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Q&A On Distributors’ Annual Pricing Changes

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HEC Q&A on Distributors’ Annual Pricing Changes for FY2017

Q: More and more distributors appreciate the importance of pricing.  In your experience, how robust are the price increase management practices used by distributors today?

A: It varies greatly. Many bigger distributors have made investments in this area. Smaller distributors may not have formal price management processes and tools. They manage prices on a day-to-day basis through approvals, controls, and incentives – and they may rarely take time to address pricing in a strategic way. They may look at the price lever strategically at the time of budgeting. At that point, they may prepare a financial forecast to show where budgeted price lifts should come from, reflecting some data and the judgment of the individuals involved.

Q: Is this approach problematic?

A: If budgeted price moves do not generally materialize or stick, then this shows that the approaches failed to deliver. One major risk is that these distributors may get caught in a vicious cycle of chasing volume to make up for less-than-planned margins. Chasing volume then just puts even more pressure on price. More robust analytics can make the difference, so pricing can actually drive profitability, rather than being a problem area.

Q: What are some ways that more robust analytics can help, beyond what’s in management’s heads?

A: The industry knowledge of management can be very helpful. They can help identify key drivers of price sensitivity. A robust price segmentation model should leverage those insights and build on them. Analytics can help refine basic models and drive to higher levels of accuracy. For instance, after management identifies known drivers of price sensitivity, analysis of data can often tell which of those attributes may be more important in particular parts of the business. So, the segmentation model becomes more refined, as it is now driven by a combination of insights and also data. As another example, going beyond segmentation: it is also typically possible to align folks on relative areas of price risk. For example, raising prices at small accounts is typically viewed as less risky than making moves at large customers. This is interesting, but for many distributors this is not a new insight – they may already be pricing significantly higher at smaller customers. Analytics can tell you: according to the data, where have you already pushed the envelope so far that further price increases are unlikely to stick, and where do you potentially have some room left still?

Q: Even distributors with strong analytics resources can find it challenging to translate pricing recommendations from their analytics into actual results. What are some ways that help with this translation, so recommendations are not “overridden” by judgment of those managing day-to-day operations?

A: Better recommendations stand a better chance of being implemented. Still, for pricing recommendations to stick, there must also be buy-in, beyond just mathematical sophistication and accuracy. This can mean involving key folks in developing the mathematical models, so they also feel some ownership. The pricing recommendations should also be validated and tweaked before implementation. Stakeholders, particularly the front line, should get some education on why the pricing recommendations make sense. In our experience, if the math is strong, if it is developed in a transparent and collaborative manner, if it is its rolled out in a way that fosters buy-in, and if the right set of incentives exist, then it is generally possible to get folks to follow the guidance, even without relying heavily on controls.

Q: All this sounds hard. Pricing across large product and customer portfolios gets complex for B2B distributors, and getting sales folks on board can be a change management challenge. How can distributors do a better without major investments, like buying pricing software or hiring a full-time pricing analyst?

A: Pricing software implementations can be expensive, and too often they do not live up to their promises. For various reasons, price optimization technology has failed to deliver at many distributors. Analytics software is only effective if there is a qualified analyst to use it. As an alternative to relying solely on internal tools or hiring an analyst, some businesses opt to hire specialists like ourselves to use on an as needed basis. This gives them a way to surgically insert a highly specialized asset to augment their internal resources. In a high-impact area such as pricing, this approach can make sense in a lower mid-market business.

Lee Nyari
Managing Partner of The Innovative Pricing Group, LLC

 

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Supply Chain News: Highlights from the 22nd Annual Third-Party Logistics Study Part 2

For the 22nd consecutive year, Dr. John Langley of Penn State University again led the annual Third Party Logistics Study, released as usual this year at the CSCMP conference in Atlanta in late September, a collaboration between Langley, again this year Penske Logistics, and new sponsors recruiting firm Korn Ferry and consultant Infosys, basically replacing Capgemini, which was a sponsor for many years.

In part 1 of our review, we focused on the core data from the survey of shippers and 3PLs, including the dreaded “IT gap” relative to the perception of 3PL IT capabilities (see Highlights from the 22nd Annual Third-Party Logistics Study.)

Again this year, the report augments that core data with commentary and other survey data on what might be called special topics, which this year included use of blockchain technology in the supply chain, automation and digitization, and risk and resiliency in shipper-3PL relationships.

We provide highlights of each of these sections below.

Use of Blockchain in the Supply Chain

Blockchain, the technology that first broke into prominence as the foundation of the digital currency Bitcoin, has much promise in the supply chain by its potential ablity to make it easier and less expensive to share data across the supply chain versus traditional IT approaches.

As the 3PL study notes, the technology also “improves security because each transaction is validated and recorded by an independent third party. No one party can modify, delete or append any record without a validation of the edit from others in the network. The goal is to create one version of the truth, link information and create transparency.”

For every each movement of goods across parties, blockchain could identify the parties involved, price, date, location, quality, state of the product, and other information relevant to managing shipments and the products on those shipments.

