


I SPOKE TO CARL FOWLER, the Vice President of North American Sales and Engineering at Menlo Logistics, on the topic of continuous improve-

ment and procuring warehousing services.The question I had in mind was this: Suppose you know that your warehous-

ing operations are not what they should be and you want a third-party-logistics provider (3PL) to manage your warehousing operations for you. Further, sup-pose that one criterion that is important to you in selecting a 3PL is its expertise in continuous improvement. How would you know which 3PLs have a strong Lean or Six Sigma culture? After all, it is very likely that each 3PL would claim to have expertise in this area.

Fowler had good immediate answers to that question, but he also had a broader and more thoughtful response about how the existing procurement process can so often lead to suboptimal results.

Fowler’s immediate answer was that companies should ask:• How many employee-led Kaizen events took place at the warehouse in ques-

tion? Were those bottom-up or top-down events? (Companies that live Lean will tell you bottom-up is better.)

• Does the 3PL run Kaizen events outside of the supply chain area? For exam-ple, in back office or sales or customer service functions? This is a good indicator of how deeply embedded Lean is into the culture as a whole.

• What were the hard dollar savings associated with these continuous im-provement events? The soft dollar savings? The productivity improvements? How were these benefits measured and did the customer sign off on them?

• How many value stream mapping engagements did the 3PL have with refer-ence clients, and did those engagements reach beyond the warehouse to broader supply chain processes?

Fowler mentioned that 3PLs that have really embedded Lean into their cul-ture have to hire a different profile of worker. So often, 3PLs hire warehouse associates for simple functional tasks – inventory put-away, pick and pack, and so on. There is no sense of a greater calling. 3PLs that truly have embedded Lean into their culture and processes put engagement and respect for the warehouse worker at the forefront. Workers are given the opportunity and authority to in-fluence the work – through applying their knowledge and experience, and using teachings on how to use Lean tools to remove waste. If you really want front-line employees to function well in this environment, you have to be able to practice “servant leadership” and truly make them the core and the driver of continuous improvement processes — and by sharing the success with them through per-formance incentives based on efficiency improvement.

The combination of engagement and incentive pay means that Menlo has much higher warehouse-associate retention than the industry as a whole.

But while Fowler walked me through the right questions to ask, his perspec-tive was that the traditional 3PL request for proposal (RFP) process is broken.

3PL QUALIFICATIONS

Broken RFPs: Are You Procuring for Success When You Outsource Logistics?By Steve Banker

Potential customers are putting 3PLs into a box through a process that is too prescriptive, and consequently robbing

themselves of an opportunity to re-engineer

their supply chains.


Potential customers are putting 3PLs into a box through a process that is too prescriptive, and consequently robbing themselves of an opportunity to re-engineer their supply chains.

Is what the company wants really just the ability to save half a cent on line orders picked in an hour? Then the traditional procurement-led pro-cess – which requires “conspicuous compliance to the RFP” – is just fine for this objective. Noncompliance to

Future Issues of 3PL Americas3PL Americas is the magazine of IWLA and provides members and non-members with news and information on concepts and best practices in warehouse and logistics management. The lead articles for upcoming issues are set well in advance. We welcome reader input on themes and articles for future issues.

Lead article themes and deadlines:

• Summer 2015 – Warehouse technology and WMS (June 26, 2015)

• Fall 2015 – Real estate and best practices in facility management (September 18, 2015)

• Winter 2016 – The future of 3PLs (December 4, 2015)

• Spring 2015 – Legal challenges for warehouse operators (April 8, 2016)

Suggestions for authors, articles and themes can be submitted to [email protected].

3PL Americas

THE 2015 IWLA CONVENTION + EXPO

PORT OF SAVANNAH

www.IWLA.com

PM 42128520

T H E M A G A Z I N E O F I W L A I N N O R T H A M E R I C A • W I N T E R 2 015

™

to achieve bigger and more-funda-mental supply chain objectives. Begin by using a Request for Information that states the problem and asks 3PLs how they think that problem can best be solved.

In response to an RFI, for the right opportunity, Menlo is willing to incur upfront costs. They will send in their Lean consultants, typically degreed professionals with engineering and operations research backgrounds, who are proficient in network design, to come up with Menlo’s suggested alternative to a problem, at no cost to the customer.

Now, it is likely that other 3PLs will come up with different alterna-tives. At this point, the customer may want to combine the best ideas of each 3PL into an RFP. In short, it is an iterative RFP process. This is a longer process. Menlo is completely comfortable with a sales cycle that takes 12 to 19 months. In fact, be-cause they seek to provide creative, higher-value solutions, a short sales cycle is suspect.

And what seems like a longer process can actually save companies money.

According to Fowler, when Menlo and most other major 3PLs lose in a sales cycle, the most common reason is because the company abandoned the search for a 3PL partner. “Think about all the money and time wasted when this happens,” he notes.

all criteria on the RFP becomes an easy way to eliminate prospective 3PL partners.

But if the question is broadened – “Is Memphis even the right location for a warehouse based on the compa-ny’s demand profile? Are we looking for improvements to the order-to-cash process?” – this would involve services that go beyond warehousing.

In short, companies should begin by asking themselves how they want

Counsel for the Road Ahead

Over the years, Benesch has provided legal consultation and pragmatic business advice to well over 100 Transportation Brokers, Surface Freight Forwarders, Ocean Freight Forwarders, NVOCC’s, Air Freight Forwarders, Warehousemen, 3PLs, 4PLs, and other Freight Intermediaries of all kinds. They know that when it comes to corporate structuring, mergers and acquisitions, transportation and logistics contracts, best practices, regulatory challenges, insurance and risk management, freight loss and damage or freight charge disputes, catastrophic personal injuries, and independent contractor relationships — Benesch knows Intermediaries.

100 FREIGHT INTERMEDIARIES CAN’T BE WRONG

Cleveland | Columbus | Hackensack | Indianapolis | Philadelphia | Shanghai | Wilmington | www.beneschlaw.com

MEMBER

MEMBER

®


doesn’t, its customers might be con-sidered “common law employers” under the act. Protecting customers from this exposure costs staffing com-panies money.

Staffing companies might feel they need to avoid some of these costs, along with those for employee ben-efits and vacation pay, to keep their prices down and remain competi-tive. It’s important for 3PLs to know what the price they’re paying is going to provide. After all, using staffing companies is supposed to allow com-panies to get the workers they need for the period that they need them – without having to permanently hire them and then lay them off – and still meet all of the legal and financial requirements related to hiring. For customers, avoiding risk is a reason for utilizing a staffing strategy. They

need to know that the staffing provid-ers they use are equipped to accept risk transferred to them, and won’t actually amplify the risk.

Landry believes that 3PLs must rethink how they choose staffing pro-viders. If the decision is made by an employee in procurement, it’ll likely, he says, be based mainly on price. But if a team of employees, including peo-ple in operations, HR and procure-ment, makes the choice, the group will consider the broader costs related to the use of temporary staff. They’ll examine quality issues, dependability, commitment to service, compliance with legal requirements, the poten-tial future hirability of the workers provided and so on. A procurement employee who makes a poor buying decision might never learn how costs for extra workers, overtime, rework and turnover add to the price in the

Finally, Fowler believes that this more free-form, higher-value-add style of procurement actually benefits 3PLs with a true Lean culture. Lean is

what allows 3PLs to creatively solve important value chain problems.

Steve Banker is Service Director, Sup-

ply Chain Management for ARC Ad-visory Group. He can be reached at [email protected]. This article is republished with his permission.

company’s agreement with a staffing company. Instead of driving down the price for service, employers should be demanding the best-quality service they can get. In the long run, says Landry, they’ll pay less for it.