The report says “The public availability of the ledger makes it possible to trace back every product to the very origin of the raw material used.” But this isn’t exactly correct, as often a controlling party – say a Walmart – will restrict which parties have permission to see what information – and it seems highly unlikely to SCDigest that Walmart would open up all its supply chain data to its supplier and carrier base.

That noted, the report says “The information shared would increase visibility and minimize the potential for human error. It could also dramatically reduce time delays, eliminate added costs, minimize human error and decrease corruption,” – and could even conceivably provide insight into real-time demand for goods and logistics services.

Nevertheless, the technology is very new, with conflicting standards – and is still little known or understood by most. The study found the majority of respondents – 67% of shippers and 62% of 3PL providers – said they don’t know enough about blockchain to rate it at this time.

However, the report encourages 3PLs to consider adopting blockchain as a way of differentiating their offerings.

This section of the report concludes with the observation that “Costs to collect information have decreased, but it isn’t free, and the value proposition [of blockchain] is yet to be defined. There is a balance of mitigating risk and improving security and the costs associated with doing so. More time is needed to determine which companies are willing to invest in the technology.”

 

Automation and Digitization in the Supply Chain

This section covers a broad range of technologies that are impacting the supply chain, from AI and big data to autonomous trucks, with a lot of space devoted to various levels of truck driving automation.

More traditionally, the report says that there is often a lot of data in core Warehouse Management and Transportation Management systems that could be mined for the mutual benefit of shippers and 3PLs.

From a 3PL perspective, an executive from Penske Logistics notes that “Granular data related to the handling of an order and the handoff to the warehouse or the fleet, as well as the visibility out on the road and time records of deliveries, makes you much more efficient and provides insight into the costs to serve individual customers or individual stops. Then you can make better decisions on how you price your product in market.”

Moving to newer technologies, the report noted the rising interest in and availability of on-line freight matching services, as the Uberization of load matching – from companies including Uber itself but a growing number of others – is already having an impact on shippers and 3PLs.

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Europe Container Terminal (ECT), Europe’s Biggest Port

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The Europe Container Terminal (ECT), which operates 672 acres of PoR along the west coast.  At 50 years old, it was the port’s first container terminal, and recently became the first fully-automated terminal in the world.

We always pictured a large container port with workers all over the docks. This made it surprising to see ECT’s docks essentially people-free. Instead, we saw auto-guided vehicles and cranes moving containers everywhere.

Here’s a few facts about ECT:

  • It handles about 80,000 containers each week (about 100,000 during a good economy)
  • It handles 120 trains per week, most of them going to Germany
  • It handles 500 barges per week
  • It handles 22 trucks per week
  • ECT employees about 2,000 people, working in five shifts, 24/7

HEC Distribution is your USA Based, Global Supply Chain Partner, specializing in B2B Import/Export Services.  Please contact us today at www.HECdistribution.com, to learn more.

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PowerFilm’s AA Solar Charger

PowerFilm’s AA Solar Charger works to keep 2 or 4 AA rechargeable batteries always at the ready.

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PowerFilm’s AA Solar Charger

The compact design makes the AA solar charger an easy addition to your next outing or excursion. Feel secure in knowing your AA battery powered devices will always be on.

How the charger works:

  1. The 1.5 watt solar panel charges 4 AA (included) batteries in 6 hours or less depending on the level of charge in the batteries.
  2. Once charged, the AA batteries are ready to be placed in any device running on AA batteries.
  3. Can be used to charge 2 or 4 AA batteries (charge time for 2 batteries is reduced).

What’s in the package?

  • 4 rechargeable AA batteries
  • 1 AA Foldable Solar Charger
  • 2 AAA battery adaptors for charging AAA rechargeable batteries

Best uses:

  • AA or AAA battery charging only
  • Digital cameras
  • Flashlights
  • Portable radios
  • Two-way radios
  • Camp lighting

Specs

  • Operating Voltage: 3.6
  • Wattage: 2.2
  • Current: 0.6 amps
  • Width (mm): 139.7
  • Length (mm): 800 unfolded; 82.55 folded
  • Width (in): 5.5
  • Length (in): 31.5 unfolded; 3.25 folded
  • Weight (kg): 0.224 w/ batteries
  • Weight (lb): 7.9 ounces w/ batteries

Find more PowerFilm products here on our website!

Right Products. Great Price. Goals Met.

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Avoid Disaster through Supply Chain Risk Management

A tsunami in Japan and floods in Thailand in 2011 disrupted the electronics supply chain. Original equipment manufacturers (OEMs) were not able to get the electronic parts to produce products as planned. Many were taken by surprise. Any OEM and or supplier that take a reactive approach rather than proactive to dealing with natural disaster disruptions are taking a big gamble.

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Labor unrest, electrical/nuclear blackouts, and counterfeit parts sneaked into ad hoc electronics supply chains. Some OEMs were not able to quickly identify their deep tier suppliers after the disruptions.  In at least one instance, a third-tier supplier was discovered as the single source for multiple suppliers in the second-tier.

To better prepare for similar disruptions, many OEMs have turned to enterprise risk management (ERM) to proactively detect, prevent and mitigate risks in the supply chain with a focus on deep tier suppliers.  While business continuity planning is an important part of ERM, it can also help to increase the globalization of electronics supply chain with alternate locations and transportation routes.  The larger the globalization is, the more information flows though the supply chain and the more it is vulnerable to cyber attacks.

Progress has been made in standardizing ERM to allow OEMs to collaborate one another.  ERM includes ISO 28000, the standard for security risk management system for supply chain, as well as other related ISO standards.

While different vendors have different strategies on implementing actionable electronics supply chain risk management plan, the best strategy is dynamic risk assessment plan. For example, LockPath’s Keylight platform lets administrators conduct dynamic assessments to gain greater visibility into the risk and compliance landscape.  The administrators can include questions, link assessments to controls, and configure follow-up or remediation tasks based on user responses.

Risk management plan consists of four key elements:  assets, vulnerabilities, risks and safeguards/remediation.

Location is the most important asset. The organization should ascertain whether it is located in an industrial cluster. Contacts of OEM’s emergency personnel should be readily available. Audit reports, disaster recovery and business continuity plans, Service Level Agreements and charts of how multi-tier suppliers are related to one another should also be considered important resources.

All electronics supply chain assets come with vulnerabilities. In many organizations, through growth or acquisition, supply chain warehouses have merged. Too often, single source n-tier suppliers are discovered only after a disaster or catastrophe. OEMs should also avoid using second sources within an single industrial cluster in a high-prone disaster area. Organizations should also consider its cyber vulnerability. Today’s jackers are more sophisticated with biometric frauds and new types of attacks.

A dynamic risk assessment approach is more flexible than a static approach. Lockpath’s Keylight platform, for example, contains Risk Manager, Audit Manager and Compliance Manager and four other applications.  “The seven applications of the Keylight Platform are designed to be used individually or their power can be magnified by using them in combination with each other,” said Sam Abadir, director of product management at LockPath, adding that “having an integrated view of risk across the supply chain will make OEM’s business more resilient to risks and interruptions.”

When safeguards cannot be implemented cost effectively, consider three ways of handling of residual (remaining) risks.  First, get property insurance (from providers such as FM Global) that can be customized to the supply chain enterprise’s business needs. Consider supply chain intelligence analytics (a wide variety of platforms such asFusionOps are on offer) to reduce the number of residual risks. Third, consider Electronic Industry Citizenship Coalition (EICC). This industry organization requires members to take an annual self-assessment to help identify the social, environmental, and ethical risks in their supply chains.

How has your risk management planning evolved over time?

*Article originally posted at Ebnonline.com*

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Product Highlight: Andis Cordless Envy Li

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Andis® introduces the new Cordless Envy Li clipper into its line of beauty and barber tools. Designed to be lightweight and versatile, the Cordless Envy Li clipper is a high speed, adjustable clipper for all-around professional styling. The Cordless Envy Li is also Andis’ first professional adjustable-blade professional clipper, a favorite for barbers and stylists executing the best fades in the industry.

Styling has never been more effortless than with the versatile Cordless Envy Li clipper, says Karen Formico, vice president of marketing for Andis. As Andis’ first adjustable blade cordless clipper, it delivers the same power as our popular Envy Clipper and is perfect for delivering a professional look with the versatility of cordless.

The Cordless Envy Li clipper is powered by a powerful lithium-ion battery that runs continuously for up to two hours and can be operated with the cord when the battery is charging for uninterrupted cutting. In addition, the clipper is equipped with a carbon steel blade that adjusts from size 000 to 1, for styling versatility.

Find The Cordless Envy Li Adjustable Blade Clipper by clicking the picture below!

 

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Cordless Envy Li – Adjustable Blade Clipper

Right Products. Great Price. Goals Met.

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Report: Industrial Fire Safety Equipment Market To Grow 7% By 2020

LONDON — Technavio analysts forecast the global industrial fire safety equipment market to grow at a CAGR of a little over 7 percent during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the global industrial fire safety equipment market for 2016-2020. APAC, EMEA and the Americas are the key regions of the market, which have been considered in the scope of the report.

According to Gaurav Mohindru, a lead analyst at Technavio for research on engineering tools, “The Middle East, which has an extensive presence of high-risk industrial sectors like oil and gas production and refining, is incorporating advanced technologies to tackle unforeseen fire and safety hazards. Across the Middle East, countries are integrating drones into their homeland security systems to fight fires and other disasters in high-risk industrial areas. These innovations may be integrated with the conventional industrial firefighting equipment in the near future.”