For their part, staffing compa-nies need to push back against the commoditization of their business, says Landry, which forces them to cut costs – and services – to appeal to customer demand. They need to boost their commitment to customers by providing better-qualified, reli-able workers who are matched to their assignments and appropriately paid, and be available when custom-ers need them, even if that involves weekend and early-morning work. Charging customers just a few pen-nies extra per man-hour will cover the extra costs they’d incur in making these changes, says Landry.■

STAFFING from page 12


T H E 2 0 1 5 I W L A C O N V E N T I O N & E X P O

As I reflect on the past year, I am filled withgratitude. Being IWLA Chairman was agreat honor for me. I was blessed to haveworked with so many wonderful people inour industry and with a top-notch IWLAstaff.

It was Steve DeHaan’s first full year as ourpresident and CEO. I was able to observeand work with Steve as he made positivechanges that made IWLA that much better!

Steve also showed that he has great leadership qualities, guiding us to achieveone of the best – if not the best – financialyears IWLA has ever had. We are certainlyheaded in the right direction.

The success of the past year did not justhappen. There were many volunteer warehouse members that made a large contribution. We had educational offeringsthat were more popular than ever andexceeded our revenue budget. We had moreof our companies join the IWLA InsuranceCompany (our captive) to help them withsafety and insurance costs.

The 2014 IWLA Convention & Expo inArizona and the 2015 event this year inSavannah were rousing successes. Ourgovernment-affairs efforts have grown andhave been more successful. We raised moremoney than ever for the IWLA PoliticalAction Committee in an off-year election.We also had a great success rate: 100 percent of our candidates won election.

The IWLA Board invited committee chairsto the meeting in Savannah. More than adozen joined us, and I believe they allmade a contribution and benefitted fromthe experience.

As we wrapped up the meeting inSavannah, I told those present that it waswonderful working with a board whosemembers were in this for the right reason. Ido not believe that anyone had an agendaand that we were all in this to benefit IWLA.

This is a great industry and the primary reason I was honored to be chairman wasbecause of all of the great people in ourindustry. I characterize our membership ashonest, hard-working folks who take care oftheir people and their customers. People inour industry have to do things rightbecause of the small margins. And ourmembers are almost always in the businessfor the long haul. I think our industry is agood example of our capitalistic free-enterprise system.

Rob Doyle will be an outstanding chairmanfor this coming year; he has already hit theground running. He has proven his worthmany times over in the past five years. Heserved as chairman of the SavannahConvention Planning Committee – and hisleadership was a large part of the successof the 2014 Arizona convention. He and Iworked very closely this past year and hissupport and advice were invaluable.

Rob is a very hard worker and I know that this year under his leadership will besuccessful for IWLA and rewarding for all ofthose who will have the opportunity to workwith him.

A Hapag-Lloyd container ship

passes the hotel and downtown

Savannah.

The 2015IWLA Convention & Expo:CONNECT, DISCOVER, INNOVATEMarch 8-10, 2015 in Savannah, Georgia

A message from Immediate Past Chairman Tom Herche

By all measures it was a great convention! As a location, the city ofSavannah is a superb destination – the city is beautiful and the WestinSavannah Harbor Resort is very hospitable. The hotel provided a greatconvention venue and being on theSavannah River, it gave a close-upview of container ships entering one ofAmerica’s great ports; and incidentally,it also hosted a challenging PGA golfcourse.

The convention was marked by arecord attendance and tradeshow participation, informative and inspiring speakers, well-attended panel discussions and social activities.

Chairman Tom Herche welcomes thedelegates

A Marine honor guard opens the

conference.

Steve DeHaan points

the way to John McKenna (L)

and Shaun Power.

Savannah viewed from the hotel.

Majestic Realty 2015 IWLA Golf Classic Tournament

Below: Representatives from Eagle Sponsor

Allegiance Staffing, Michelle Harger and

Gena Kizer, distribute hats to golfers.

IWLA President & CEO Steve

DeHaan delivers the State of the

Association address. IWLA had a

record year on most fronts in

2014.

A piper welcomes the

golfers to the links.

1978.MagLayout2015-4PG 4/9/15 5:52 PM Page 2



As I reflect on the past year, I am filled withgratitude. Being IWLA Chairman was agreat honor for me. I was blessed to haveworked with so many wonderful people inour industry and with a top-notch IWLAstaff.

It was Steve DeHaan’s first full year as ourpresident and CEO. I was able to observeand work with Steve as he made positivechanges that made IWLA that much better!

Steve also showed that he has great leadership qualities, guiding us to achieveone of the best – if not the best – financialyears IWLA has ever had. We are certainlyheaded in the right direction.

The success of the past year did not justhappen. There were many volunteer warehouse members that made a large contribution. We had educational offeringsthat were more popular than ever andexceeded our revenue budget. We had moreof our companies join the IWLA InsuranceCompany (our captive) to help them withsafety and insurance costs.

The 2014 IWLA Convention & Expo inArizona and the 2015 event this year inSavannah were rousing successes. Ourgovernment-affairs efforts have grown andhave been more successful. We raised moremoney than ever for the IWLA PoliticalAction Committee in an off-year election.We also had a great success rate: 100 percent of our candidates won election.

The IWLA Board invited committee chairsto the meeting in Savannah. More than adozen joined us, and I believe they allmade a contribution and benefitted fromthe experience.

As we wrapped up the meeting inSavannah, I told those present that it waswonderful working with a board whosemembers were in this for the right reason. Ido not believe that anyone had an agendaand that we were all in this to benefit IWLA.

This is a great industry and the primary reason I was honored to be chairman wasbecause of all of the great people in ourindustry. I characterize our membership ashonest, hard-working folks who take care oftheir people and their customers. People inour industry have to do things rightbecause of the small margins. And ourmembers are almost always in the businessfor the long haul. I think our industry is agood example of our capitalistic free-enterprise system.

Rob Doyle will be an outstanding chairmanfor this coming year; he has already hit theground running. He has proven his worthmany times over in the past five years. Heserved as chairman of the SavannahConvention Planning Committee – and hisleadership was a large part of the successof the 2014 Arizona convention. He and Iworked very closely this past year and hissupport and advice were invaluable.

Rob is a very hard worker and I know that this year under his leadership will besuccessful for IWLA and rewarding for all ofthose who will have the opportunity to workwith him.

A Hapag-Lloyd container ship

passes the hotel and downtown

Savannah.

The 2015IWLA Convention & Expo:CONNECT, DISCOVER, INNOVATEMarch 8-10, 2015 in Savannah, Georgia

A message from Immediate Past Chairman Tom Herche

By all measures it was a great convention! As a location, the city ofSavannah is a superb destination – the city is beautiful and the WestinSavannah Harbor Resort is very hospitable. The hotel provided a greatconvention venue and being on theSavannah River, it gave a close-upview of container ships entering one ofAmerica’s great ports; and incidentally,it also hosted a challenging PGA golfcourse.

The convention was marked by arecord attendance and tradeshow participation, informative and inspiring speakers, well-attended panel discussions and social activities.

Chairman Tom Herche welcomes thedelegates

A Marine honor guard opens the

conference.

Steve DeHaan points

the way to John McKenna (L)

and Shaun Power.

Savannah viewed from the hotel.

Majestic Realty 2015 IWLA Golf Classic Tournament

Below: Representatives from Eagle Sponsor

Allegiance Staffing, Michelle Harger and

Gena Kizer, distribute hats to golfers.

IWLA President & CEO Steve

DeHaan delivers the State of the

Association address. IWLA had a

record year on most fronts in

2014.

A piper welcomes the

golfers to the links.



Bill Courtney delivers an

inspiring keynote address

on community involvement

and commitment, a story

that was the subject of the

Academy Award winning

2011 documentary

film “Undefeated.”