Technavio analysts highlight the following three factors that are contributing to the growth of the global industrial fire safety equipment market:

  • Outdated infrastructure in oil and gas sector
  • Redefined industrial safety codes and regulations
  • Anticipation of future scenarios using fire protection analysis

Outdated infrastructure in oil and gas sector

The oil and gas industry is considered to be most dangerous and hazardous industry. The history of fire accidents in the industry has shown that careless actions have, many a time, led to catastrophic consequences.

For instance, 27 people were killed and 73 injured in an explosion at Algeria’s Skikda LNG plant in 2004; the cause was a leakage of a large quantity of gas from a cold box exchanger that ignited when it was fed into the boiler.

This accident was in the downstream sector. In the oil and gas industry, the upstream sector, especially offshore drilling sites where many rigs manufactured before the 1970s are still in operation, constitutes the largest source of fires. The major concern thus lies with the downstream sector.

The majority of the oil rigs are in the US, which has more than 3,000 operational rigs with 98% of the machinery being in operation for more than 30 years.

These oil rig platforms are mostly equipped with traditional fire safety systems. After incidents like BP Macondo in 2010, the US government and the Coast Guard made it mandatory to install upgraded fire safety systems. The use of outdated machinery and fire safety systems will increase the demand for new fire safety equipment in the sector, thus boosting the growth of the market.

Redefined industrial safety codes and regulations

The development of new codes is in the process of initiation in many industries to ensure the safety of the work environment. The first step in such a development is conducting rigorous fire protection and operational analysis. The National Fire Protection Association (NFPA) is a US-based agency that coordinates with the community for fire protection to improve the efficiency of firefighters and provides a clear understanding of real-life fire accident scenarios. By doing so, the agency aims to develop the tactics and procedures needed for safe operations during accidents. Most industries like chemical, oil and gas and other prominent process industries are also upgrading their infrastructure with widely-used fire detection and suppression systems.

Anticipation of future scenarios using fire protection analysis

Earlier, a fire safety system in an industrial facility was installed with the primary aim of dealing with accidents after such situations had occurred. They were not designed to meet the future demands or circumstances. The number of equipment installed in a facility were insufficient not only in terms of the size of the facility but also with regard to the potential threats.

Codes relevant to industrial design are now updated based on rigorous and sophisticated testing standards rather than relying on traditional safety procedures.

For instance, the NFPA 2: Hydrogen Technologies Code governs standards for hydrogen equipment that is based on calculated flame hazards, which are caused by the system pressure and volume. The previous NFPA versions had regulations relating to standardized setback distances, which were calculated based on the exposure.

*Original article is from IndDist.com*

Check out HEC Distribution’s line of fire safety equipment today.

Right Product. Great Price. Goals Met.

 

 

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Warehouse Makeover: Blueprint For Change

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When it comes to realignments in the global supply chain, mega-retailers such as Amazon, Alibaba, Target, and Walmart flooding today’s headlines with announcements of strategic acquisitions, new distribution and fulfillment centers, and multi-million-dollar investments to overhaul existing supply chain operations.

But, it’s not only the global retail giants that gain market share and operating efficiencies through flexible supply chain strategies. Achieving flexibility should be the goal of every supply chain leader, especially in today’s complex operating ecosystem. One area of progressive solutions is flexible distribution center (DC) design. The warehouse has evolved from its basic function as a storehouse to an intelligent component of the entire global supply chain. The warehouse design of tomorrow is transitioning to meet the physical needs of the basic warehouse operator as well as the more highly automated e-commerce fulfillment center.

Along with agile and lean, flexible is a common supply chain buzzword these days. But what does it mean to be flexible from an operations standpoint? Academically speaking, the word flexibility in supply chain terminology refers to the ability to adapt quickly to market demands and deliver products and services to customers promptly, according to Marc Schniederjans, author and business professor, University of Nebraska.

It’s important to fully grasp the concept of flexibility—not only its definition, but also its real-life operational applications. Flexibility leads to agility, and agility provides organizations across the supply chain a competitive market advantage. In supply chain speak, flexibility can convey a multitude of applications. As DC managers transition from tactical to strategic approaches in supply chain management, companies of all sizes are evaluating flexible alternatives in building and network design, expanded value-add customer services, and strategic software applications.

MAXIMIZING THROUGHPUT

When Walmart took a strategic overview of its supply chain in 2005, one area of focus was maximizing throughput in its distribution network. At the time, with almost 300,000 SKUs, the global retail giant assessed how its perishable commodities and dry goods functioned in the distribution system.

In a strategic move to promote flexibility, the company elected to open 40 high-velocity cross-dock distribution centers designed specifically for perishables distribution to store locations. Built on a smaller footprint, these temperature-controlled facilities required less automation, thus promoting quicker inventory turns than the larger DCs in Walmart’s distribution network.

Soon thereafter, Walmart’s supply chain managers were so enamored with the idea of high-throughput DCs that the company elected to consolidate fast-moving, high-turnover dry merchandise—such as paper goods, seasonal items, and toiletries—in the perishable facilities. The consolidation strategy of combining high-demand dry goods with perishables paid off, further enhancing efficiencies and flexibility in Walmart’s supply chain. Fast forward a full decade and Walmart is realigning its network design to capture the emerging e-tail market with a $1-billion investment in specialized fulfillment facilities, automated high-throughput equipment, and new supply chain talent.