The Jock Menzies

Award for

Distinguished

Service &

Leadership is

presented to

Paul Delp and

Gary Minardi

(4th and 5th from

left) for their service

to the IWLA

Transportation

Advisory Council.

Rob Doyle presents the

IWLA Innovation Award -

Service to Diaya Mills and

Kelli Ryan of Select

Staffing.



Products to Jim Ruschman of

FlatFork Company.

At the

Chairman’s

Dinner on

Tuesday evening,

Tom Herche

passes the gavel

and IWLA’s

chairmanship to

Rob Doyle.

The Expo is

where

partner and

warehouse

members meet

to discuss the

latest products

and services.

IWLA taps experts

like John Horvath

to help members

navigate the

complex course of

warehouse law.

Left: Tom

Herche

introduces

2015

executive

committee.

L-R –

Cliff Otto,

Rob Doyle,

Mark DeFabis,

Frank Anderson

Paul Verst hosts

the mergers and

acquisitions panel.

The IWLA Government Affairs Service Award is presented to

Mark DeFabis (center) who testified before the U.S. Congress on

3PLs’ behalf and who spearheads the IWLA Congressional

Contact Program.




Bill Courtney delivers an

inspiring keynote address

on community involvement

and commitment, a story

that was the subject of the

Academy Award winning

2011 documentary

film “Undefeated.”

The Jock Menzies

Award for

Distinguished

Service &

Leadership is

presented to

Paul Delp and

Gary Minardi

(4th and 5th from

left) for their service

to the IWLA

Transportation

Advisory Council.



Service to Diaya Mills and

Kelli Ryan of Select

Staffing.



Products to Jim Ruschman of

FlatFork Company.

At the

Chairman’s

Dinner on

Tuesday evening,

Tom Herche

passes the gavel

and IWLA’s

chairmanship to

Rob Doyle.

The Expo is

where

partner and

warehouse

members meet

to discuss the

latest products

and services.

IWLA taps experts

like John Horvath

to help members

navigate the

complex course of

warehouse law.

Left: Tom

Herche

introduces

2015

executive

committee.

L-R –

Cliff Otto,

Rob Doyle,

Mark DeFabis,

Frank Anderson

Paul Verst hosts

the mergers and

acquisitions panel.

The IWLA Government Affairs Service Award is presented to

Mark DeFabis (center) who testified before the U.S. Congress on

3PLs’ behalf and who spearheads the IWLA Congressional

Contact Program.


ANNUAL CONVENTION1 – 4 June 2015Liverpool, UK

www.ifwla.com

Join over 250 international delegates in a programme of work and culture

The International Federation of Warehousing Logistics Associations

IFWLA 2015

The online journal of the International Federation of Warehousing and Logistics Associations

WAREHOUSING& LOGISTICS

INTERNATIONALwww.warehousinglogisticsinternational.com

The IFWLA convention is a four day programme of business and culture planned for some 250 national and international delegates, comprising manufacturers, retailers, third party logistics providers and other supply chain and logistics practitioners.

Bringing together all sides of the global logistics industry, the International Convention is under-pinned by a two day conference to be held on Tuesday 02 and Wednesday 03 June, at Liverpool’s historic Town Hall

www.ifwla.com

81720-16_MM13_IFWLA Ad_212.72x276.22mm_2015_FV.indd 1 23/03/2015 12:25


THIRD-PARTY-LOGISTICS PROVIDERS (3PLS) have grown tre-mendously in recent years, as the dynamic of getting goods to market has

evolved. In days past, entering a market meant making a significant investment in facilities and infrastructure to ensure the effective delivery of your product. No more. Today, 3PLs can handle every step of the process for you, liberating your time and resources to focus on selling your product.

The 3PLs of today can provide a much broader range of services than they used to. It used to be that their primary focus was on warehousing and ship-ping, so if you sent them your product, they would store it and ship it for you. Now, 3PLs can handle almost your entire business. This includes not only the complete supply chain cycle, but also such functions as customer service, order management, sales support, e-commerce and IT integration. In fact, there are very few aspects of a business that a 3PL can’t take care of for a client; 3PLs have the resources to provide clients with the benefit of top-tier technology without the investment. However, before we get into whether or not you should hire a 3PL, what do shippers want in a 3PL to begin with?

■ What do Shippers Want from a Third-Party-Logistics Company?According to the Capgemini Consulting 2014 Third-Party Logistics Study,

its eighteenth annual study, shippers most value a 3PL’s ability to provide continuous improvements (55 percent), followed by experience in the shipper’s industry (49 percent) and an established, ongoing relationship (42 percent). Further, shippers appear to be seeking strategies to control costs while striving for optimal 3PL relationships by seeking a balance between centralization and decentralization of their sourcing decisions.

Collaboration is also something that shippers want more of, and results in-dicate that collaboration is increasing. According to the study, the majority of shippers and 3PLs say their relationships have grown more collaborative over the past three years, with shippers even more likely than 3PLs to say they are much more collaborative. (See Figure 1.)

Collaboration opens the door for more strategic relationships among ship-pers and 3PLs. In order to attain more highly functioning and cost-effective supply chains, shippers need strong, lengthy and partner-focused relationships with their 3PLS and 4PLs.

Given the available capabilities of a 3PL, this begs the question:Should You be Utilizing a Third-Party-Logistics Company or Not?The answer, of course, is that it all depends.It depends on a multitude of factors, not the least of which are the stage your

BENEFITS OF OUTSOURCING

To Hire a Third Party Logistics Company or Not to Hire a Third Party Logistics Company…That is the QuestionBy Adam Robinson

3PLs can handle every step of the process for

you, liberating your time and resources to focus on

selling your product.


business is in (to help you understand your needs, use the 3PL checklist at cerasis.com/2013/08/05/third-par-ty-logistics-companies), the amount of existing infrastructure you have, and the functions that you require to service your customers. While it doesn’t make sense in every situa-tion, the benefits of using a third-party- logist ics company can be staggering.

Here brief ly are five benefits you can realize from using a 3PL. (These are just the top five on a macro level; there are many other benefits on a micro level.)

1. Expertise: A third-party-logis-tics company handles logistics for a living… as an entire business model. That’s all it does. Believe it or not, there are some traffic and transporta-tion managers who are not experts in logistics, so why not let the experts handle all of the details?

2. Efficiency: Not only does a third-party-logistics company have the expertise, it also has the infra-structure and technology to be really good at what it does. This translates to higher service levels to your cus-tomers and, very likely, cost savings for you. Higher quality. Lower cost. The Holy Grail of business.

3. Technology: Since 3PLs usu-ally have the latest technology, you get the benefits of the technology without having to make the capital investment. Win, win. However, a caveat here: If the 3PL is offering you TMS software and other freight

technology, make sure it is not out-sourcing this technology to a software provider. This could be problematic when you, as a user, want updates to the technology. Third-party-logistics companies with in-house technology teams that develop the TMS them-selves will provide the best value.

4. Core Competency: Utilizing the resources of an expert frees up

your time and fi-nancial resources to focus on what you do best. You can have confi-dence that your

logistics are being taken care of, so you can focus on growing the enterprise.

5. Scalability: 3PLs are almost infinitely scalable. If your business triples in 18 months, you don’t have to rush to secure new facilities, buy new equipment, or hire and train staff. It simply takes a phone call to reach out to the 3PL to secure new rates as you open up more shipping lanes or add another login to the transportation management system as you bring on new locations.

■ “But I Can Do It Cheaper/Better Myself… I Don’t Need an Outside Third-Party-Logistics Company Telling Me what To Do.”We get it. You’ve mastered your lo-

gistics processes. You are an expert at getting the best rate from the one LTL shipping carrier you use. Once your company hires a third-party-logistics company, they will no longer need you… Right? No, that is usually not

the case. In fact, they can have you stay more strategic, not bogged down in the weeds of detail and tactics, and focused on growing the business.