When it comes to DC network designs, Amazon wrote the book on flexibility in facility specialization. With a total of 160 (and growing) current U.S. distribution facilities, Amazon has seven distribution facility prototypes across its North American supply chain. The distribution focus and number of each warehouse facility type are:

  • Fulfillment and redistribution centers (75)
  • Sortation centers (26)
  • PrimeNow hubs (43)
  • Delivery/sortation stations (16)

In Amazon’s ever-evolving delivery network, new facility prototypes include Delivery Station Networks, which are located close to metropolitan population centers and smaller in size—less than 100,000 square feet. Amazon has also introduced two new delivery concepts for groceries that require independent operating facilities: Amazon Fresh for perishables and Amazon Pantry for same-day delivery of dry goods. As delivery channels evolve from the point of production to the point of consumption, Amazon and other multi-channel retailers are realigning supply chain strategies.

DC DESIGN DYNAMICS

Today’s modern warehouse design is larger, taller, wider, brighter, smarter, and more flexible. Basic design in the 21st century DC includes higher ceiling heights (36 feet and higher), flat concrete floor surfaces, LED and natural light features, expanded trailer storage, and highly automated materials handling equipment operated by intelligent software.

Mandated by a more sustainably conscious corporate mindset, LEED-certified buildings were more commonplace in the pre-recession era. In today’s more cost-driven environment, LEED is no longer the required standard in warehouse design.

“Developers or tenants don’t want to pay for the extra cost of upgrading to LEED certification,” notes Stuart Price of Conlan Construction, a general contractor that specializes in constructing distribution facilities. “Today, we build to what we call LEED-light.”

DOES THIS PRODUCT MAKE MY FLOOR LOOK FLAT?

Just when it seemed industrial developers had introduced every imaginable upgrade to improve operating efficiency and throughput, the issue of a better warehouse floor has surfaced. Similar to warehouse roof systems, floor slabs are an entity unto themselves, producing various operational optimization complexities.

The latest trends in DC building design include super-flat floor surfaces and specialized concrete to ensure a level and solid pour. Known to settle, curl, crack, chip, and sweat, warehouse floors have progressed from rough concrete slabs to a smooth, flat, and sheen surface, designed to enhance floor-load capacity.

“A level floor slab is more important than ever,” says Mike Gray, president of Ridgeline Development, a real estate developer of bulk distribution properties in major North American markets. “Requirements for a flat and level floor system are increasing due to the materials handling equipment servicing higher cube heights and narrow aisle widths in modern warehouse facilities.”

An Illinois-based concrete innovator recently introduced a new design—Ductilecrete—in floor slab structures. The concrete product is stronger and more durable than traditional warehouse floor systems. The floor guarantees against curling, shrinkage, and moisture—issues that plague an aging floor slab.

The concrete surface is not only more resilient but contains fewer expansion joints, which equates to less floor damage and wear on materials handling equipment and lower maintenance costs. The surface also provides a light-reflective sheen that minimizes glare and mitigates risk for forklift operators.

“No other occupant of a warehouse facility benefits more from a slab system with fewer expansion joints than today’s e-commerce user,” Gray says. “A flat and expanded floor surface area enables higher and tighter rack configurations and level conveyor installation.”

A slab with up to 75 percent fewer expansion joints maximizes the floor surface area for flexible applications. The flat floor throughout the warehouse enables more solid footing for high-bay pallet racking, heavy machinery, and high-speed conveyors used in e-commerce fulfillment centers. Fewer expansion joints, combined with today’s wider column spacing, equate to flexibility in rack systems and conveyor layout design.

“New designs in flat floor slab systems resonate with our distribution customers,” explains Thomas Cobb of Oakmont Industrial Group, a national developer that specializes in bulk distribution properties. “The floor strength enables our tenants to increase storage capacity and flexibility due to the heavier floor loads without the increased costs associated with a thicker slab foundation.”

In late 2015, Interface Carpets, an international flooring company that specializes in modular carpet tile, leased a 370,000-square-foot cross-dock facility from Oakmont for a southeast regional DC.

“Some of the main drivers in the selection of this property were the 36-foot ceiling clear height and the increased load capacity offered by the super-flat floor system,” Cobb explains. “The floor design enabled Interface to maximize its storage requirements with higher racking and a narrow aisle configuration.”

In addition to advanced building features, such as higher ceilings and flat floor surfaces, e-commerce facility design also calls for flexibility in truck court and employee parking areas. As distributors demand more on-site trailer parking in DC locations, developers are challenged with designing truck courts and storage yards with higher trailer parking ratios.

Additionally, asphalt truck courts are becoming obsolete in favor of all-concrete designs.