While we all tend to think that we’re good at everything we do, that’s not always the case. More to the point, do-ing it ourselves generally requires an investment in facilities, equipment, people and time. In many cases, that investment is fixed. Your warehouse doesn’t grow or shrink based on how much space you need at a given time. Your warehouse rent doesn’t change based on how much product you ship, nor does the cost of your forklifts, pallet racking or utilities. Your labor is variable, but only to a point. Most businesses are still going to have a minimum amount of staff, regard-less of revenues, to handle the tactics and details of freight, transportation procurement, carrier relations for on-going freight maintenance, and more.

When you use a 3PL, you pay only for what you use. When you do move product in or out, you pay only for the freight costs. You’re getting full-time people at pro-rated wages. You will also likely benefit from your pro-vider’s economy of scale. Freight and shipping costs will almost certainly be better than what you can secure on your own, for the simple fact that your 3PL is moving a lot more product that you are individually. Win, win, win.

Now, this doesn’t mean that a 3PL is right for your company. If you’re in an industry that is very localized or distribution-focused, it may make a lot more sense to do it yourself. Perhaps you are the expert in your field, which negates the benefits of outsourcing. There are no absolutes in anything, especially business. When it comes to decisions affecting the future of your company, there are usually not even any rules of thumb. Every circumstance is as different as the enterprise that is exploring it. It all comes down to what’s right for your business, your customers and your people. But, it never hurts to at least have a conversation with an expert.

Adam Robinson is marketing man-ager for Minnesota 3PL Cerasis.

Figure 1

While it doesn’t make sense in every situation, the

benefits of using a third-party-logistics company

can be staggering.


LEADERSHIP AND MANAGEMENT

The War for Talent

By Chip Scholz

THERE IS A WAR FOR TALENT TODAY, and it affects every Ameri-can business. It is driven by demographics: the Boomers are retiring

and leaving the workforce in ever-increasing numbers; college and university graduation rates can’t keep up with the need for educated talent; and there is a shortage of people willing to work in a warehouse for the wages now paid in that environment. Here are some of the facts:

• By 2020, the U.S. Bureau of Labor Statistics says that over 50 percent of the workforce will become eligible for retirement. We do not have workers with enough training or skills to replace experienced retiring workers. The shortage of available skilled workers is likely to exceed 10 million by 2020.

• One-fifth of this country’s large, established companies will be losing 40 percent or more of their top-level talent in the next five years. The replacement pool of 35-to-50-year-olds has declined by 20 percent during the same period.

• Within the next 10 years, 18 million jobs will require individuals with bac-calaureate degrees. At current graduation levels, the Employment Policy Foun-dation predicts a shortfall of 6 million candidates.

• In 1973, blue-collar workers represented over 60 percent of the workforce. Very soon, just 10 percent of the workforce will be blue-collar. The Hudson Institute estimates that only 20 percent of our workers will have the skills to do 60 percent of the jobs.

The competition for talent is pervasive. Job-hopping has increased as the economy has lost active workers. According to a Society of Human Resources Management (SHRM) survey, 75 percent of American employees and 82 per-cent of American executives are looking for a new job. Here are a few more stats you need to pay attention to:

• Despite economic uncertainty, nearly seven out of 10 U.S. workers say job change will be at their own initiative.

• Thirty-nine percent of the workforce has worked for six or more companies – up from 27 percent in 1999.

• Forty-five percent of workers want to change jobs at least every three to five years – up from 26 percent in 1999.

Why is this important to you? Only 15 percent of the executives surveyed by McKinsey & Co. said improving the talent pool is a top priority, even though 75 percent of those same executives said that “a chronic shortage of talent” is one of the constraints on their companies’ growth.

Many studies have shown that low-performing companies have nearly twice as much turnover among top-performing employees as high-performing companies. To put that fact into context, consider that three out of every four Fortune 5000 companies on the list in 1970 are no longer on the list. One out of three firms that went public since 1988 are out of business.

What are you doing to win the talent war? What are you doing to change your outcomes? What do you need to change in the way that you recruit, hire, train and develop your employees? How can you maintain a high-performing workforce?

One way is to keep a handle on your turnover. Imagine, if you will, that

A chronic shortage of talent is one of the constraints on a company’s growth.


you are a typical 3PL. Your customers are demanding that you continue to reduce the cost of your service to them. You, therefore, require more cost savings, so that margins remain bearable and there is some return on the time, effort and money invested.

You have done just about every-thing you and your team can think of to reduce costs further. You have squeezed your current suppli-ers, changed to new suppliers, and stripped the workforce to its bare bones. You absolutely don’t know where you are going to find anything else to cut!

Turnover impacts your bottom line in a lot of sneaky ways. It is usu-ally the last place that companies look to improve their returns because there is no line item on a P&L marked “turnover.” The costs are soft, hid-den. Labor costs on the P&L may even show a decline in times of high turnover, providing misleading in-formation.

However, depending on the source of the information, it is estimated

that turnover costs three to five times the annual salary of the position that turns over. Those numbers may be high, so let’s put some meat on those bones to assess the conservative costs of turnover. Let’s assume that the position that turns over has an annual salary of $50,000. Here are the costs that are incurred:

• While the position is vacant, co-workers are asked to fill in. Produc-tivity drops as others cover the tasks of the open position. Morale suffers – which leads to more turnover. Stress levels increase due to longer hours, leading to mistakes, accidents, inju-ries, illness and reduced quality.

3 Estimated Costs: $25,300• Recruiting costs include lost

productivity of the managers that have to recruit. Additional costs may include a recruiter or temp agency. Advertising a position, going through résumés, travel arrangements for meetings, etc. all add up. In a tight labor market, relocation fees, signing bonuses or referral fees need to be factored in.

3 Estimated Costs: $28,800• Once you have hired a new em-

ployee, the costs continue. You most likely end up paying the new worker more than you were paying before. To eliminate problems, you give raises to close co-workers. Productivity issues arise because the new employee is not up to speed and other employ-ees are filling in. You are paying the new employee fully even though their productivity is low. To get them up to speed, you have to train them. That means that managers, supervisors and other employees are pulled away from their jobs, further lowering pro-ductivity.

3 Estimated Costs: $56,400By losing that one employee, the

bottom line is affected by $110,500. Drop in the bucket? Maybe, but con-sider the multiplier effect. If you have 100 employees that average $50,000 in salary per year and your turnover rate is 30 percent (not unheard of), turnover just cost you more than $3 million. Is that significant? Wouldn’t

ADVERTISE WITH USIt’s your association.It’s your magazine.

3PL Americas goes to your customers and partners.

Members read it cover to cover.

Make 3PL Americas part of your marketing plan.

Contact us at 877-305-6587or [email protected]

&Professional, Reliable, Unloading and Warehousing Services

– We make it easy for you!

One of the Simplest Ways to Increase WarehousingEfficiency and Improve Your Bottom Line…

• Over1,000OSHA-trained,certifiedworkerswithon-sitemanagement• Ourfullyinsuredpersonnelmeansnoliabilityforyou• Easilyadjusttoseasonalandpeakdemandfluctuations• Nationwidecoveragewith85+distributioncenters

To see how much money Rogers-Premier can save your company, contact us today.

Rogers-Premier Unloading Services, LLC. Phone (800)448-6230 Fax (800) 448-6250 Email [email protected]

CONTACT: SCOTT MCCLELLAN • (252) 343-3922 • [email protected]

Currently covering all

states shaded below!

Continued on page 26


IN DECEMBER 2012, the U.S. Equal Employment Opportunity Com-mission (EEOC) announced that one of its top priorities until calendar

year 2016 is eliminating systemic barriers to recruitment and hiring. With this priority in mind, the EEOC has cracked down on employers who – like many in the warehousing industry – run background checks before hiring a new worker.