“With heavy truck traffic in a typical distribution center, it makes sense to design the truck court with 100-percent concrete—from a maintenance and utilization standpoint,” says Conlan’s Price. “Concrete generates less heat than asphalt, providing a practical, sustainable solution.”

FROM HARD SURFACES TO SOFT LANDINGS

While upgrades in DC design are trending to meet the high volume demands of fulfillment centers across North America, software solutions targeting inventory management and throughput optimization are evolving to address omni-channel distribution models.

Warehouse Management Systems (WMS) were introduced two decades ago to manage inventory, but software systems have advanced as the demand for data flow and supply chain intelligence has increased. From the legacy WMS platforms, Warehouse Control Systems (WCS) were launched to interact with advanced materials handling equipment, such as sortation and picking simulation systems.

The latest evolution in next-generation supply chain software is the Warehouse Execution System (WES)—an IT platform that interfaces with an existing ERP system or WMS to optimize inventory flow and execute more complex picking production commonly found in e-commerce facilities.

“Our WES acts as the conductor in an orchestra concept,” says Dave Williams, director of software solutions at Westfalia, a warehouse automation firm based in York, Pa. “The WES conducts the other software applications, allowing a shipper to track inventory downstream in the supply chain all the way to the retail level.

“Our software gives shippers the ability to track inventory from the raw material stage to the consumer purchase point,” he adds. In a highly regulated industry such as food and beverage, flexibility is the key to high throughput and lean operating systems to eliminate food waste.

“How a customer rotates inventory is a primary concern,” says Williams. “Our WES software enables a distributor to track perishable expiration dates to ensure quality and freshness. The ‘first expired/first out’ concept is a huge driver in the way our WES interfaces with product flow. We build flexibility into our software tools.”

WAREHOUSE FUNCTIONALITY EXPANDED

Today’s modern warehouse encompasses more than just a storage box with four walls to house inventory. Next-generation DCs include value-added services (VAS) and intelligent applications. Across the global supply chain, the 21st century DC offers flexibility to the end customer. In today’s competitive landscape, distribution companies across North America are enhancing their value proposition.

Companies are providing customers more value-added services, particularly in modern e-commerce operations. For example, New England-based ModusLink recently partnered with a top tier electronics manufacturer to provide flexible postponement, customized assembly, packaging, and last mile delivery strategies to enhance the shipper’s B2C strategy.

“From our solutions center, we provide full flexibility with a custom fit for the consumer’s phone,” explains Shel Virden, group business director of global account management for ModusLink. “Our process starts with the online order, includes adding personalized phone accessories, and ends with direct delivery to the end user.”

Shippers and manufacturers trust third-party providers to execute flexible value-add services beyond traditional warehouse functions. “We manage the customer’s inventory supply side as well,” Virden says. “We’re the last group in the supply chain to touch the phone before it gets in the customer’s hands, so we are given a high level of trust from brand execution to final-mile delivery.”

When it comes to e-commerce specialization in warehouse flexibility, Mason, Ohio-based Intelligrated provides advanced sortation automation with its Dynamic Discharge Compensation (DDC) technology. DDC provides for high-speed conveyor processing up to 25,000 units per hour with 99.99 percent accuracy.

Through enhanced vision technology, DDC detects each item’s exact size and location on the conveyor and relays the data to intelligent software, adjusting the product’s discharge timing from the belt to enhance throughput and order accuracy.

“The high-speed conveyor provides near perfect intelligence and precision to compensate for the product size and location on the belt once the item is discharged from the belt,” says Satyen Pathak, Intelligrated’s senior product manager.

GAINING A COMPETITIVE EDGE

Keeping pace with the latest in materials handling equipment, software solutions, and facility design features can be daunting for supply chain managers. Where does an organization invest resources to help maintain a competitive edge in the distribution game?

Senior management scrutinizes key metrics such as ROI, so deciding where to invest capital to enhance DC flexibility and functionality can be the difference between gaining or losing market share.

Taking flexible warehouse solutions to a new level, newcomer Flexe has introduced the ultimate in warehouse space utilization. Through a cloud-based platform, the Seattle start-up connects short-term users of warehouse space with companies across North America that have excess storage capacity.

“Our platform works well for companies that can’t predict what the next three to five years will look like,” according to Ryan Morel, Flexe’s general manager of market development. “We can coordinate storage for a single pallet or meet a large seasonal storage need where a 3PL may not be the answer.”

In the end, flexibility is about service to the customer and providing operating efficiency across the supply chain. As updated building design features support higher throughput and storage capabilities, advanced warehouse execution software complements a synchronized distribution platform.

Technology applications, advanced automation, and progressive building design all add up to provide flexible support to the end-to-end supply chain.

 

*Article originally posted at InboundLogistics.com*

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US manufacturing is alive and well

 

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Historically speaking, there’s no doubt that the U.S manufacturing industry has had an incredible effect on the U.S economy. Through the captains of industry in the 20th century, manufacturing quite literally propelled the U.S into the World super power it is today.

When we talk about manufacturing, we’re referring to the process of transforming raw material into new products – Using whatever industrial means necessary. The production of cars, furniture, oil rig machinery and even medicines falls under the category of ‘manufacturing’.

It may sound like a dull sector, but manufacturing is the driving force behind tools and technologies used across multiple sectors. Health care, construction, solar energy, nuclear energy and automobile innovation – It all starts with creating a product, and it’s human nature to constantly adapt, evolve and improve anything we create. Manufacturing is one of the key industries to drive forward R&D in the U.S, showing a 250% increase in manufacturing efficiency per employee since 1987.

Throughout the 21st century China has been popularized as the manufacturing powerhouse. Whilst that is true, the public assumption that U.S. manufacturing has decreased as a result couldn’t be further from the truth. In fact, even back in 2010, Business Insider reported that Chinese manufacturing companies were making plans to invest in Idaho!

Over 9% of the U.S population are employer in the manufacturing sector, and they’re earning on average $25.58 / hr, significantly more than the $21.32 / hr national average. Numbers employed in the sector were hurt significantly after the 2008 financial crash, but the situation is steadily recovering, and it’s estimated that an additional 3.5 workers will be needed in the next 10 years to meet the demand for homegrown U.S. manufacturing.

The infographic below shows 15 incredible facts about the positively flourishing U.S manufacturing sector, and the exciting times that lay ahead.

*Originally posted at BusinessInsider.com*

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The Digital Disruption In Industrial Sales And Marketing

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“Half of the money I spend on marketing is wasted, I just don’t know which half.”

A popular statement, no doubt; however, in 2016, it should be a statement from the past. The world of industrial manufacturing and distribution is driven by data and automation. The rise of industrial robotics, smart manufacturing and the Internet of Things is changing the ways we produce and move products around the world. As a result, businesses are improving efficiencies, limiting downtime and reducing the costs associated with getting a product into a customer’s hand.

The buzz surrounding the latest efficient technologies on the warehouse floor is exciting, but what often gets lost in this excitement is the cost of acquiring a customer. The B2B sales cycle is traditionally longer. Sales teams are forced to navigate a confusing process, which can result in missed opportunities and lost revenue. However, the same digital and data-driven revolution that is leaving its mark on industrial distribution systems is having an equally significant impact on industrial sales and marketing efforts.

Largely this is due to a change in B2B customer behavior. A recent report from the respected global consulting firm, Bain & Company, interviewed 370 marketing and sales executives working in the industrial and technology sectors. The numbers are impressive. Almost half of those surveyed said that digital capabilities have significantly changed their customer’s behavior. The report estimates that nearly two-thirds of all industrial B2B buyer research is now done online, meaning that customers have access to more information, and as a result, more power than in the past.

This power shift has by no means left industrial sales and marketing teams in the dark. Instead, for the most successful businesses, the lights have never been brighter. Digital capabilities allow industrial marketers to do more with less, resulting in more effective efforts that better connect and engage with buyers. As buyers spend more time online, businesses are able to paint a clearer picture of their behaviors and buying habits. Bain & Company suggest that most businesses are already sitting on a wealth of customer data, however only the most successful are using this information to their advantage.

Industrial buyers conducting research online provide valuable information for sales and marketing teams. It is easy to understand what customers are interested in, which pages or lines of business on a website get the most attention, and which products or offers are proving to be the most effective. For industrial businesses that make proper use of this information, it is impossible for marketing efforts to go to waste. By monitoring what’s working best, where customers are coming from, and what impact those efforts are having on sales, industrial businesses can turn once blind marketing efforts into well-oiled sales machines.

And the impacts of the digital revolution don’t stop there. While it is now possible to build and measure B2B marketing campaigns with incredible accuracy, industrial sales teams are still faced with managing a traditionally longer sales cycle. Unlike B2C sales, B2B purchases are rarely made on emotion. Instead, they are the result of a lengthy review process, often by many different people within an organization. Products are assessed, compared and sometimes tested before a major purchase is made. All of this can be exhausting for sales teams and valuable opportunities can be overlooked or lost during the extended process.

Marketing automation tools have changed this. Automation helps sales teams to understand what B2B customers are interested in and how close they are making a purchasing decision. It also allows sales teams to send automated communications to buyers throughout the sales cycle, ensuring that no leads are forgotten, while alerting sales teams when a prospective customer returns to a website or looks at a new product. All of these factors combine to improve efficiency, allowing sales teams to focus efforts on the leads that are most likely to buy, without losing track of leads that may not be as far along in the buying journey.

Fred Yee
CEO and Founder of ActiveConversion
B2B manufacturers and industrial distributors are on the front lines of the digital revolution. Technologies which improve production and distribution system efficiency are becoming essential to compete on a global scale, but that is only half the picture. The most successful industrial distributors are also implementing data-driven marketing technology to understand customer behavior and streamline the sales process by reducing wasted efforts and scoring the best opportunities — all resulting in a lower cost to acquire new customers.