Specifically, the EEOC wants to make sure employers are not using credit- or criminal-history information, which is included in most background checks, to discriminate against applicants and employees. Although federal law does not prohibit employers from asking applicants and employees about their credit- and criminal-history information, federal anti-discrimination laws do prohibit employers from discriminating against applicants and employees when they use this information.

Liability for disparate treatment (or intentional discrimination) arises where an employer uses history information differently based on an applicant’s or employee’s race, national origin or other protected trait. Liability for disparate impact (or unintentional discrimination) arises if an employer uniformly takes credit- and criminal-history information into account and, doing so, dispropor-tionately excludes people of a particular race, national origin or other protected characteristic, where the inquiry is not job-related for the position in question and consistent with business necessity. The EEOC is increasingly interested in the latter form of discrimination, targeting neutral background-check policies that disproportionately exclude minorities.

As a rule of thumb, credit-history information should not be pulled or consid-ered unless an applicant or employee is being looked at for a financial position. For instance, a warehouse should not run a credit-history report on an entry-level warehouse worker who is responsible only for packing and moving goods on the floor, because his job has nothing to do with finance. On the other hand, a warehouse supervisor who deals with customer payments on a day-to-day ba-sis would be the proper subject of a credit report. Because the supervisor deals directly with company finances, the warehouse may run his credit history as it is job-related and consistent with business necessity.

To the extent employers in the warehousing industry conduct background checks, they should consider taking the following steps:• Have a policy in place to ensure background information is being considered

consistently to avoid the appearance of intentional discrimination from one employee to the next;

• Make sure the background information being considered is job-related and consistent with business necessity;

• Allow employees to explain any background information that may be used against them;

• Analyze each employee situation on a case-by-case basis; and• Comply with state law regarding the use of background checks.

LEGAL

Are Your Background-Check Procedures Placing Your Warehouse at Risk?By Kerryann Haase Minton and Sarah E. Flotte

Kerryann Haase Minton

Sarah E. Flotte

As a rule of thumb, credit-history information should not be pulled or considered

unless an applicant or employee is being looked at for a financial position.


With these steps, employers in the warehousing industry can proactively attempt to address the EEOC’s stated concerns regarding the use of credit- and criminal-history information in employment decisions.

the forklift fuel front runner.www.amerigas.com

1-800-AmeriGAs (263-7442)

more trucks more supply more deliveries.

DISTRIBUTION POINTS

800,0005,000

250

ANNUAL DELIVERIES

PORTABLE CYLINDERS

STATIONARY TANKS

FLEET

PROPANE SOURCES

4,000,0003,000,000

Kerryann Haase Minton is manag-ing partner at Michael Best & Fried-rich LLP in Chicago. Sarah E. Flotte is an associate in the same office.

This article is for informational pur-

poses only and is not legal advice. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-cli-ent relationship. © Michael Best & Friedrich LLP 2015

that $3 million be better off working for you or in your pocket?

It is a bottom-line expense that doesn’t show up specifically on the books, but costs you plenty in bot-tom-line dollars. Let’s talk about a few ways to lower your turnover so you can keep more of your hard-earned money.

1. Hire the Right People: I am sure you have had the experience of hiring someone that interviewed well, looked great on paper, but never per-formed up to expectations. We hire based on the knowledge and skills (résumé, references) that are pre-sented to us. We hire people we like, or who are like us. We hire through the lens of our own biases. We may see the attitudes that the candidate shows during the interview, but we don’t know what attitudes they will bring with them to the job.

According to a Michigan State University study done by Dr. Robert Hunter, the traditional résumé/inter-view hiring process is only 14 percent effective in finding the right people. If you add reference checks, you can increase your efficiency to 26 percent. This is typically how most companies hire. That means that only one in four of your hires is a good one!

How can you increase your chanc-es? If you add testing for attitudes

and behaviors, your rate of success goes up to 53 percent. And if you add a job benchmark, your success rate climbs to 76 percent.

Further, if you hire the right per-son for the job, you will reduce stress on the person you have hired. They will be doing the things they like to do and are suited to do. Doing the job comes more easily, and job satisfac-tion increases.

2. Set Clear Expectations: No-body comes to work wanting to do a bad job. One reason for turnover is a lack of clear expectations that is evidenced by a lack of clear direction about the way success is measured and what outcomes the work will re-sult in. Be sure to develop a clear set of work standards, and allow your employees to interface with custom-ers as often as possible. Don’t forget to celebrate achievements in hitting the standards!

Now comes the hard part… What are your expectations for the compa-ny? Do you have a clear vision for the future? Does everyone in the compa-ny understand the vision, the values and the mission? Can they tell you how what they do relates to accom-plishing the vision? If not, you need to clarify those things for yourself and for your employees.

3. Create Opportunities for Growth and Development: If an

employee finds work to be challeng-ing with opportunities for personal and professional growth, job satisfac-tion increases.

Promote from within when you can. Vary job assignments and of-fer opportunities to work on special projects beyond the scope of their normal jobs. Split jobs into different levels, thereby offering increasing leadership opportunities. Help them develop their personal and profes-sional leadership abilities through workshops or coaching.

4. Managers Must be Good Leaders: Employees always work harder for good leaders. Good lead-ers can be developed, but it must be intentional. Make sure you and your managers are well trained. People respond to managers they can trust and who can inspire them to achieve their goals.

Reducing turnover and creating more productive employees gives you an added bonus. You won’t spend all of your time worrying about where your next hire is going to come from, allowing you to invest more time working on your business, not in your business. Isn’t that where you want to invest your time?

Chip Scholz is head coach of Scholz and Associates, Inc. and serves on the IWLA board of directors.

TALENT from page 24


NEARLY 30 YEARS AGO, when I started my company with little more than youthful determination, a shoestring budget and the support of my

loved ones, my main focus was getting the business off the ground and taking care of my family.

There were lots of early mornings and late nights in those early days and, in fact, that really hasn’t changed much. But many other things are very different now.

Instead of one truck, a handful of employees and cramped office space, today our company employs more than 2,000 team members across the nation. And as our business has grown, so has my idea of what it means to be a responsible corporate citizen.

I believe it is incumbent upon business owners to support the communities where they operate, and move beyond those borders as they become able. That support may manifest itself in myriad ways, but it’s important for successful companies to promote a culture of giving back.

For me, that means promoting a culture within the company that extends to our community, ex-emplified by the set of guiding principles on which we’ve built our business:

Practice Honesty, Integrity and Fairness in Everything We Do.• We are only as reliable as our word. To compromise that would be to forfeit

the work that has gone into making our name trustworthy.Ensure That Every Customer Receives Value, Quality and Satisfac-

tion.• Each of our customers is our most-important one. Recognizing them as

individuals with specific needs, we will endeavor to exceed expectations by pro-viding maximum service in every aspect of each operation.

Create an Environment in Which Our Employees Can Succeed.• Each associate is recognized as a valuable part of our operation, and all are

compensated based upon individual performance and offered an opportunity to participate in a profit-sharing program.

Return to the Community a Share of the Success We Experience.• We are successful today because of the community’s faith in our service

and our name. We will, therefore, faithfully return support to our community through charitable contributions to various organizations and funds.

And while I’ve been committed to leading my company by these guiding prin-ciples from the start, my broader outlook on corporate responsibility started to take shape for me years ago when I first began to travel the world on mission trips and saw firsthand the often overwhelming needs surrounding us.

At the time, my business was still young, and my resources didn’t exactly match my burning desire to create a better community. I saw great need, but

GIVING BACK

Corporate Responsibility = Community InvestmentBy David S. Hamilton

Giving back to the communities that have

supported our businesses, and where our employees

live, is more than just a corporate responsibility;

I see it as a corporate necessity.


didn’t know what I could do to make a difference.

I talked it over with my wife Ruth, and decided to follow the advice of Mother Teresa, “If you can’t feed a hundred people, then feed just one.”

From that initial commitment to help others, one person at a time, our nonprofit organization Point of Impact (POI) was born.

Simply put, we decided to do what we could with what we had. We began with an outreach program in Hondu-ras, providing education and medical aid to a few underprivileged children. As our company grew, so did this or-ganization, and the voluntary partici-pation in it by our employees.

In an inspiring example of living out the culture reflected in our guid-ing principles, our employees have eagerly adopted Point of Impact. They have also enlisted the support of their family and friends to help it grow.

Today, through POI, our company and dedicated employees help feed, tutor and provide medical assistance

to hundreds of children and their families in Africa, Honduras and at home in Memphis.

And while we’re doing more through POI than we were in the be-ginning, we realize that the needs are still great. Giving back to the com-munities that have supported our businesses, and where our employees live, is more than just a corporate responsibility; I see it as a corporate necessity.

Companies should share their success by reinvesting in the com-munities whose resources – human capital, infrastructure and profes-sional services – have contributed to that success. This reinvestment not only creates stronger communities for residents; it also establishes the businesses as trusted, viable mem-bers of the communities in which they’re located.

The key is to be inspired — but not paralyzed – by assessing the needs around us, and determining how we can make a positive impact with what we have.

David S. Hamilton is founder and CEO of Impact Logistics, a Memphis, Tenn.-based logistics, warehous-ing and workforce company. Since launching Point of Impact in 2006, the organization has benefited thou-sands of children and their families, in the U.S. and abroad. For more in-formation on the organization, visit www.poihn.org.

Impact Logistics, Memphis

Dave Hamilton and friend

ADVERTISER INDEX

Allegiance Staffing .......................... IFC

AmeriGas ........................................ 26

Ancra International LLC ..................... 15

Benesch, Friedlander, Coplan & Aronoff LLP .................................. 14

Dehnco ............................................. 8

IFWLA ............................................ 20

IWLA ....................................... 24, IBC

Konstant Storage Systems ..............OBC

McCloud Services ............................. 12

MercuryGate...................................... 3

Redirack Storage Systems ...............OBC

Rogers-Premier Unloading Services .... 24

Scholz Leadership Development ......... 31

Shinetoo Lighting America LLC ........... 31

Sonwil Distribution Center ................... 4

Sphere WMS ................................... 32

Editorial and Advertising Disclaimers

The editorial contents of this publica-tion are educational and informational in nature, and not intended as minimum standards, or legal or other professional advice.

The International Warehouse Logistics Association has endeavored to include appropriate and accurate statements, but disclaims any and all warranties and/or responsibility for the statements or their application. Users should confer with their professional advisers for specific input and assistance concerning their respective projects.

Any expressions of opinion or perspec-tive by authors of articles included in this publication are not necessarily those of the IWLA.

The inclusion of commercial advertise-ments in this publication constitutes neither a recommendation nor an en-dorsement of the product or service advertised. Although the International Warehouse Logistics Association will not knowingly publish a false or misleading ad vertisement, no attempt has been made to verify the contents of advertisements included in this publication unless other than as set forth in writing by IWLA.


AT THE CORE of a warehouse manage-ment system’s ability to improve

through put and reduce labor costs is the WMS software’s “task-management engine.”

The task-management engine can be con-sidered the brain of the WMS; it notes what work needs to be accomplished, and assigns the work from its queue to specific workers, typically via wireless RF mobile devices. In higher-end WMS systems, those tasks are as-signed to individuals based on the so-called “3 Ps”:

Permission: Is the operator permitted to do a specific task? (E.g., is he or she autho-rized to access the customer account; does he have the training/certification to use the equipment required for the job, and so on.)

Proximity: Is it efficient for the operator to do a task based on where he or she is in the warehouse right now compared with others?

Priority: How important is this task? (For example, is it a “hot” replenishment”?)

Each WMS will have its own algorithms for how these factors are combined to as-sign tasks to workers. Generally, the task-management-configuration process will offer flexibility in how these rules are established. The system should also allow the generated task assignments to be overruled in real time by floor managers if necessary, though the ease of doing this will also vary from system to system.

■ Task Interleaving Goes a Step Further“Task interleaving” takes the power of the

WMS task-management engine to a new level, by combining tasks for operators in a ware-house to increase productivity and reduce equipment “deadheading.” Interleaving isn’t for every operation, but can drive big produc-tivity gains for those that can make it work.

While put-away and picking are among the most obvious and generally most critical tasks

WMS PERFORMANCE IMPROVEMENT

Task Interleaving to Maximize Your LaborBy Matt Stokfisz

to consider for interleaving, maximum value will be achieved if the task engine is looking across most or all types of work in its pool of work to be assigned.

In a warehouse without interleaving, at any given time, workers typically focus on single tasks, such as put-away, which leaves them driving empty forklifts back to the re-ceiving area after each piece of work. With task interleaving, different types of tasks can be assigned to a given operator; he or she might, for example, be assigned to do a full-pallet pick for a replenishment task in the case pick area after completing a full-pallet put-away. Assigning this different type of task to a put-away operator reduces the amount of unproductive travel. The tasks given to workers in this scenario are still determined based on the three Ps, but the pool of avail-able assignments is larger, including several different types of task.

The broader the list is of possible tasks in the task-management engine, the greater the pool of potential work assignments is, and hence the greater the opportunities are to efficiently combine tasks and reduce dead-heading.

That, however, involves greater opera-tional complexity for operators, who must master multiple tasks. It is possible to have your skilled operators take on full interleaved work, while others are assigned more-limited tasks that suit their abilities.

Companies often find productivity gains of 10 percent to 20 percent when moving to interleaving, and sometimes as high as 30 percent.

While task interleaving was more myth than reality in terms of real warehouse de-ployments 13 years ago, today an increasing number of companies are using the approach.

Matt Stokfisz is business development direc-tor for Zethcon Corporation.

“Task interleaving”

takes the power of the WMS task-

management engine to

a new level.


One of the most-talked-about subjects at the World Economic Forum annual meeting in Davos, Switzerland in January 2014 was the impact that advances in manufacturing technology will have on production. In the past two years, much has been written about 3D printing, but less attention has been paid to developments in robotics, which could have an equally material effect on industrial prac-tices. This will have undoubted implications for global supply chains.

Of course, automating production lines is nothing new. Many industrial-relations battles have been fought over efforts to introduce ro-bots to the production process, especially in the automotive sector. However, what is happen-ing now has the potential to go much further.

■ The Supply Chain Implications of AutomationLogistics companies must take note of

these developments, as they will lead to direct and indirect transformative pressures on the industry.

First, the production strategies of their clients will change dramatically. By adopting the latest robot technology for such basic and repetitive tasks as pick-and-place, there is the opportunity for employers in the West to rap-idly reduce labor costs. Robots are especially good at undertaking functions where preci-sion or consistency is required.

This, of course, would rebalance manufac-turers’ labor costs, and reduce the competi-tiveness of remote markets. This trend would be reinforced by manufacturers’ increased awareness of global supply chain risks and other pressures to near-source. This could lead to manufacturers preferring to establish new facilities in or near the major consumer markets in North America or Europe.

Intuitively, the sectors that are most likely to lose out from these changing patterns of upstream and downstream distribution will

TECHNOLOGY

The Impact of Robotics and Automation on LogisticsBy John Manners-Bell and Ken Lyon

John Manners-Bell

be the freight forwarders, shipping lines and air cargo carriers, focused as they are on global flows of goods. However, what may happen instead is that economic growth will be stimulated by the adoption of these new technologies. This would have an ameliora-tive impact on the size of the overall market, although the fastest-growing segment would likely be domestic/regional distribution.