 

*Originally posted at IndDist.com*

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Home Depot, Lowe’s Report Strong Growth To Professional Customers

 

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(FILES)A Home Depot store is seen in this March 28, 2013 photo in Silver Spring, Maryland. Home improvement retailer Home Depot boosted its forecast for the year on August 20, 2013, crediting the recovery in the housing sector for a 17.2 percent jump in quarterly profits. Net earnings for the second quarter ended August 4 came in at $1.8 billion on revenues of $22.5 billion, up from $1.5 billion on revenues of $20.6 billion a year ago. The results translated into per-share profits of $1.24, three cents above analyst forecasts. AFP PHOTO/Jewel SamadJEWEL SAMAD/AFP/Getty Images

Home Depot and Lowe’s — the two largest home improvement centers in the country — say they have increased sales to professional customers by double digits and are targeting them by offering better credit terms, flexible deliveries and on-line transactions. The growth seems to indicate both companies will continue to seek professional (pro) customers and MRO buyers, a direct shot at construction and industrial distributors.

Distributors should note the steps that these two giant companies are taking to capture a higher share of the pro construction market. Both are adding products to their pro business lines as well offering a number of new services, making it easier for their pro customers to order and receive supplies.

“We continue to strengthen our pro business, driving comps well above the company average, by further advancing our products and services offering to better serve the pro customer,” said Lowe’s COO Ricky Damron during the company’s Q1 earnings conference call.

Lowe’s has been developing an omni-channel approach to serve its pro customers. One of those strategies is using Account Executive Pro Services (AEPs). AEPs work with larger regional customers to have them order and replace products across multiple geographies and locations.

“Our AEPs are a key component of our strategy to grow our business with larger pro customers,” Damron said during the earnings call.

Lowe’s has more than 180 Pro outside representatives in the field and says it has experienced great success with the program as grows sales in AEP comp sales. The company expects to add more AEPs to create additional opportunities to reach pro customers.

Damron also says that Lowe’s is using a targeted marketing approach aimed at the professional customer and conducting special buying events for them to drive awareness and generate new business.

“We have been pleased with these results in driving both incremental purchases with existing pro customers and increasing relationships with new customers,” Damron said.

Meanwhile, Home Depot has taken several steps to grow its pro business and sales to that segment are reported to be outpacing the company’s average.

The company is offering pros private label cards that have extended terms, special return policies and other steps that are leading to a substantial number of new accounts, higher than what HD had originally anticipated.

Home Depot also recently designed and tested a pilot plan to deliver products faster and more efficiently to pro customers. The company says that it was encouraged with initial sales and it has since expanded into additional markets such as Atlanta, GA.

“We saw a pretty substantial increase in the customer option to choose delivery and we’re seeing double-digit growth,” said Craig Menear, chairman, CEO and president of Home Depot in a call with analysts following release of the company’s Q1 earnings.

The company offers flexible delivery to contractors seven days a week and next day delivery on in-stock items. It also offers contractors the ability to order on line and pick up orders in two hours, as well as beneficial credit terms and fuel discounts.

Menear also said Home Depot expects to see more growth in MRO sales due to its acquisition of Interline Brands, one of the largest industrial distributors in the country.

“The Interline integration is progressing nicely,” he told financial analysts. “We continue to move forward on a number of exciting sales driven initiatives, and we have outlined a path to truly realize the value of the Interline acquisition and the total pro opportunity over the next 18-to-24 months.”

Home Depot acquired Interline Brands last July for $1.63 billion. The acquisition was designed to help HD sell more supplies to customers in the building and maintenance profession. The company is pleased with the collaboration within its sales organization as they jointly attack end user professional markets.

Home Depot says it currently has a small percentage of sales in building and maintenance and Menear said “we think there’s lots of opportunity to grow.”

After releasing its quarterly results, Home Depot raised its fiscal 2016 sales guidance and now expects sales will be up approximately 6.3 percent and comp sales will be up approximately 4.9 percent.

Lowes’ RONA Acquisition Approved

In addition, Lowe’s is expanding its reach and has has received regulatory approval for its huge $2.3 billion purchase of RONA, its large competitor in Canada.

In Mid-May, Lowe’s received approval from Canadian regulatory authorities for its $2.3 billion acquisition of large competitor RONA, a leader in Canada’s home improvement and renovation retail market. The transaction was approved by RONA’s shareholders in March, but was subject to approval by regulators in the U.S. and Canada.

RONA, with its headquarters in Boucherville, Quebec, has approximately 500 corporate and independent affiliate dealer stores and nine hardware and construction material distribution centers. The company has more than 17,000 employees in corporate stores and over 5,000 employees in the stores of its independent affiliate dealers.

Lowe’s has 42 stores in Canada and virtually no presence in Quebec, a province that accounts for about 23 percent of the country’s population. RONA has a dominating presence as the home improvement market retailer.in Quebec.

Lowe’s had attempted to buy RONA four years ago, but the deal failed to go through, largely because of political backlash in Quebec.

 

*Originally posted on IndDist.com*