■ Direct Impact of Robotics on LogisticsSecond, there is the direct impact that ad-

vances in new technologies could have upon the transport and warehousing industry. The sector, of course, is very labor-intensive in terms of both drivers and warehouse staff. In 20 years, however, this situation may well have changed dramatically. Google is already testing technology that would result in driverless cars, and it seems reasonable that, once regulatory and labor organization barriers are overcome, we will see a growing number of driverless trucks on the roads. This would have obvious benefits in terms of costs, and would consign tachographs and hours-of-service to history, thus improving supply chain efficiencies.

In Japan, such tests are already underway, led by the New Energy and Technology Devel-opment Organization (NEDO), which has suc-cessfully trialled convoys of driverless trucks using sensors to identify their position on the road and potential obstacles. The trucks are able to brake with a reaction time of just 20 milliseconds and hence can take advantage of the slipstream of the vehicle in front – travel-ing in intervals of about 13 feet. NEDO be-lieves this will reduce fuel costs by 15 percent. Of course, by removing the driver costs, there will be far greater savings.

Caterpillar already uses six fully automated and programmed mining trucks at a facility in Australia. They can run 24 hours a day, which would normally require a team of four

Ken Lyon

A world without

drivers or warehouse

staff? This may be

some way off, but certainly not out of the

question.


drivers. They are monitored from a remote-control center, although they have the ability to make decisions on whether to stop at, or go around or over obstacles themselves.

Although there is a long way to go before we see driverless trucks on shared roads, ironically it may be safe-ty that becomes the main argument for their adoption. Governments are keen to reduce the numbers of people killed or injured in bus and truck accidents, and a large number of these incidents are caused by preventable driver er-ror. For example, a driverless vehicle will not be distracted by an incoming cell phone call and there would never be a blind spot for cyclists.

Once the truck arrives at the dis-tribution center, it would seem en-tirely possible for the unloading and put-away process to be entirely auto-mated. Already in the U.S., Amazon is using robots in some of its distri-bution centers; in 2012, it paid $775 million to buy robotics company Kiva Systems. Its robots bring product shelves to a human picker, rather

than the human picker walking the aisles to identify product. According to the company, this increases pro-ductivity by three or four times.

■ The Ethical PerspectiveThere are obvious social concerns

arising from these advances in tech-nology. Some believe that develop-ments could result in a structural change in employment, similar to that seen in the industrial revolution. The steam engine, and subsequently tractors, decimated the numbers of agricultural workers required to work on the land. At the same time, though, new jobs were created in factories, which eventually led to the higher standards of living seen in the West-ern world today. Robotics could re-sult, many hope, in a similar pattern of change, and it has been suggest-ed that a new wave of employment would be created by the production, selling and maintaining of robots.

It has been estimated in one study (“Positive Impact of Industrial Ro-bots on Employment” Metra Mar-

tech, UK, November 2011) that 2 million to 3 million jobs could be created in sectors that are presently uncompetitive in world terms – in other words, where they are unable to compete against remote, low-cost-la-bor markets. This would apply mostly to the electronics and automotive industries.

Researchers are very well aware, though, of the sensitivity of the issue, and tentatively talk of integrating robots into teams of human workers, as a sort of collaboration. Google has created its own ethical committee to review the impact of its technology. Robotics companies themselves have started a “robots=jobs” campaign, ar-guing that those economies that have adopted this technology, such as Ger-many and Japan, have actually cre-ated more jobs than have been lost.

However, the longer-term implica-tions are clear. There is no doubt that improving efficiencies will create val-ue, stimulating economic output and leading to a demand for higher-value-adding jobs. The trick for politicians

My clients are:• Clear on what’s important to them• Focused on results• Paying Attention to new opportunities• Intentionally creating the future, not just letting it happen

Is your business where you want it to be? Are you where you want to be? If not, call Head Coach Chip Scholz or check us out on the web to learn more about taking your success to the next level.

Work with an executive coach and look in the right places.

Success cannot be found in a box.

Call 704-827-4474www.scholzandassociates.com


will be to transfer large manual-labor forces (such as those in the logistics industry) to these higher-value jobs; oth-erwise, they risk creating an underclass of unskilled and unemployable workers. This is a question policy makers will have to address carefully. A world without drivers or warehouse staff? This may be some way off, but certainly not out of the question.

■ How Quickly is 3D Printing Developing?The development of 3D printing technology (additive

manufacturing) is also continuing at a rapid pace, and seri-ous investment is now being made by global manufactur-ers into this technology.

In one example, it was announced late in 2013 that re-searchers at Cornell University had managed to fabricate a working loudspeaker assembly using 3D printing alone. Apart from its plastic housing, the speaker includes a fully functional conductive coil and magnet spun from two spe-cially designed desktop customizable printers. The coil is created from a silver ink extrusion, while the magnet is spawned from a high-viscosity blend of strontium ferrite. It was then used to play back recordings to confirm its functionality.

Printing items using multiple materials is not new, but to do so using relatively inexpensive desktop printers is an interesting example of how the technology is being pushed forward by the research community.

In January 2014, the Siemens Power Generation divi-

sion began manufacturing heavy-duty spare parts for its gas turbines using 3D printing. The company foresaw that the process would reduce repair time from over 40 weeks to within four weeks. This massive reduction in repair time was expected to result in significant cost savings.

General Electric (GE) plans to make extensive use of 3D printed parts within its commercial jet engines. It expects to manufacture over 85,000 fuel nozzles for its LEAP engine orders, entering production in late 2015. The com-pany is significantly increasing its investment in industrial printers to increase capacity to meet this demand.

The primary attraction for GE is that the 3D printed parts are lighter and much stronger than conventional metal parts and can withstand the much higher tempera-tures (2400°F) necessary. GE has been purchasing 3D printing manufacturers to accelerate this process and de-velop new generations of printers.

It seems that the other major aerospace manufacturers are following suit, with Rolls-Royce, Lockheed and Boe-ing introducing 3D printed parts into their manufacturing processes.

Some segments of the aerospace industry have discov-ered that, by using 3D printing to print complete assem-blies in one piece (e.g., reconnaissance drones), they get a dramatic reduction in weight and tremendous increase in strength and durability. These developments will help to increase understanding of the advantages of 3D printing.

United Parcel Service (UPS) also announced in 2013 that it would install commercial-grade 3D printers into all of the UPS stores across the U.S. for use by businesses. This is undoubtedly as much a strategy for the company to under-stand how this technology could change the manufacturing landscape and related logistics demands. It also gives UPS the opportunity to design new service offerings based on these observations. UPS already has a significant service parts operation, which we suspect will be the sector most likely to be impacted by the general adoption of 3D printing.

Despite these developments, industry is continuing to examine the extent to which 3D printing may impact global supply chains. The existing economies of scale in many sectors are unlikely to be threatened by additive manufacturing in the immediate future. The cost of the metal powders and plastic substrates used in existing ma-chines is still many times more expensive than the same compounds presently used in conventional high-volume production lines. But the raw-material cost will probably come down and it is not the only significant cost factor in many supply chains.

No doubt the media hype will fade over time, but we ex-pect to see more developments as this technology enters the mainstream and existing manufacturers as well as innova-tive start-ups challenge the conventional business models.

John Manners-Bell is CEO of Transport Intelligence. He can be reached at [email protected]. Ken Lyon is Managing Director of Virtual Partners. His email address is [email protected].

Cloud-Based | Mobile Applications

Real-time Web Visibility & Reports

Unlimited Personal Support

Contact us today to learn how you can do it.

[email protected]

SphereWMS.com

+1.214.382.2680

Get up and

running in days,

not months.

1976.IWLAadMikeMullane 4/7/15 9:53 AM Page 1


TO KNOW WHERE YOU ARE GOING and how long the journey is, you must first know where you are and where you have been. In energy man-

agement, finding your location and bearing comes from benchmarking against your peer group.

Over the past 15 years, thousands of commercial organizations have part-nered with the U.S. Environmental Protection Agency’s (EPA’s) voluntary ENERGY STAR® program to adopt best energy-management practices and demonstrate environmental leadership. EPA created the ENERGY STAR score to help measure, track and compare the energy performance of commercial buildings, including warehouses and distribution centers. Warehouses repre-sent one of the largest sectors in the U.S., with energy accounting for 15 percent of operating costs on average.

■ Measuring Energy PerformanceMany facility managers who replace lights or install efficient HVAC equip-

ment expect that their actions will automatically result in more energy-efficient buildings. Intuitively, this makes sense, as today’s building components are more efficient than even a few years ago. However, EPA has found that newer buildings do not necessarily outperform older buildings in terms of energy effi-ciency – nor is the presence of more advanced technology sufficient, on its own, to guarantee superior energy performance. Rather, the key is how the property is operated, and facility managers need to know how their buildings are actually performing (as opposed to predicted performance) in order to make the most ef-fective operational decisions, confirm intuitions, and recognize and build upon best practices.

■ The ENERGY STAR ScoreFor these reasons, EPA developed the 1–100 ENERGY STAR score to help

building operators understand how their properties are actually performing, compared with similar buildings nationwide (while accounting for size, climate and other key operating parameters).

Warehouses receiving a high score are considered to be better energy per-formers (lower energy use) than those with low ratings (higher energy use). A rating of 50 is defined as the industry median. A warehouse with a rating of 75 performs better than 75 percent of similar warehouses across the U.S. and is eligible to receive ENERGY STAR certification from the EPA in recognition of superior energy performance. Warehouses outside the U.S. cannot earn EN-ERGY STAR certification currently; however, they can still be benchmarked in Portfolio Manager®, allowing performance evaluation and identification of op-portunities for improvement.

The ENERGY STAR score is about more than just earning certification. Facility managers at any level of performance can use EPA’s Portfolio Man-

ENERGY EFFICIENCY

Increasing Warehouse Energy Performance with ENERGY STARBy Clark Reed

EPA has found that newer buildings do not necessarily outperform older buildings

in terms of energy efficiency.


IWLA Events Calendar

★ 2015 IWLA Economics of Warehousing & 3PL Sales CourseMay 13 to 15 – Niagara Falls, N.Y.

★ 2015 IWLA Safety & Risk ConferenceSeptember 2 and 3 – Chicago, Ill.

★ 2015 IWLA Technology & Operations for Warehousing Solutions ConferenceSeptember 24 and 25 – Fort Worth, Texas

★ 2015 IWLA Essentials of Warehousing CourseOctober 6 to 9 – Tempe, Ariz.

ager benchmarking tool to set per-formance goals, track energy use, and measure improvement over time. To date, more than 400,000 build-ings – including 3,000 warehouses and distribution centers – have been benchmarked in Portfolio Manager. Given such widespread use, ENERGY STAR scores have become equiva-lent to a “miles-per-gallon” rating for commercial buildings.

■ Behind the CurtainAn ENERGY STAR score is acces-

sible to the public for free through the ENERGY STAR website (www.energystar.gov/benchmark), where people can create their own pass-word-protected accounts in Portfolio Manager. As they set up their prop-erties, users are asked to describe basic features of their warehouse, including:• Warehouse type (refrigerated or

unrefrigerated);• Building floor area;• Number of workers on main shift;

• Percentage of building heated/cooled; and

• Hours of operation per week.These values are fed into an un-

derlying scoring model, which allows the tool to normalize for operating parameters, weather, and choice of fuel mix.

Once the warehouse space has been defined, users enter monthly energy-consumption data (which can be gathered from utility bills, captured from a building energy-management system, or provided by energy information service provid-ers). Portfolio Manager requires at least a year’s worth of data in order to generate a score.

From here, users can establish an energy “baseline” from which per-formance can be measured as subse-quent months’ energy data are added. Although cost is not a required input in order to obtain a score, Portfolio Manager allows users to enter this information in order to track cost per square foot and total energy expendi-tures over time.

■ After Scoring ProcessAlthough the 1–100 ENERGY

STAR score does not prescribe spe-cific actions to increase performance (better left to energy auditors and other professionals), the score can help guide property owners and op-erators towards general recommen-dations. For owners/managers of multiple properties, the score can also be used to help identify those buildings most in need of immediate attention.

Low Scores (1 – 49) – Greatest Opportunities for Investments

Warehouses in this category may provide attractive returns on capital

investments. Opportunities to up-grade lighting, HVAC, materials han-dling, and other significant energy using systems should be explored. Recognizing that a property is not performing as well as expected may also help to gain the attention and commitment of property- or orga-nization-level decision makers, who may recognize the need to devote resources to underperforming prop-erties.

Mid-Level Scores (50 – 74) – Fine-tune Operations and Maintenance

Warehouses with mid-range benchmarks should cons ider low- or no-cost activities such as developing and implementing pre-ventative-maintenance plans, re-viewing temperature set points and lighting schedules, increasing employee training, or re-assessing incentive, recognition and reward systems to ensure that they drive energy performance. Often, these relatively low-cost efforts can help shed unnecessary energy use that can help these facilities become “top performers.”

High Scores (75 – 100) – Reward and Learn

Warehouses within this range are among the highest energy performers compared with other U.S. warehous-es, and may be eligible to apply for the ENERGY STAR certification. Upon successful receipt of this recognition, facility managers may consider shar-ing their energy-management plans, operational strategies and other best practices within their organization – or even externally, so that others may replicate their success.

For more information, visit www.energystar.gov/buildings to find a registry of ENERGY STAR certified warehouses, trainings for bench-marking warehouse energy perfor-mance, tips from successful leaders to create an action plan for imple-menting upgrades, and many other resources to save energy and reduce costs.

Clark Reed is National Program Manager, ENERGY STAR, U.S Envi-ronmental Protection Agency.

An ENERGY STAR score is accessible to the public

for free through the ENERGY STAR website.

The 2015 IWLA educational offerings will help you continue to evolve to better serve your customers and succeed as a warehouse logistics professional. Registration is open at www.IWLA.com for most of these events. (Please note that IWLA has rearranged the education schedule to better serve members.)

2015 IWLA Economics of Warehousing & 3PL SalesMay 13-15Niagara, N.Y.

2015 IWLA Safety & Risk ConferenceSept. 2 & 3Chicago, Ill.

2015 IWLA Technology & Operations Solutions ConferenceSept. 24 & 25Fort Worth, Texas

2015 Essentials of Warehousing CourseOct. 7-9Tempe, Ariz.

2015 IWLA Warehouse Legal Practice SymposiumNov. 11 & 12Chicago, Ill.

IWLA has other educational opportunities available on demand or via distance learning. Watch the IWLA On-demand Resource Center at www.IWLA.com for the latest live webinars and archived materials.

IWLA Education Helps YouConneCt, DisCover, innovate

STORAGE SYSTEMS

Phone: 847-364-2400 Toll Free: 1-888-566-7826

www.konstant.com

Innovative Solutions for Storage and Material Handling Systems

Pallet RackPush Back Rack

Drive-In RackStructural and Roll Formed

Furniture RackPallet Flow Rack

Pick ModulesMezzanines

Supply ChainSolutionsSupply ChainSolutions

Integrated Systems

Pick Towers

Structural & Roll-Formed

Selective Rack & VNA

Double Deep Rack

Push Back Rack

Drive-In Rack

Carton & Pallet Flow Rack

Shelving Systems

Mezzanines

Pallet Runner®

1-866-473-3472www.redirack.com

3pl americas - international warehouse logistics … · your staffing provider ... il 60018 usa...

Documents