February 9, 2011
Scott Brinks’ has a systems view of logistics after 30+ years’ experience in all phases of it, including at the C-level doing turnarounds. He’s moved all kinds of loads, thinks lean, postponement, reverse logistics, milk runs … He has an idea: We could eliminate half the trucks now plying American roads without sacrificing the social benefit they provide, or never need more trucks than we have now. If you would like to purchase a device for your truck such as an ELD Device then you can purchase one from https://fleetmastersinc.net/best-eld-devices/.
He was interviewed on Jan 15, 2011. You can contact Scott at: firstname.lastname@example.org
Q: How can we do this?
A. By posing a basic question: “Why do we use so many trucks? Three reasons:
- Wasteful marketing practices and promises.
- Hauling too much air and water.
- Inefficient truck routing.
Q. What kinds of marketing practices are wasteful?
1. Too many retail packages are designed to “scream buy me;” then add extras for security and identification. Odd shapes don’t nest or pack well. How many retail packages do you see for which material used for the package exceeds that of its contents; wasteful to handle and transport; and difficult or impossible to recycle?
2. Marketing convenience for the customer, but wasteful to supply. For instance, Windex is a good product, but sold in a hand-shaped bottle ready to squirt. Years ago, we would have bought a long-life dispenser bottle, and when it ran out, buy a little concentrate, add water, and mix. But this seems messy and awkward for consumers, just as it had been for janitors before PortionPac training. Many products are like this.
3. Provide more fast delivery than customers really need, or set up systems to trigger shipments more frequently than necessary. For instance, every month, I get a little box of medicine packed in a box full of air. Assuming that the extra pack is necessary, doubtful, why do it 3-4 times more often than necessary? Yes, excess inventory is also wasteful, but look at the bigger system. What percent of UPS or Fed-Ex deliveries are really next day critical? Greater flexibility in shipping windows opens more possibilities to optimize truck routing circuits.
4. A classic case of marketing conflicting with shipping is Procter & Gamble’s Pringles. Potato chip bags are mostly air. P&G learned to make them in a uniform shape, stack them in a can, and market them in the 1960s. But a can is not the ultimate shipping container either, and Pringles proliferated multiple types and flavors to build a billion dollar global brand that P&G marketing constantly defends from controversies that may dent it. Olestra used in the fat-free version is probably the best-known controversy.
Q. Is this conflict the result of thinking that more and bigger is better?
A. Many business motivations contribute. Certainly companies racing to capture revenue may reduce their concern for system waste. However, when interests and perspectives are limited to the boundaries of separate departments and companies, a lot of opportunities are simply not seen. Companies like UPS have long used industrial engineering to improve efficiency of operations separately, but reducing the total number of trucks and loads requires looking at the system from a bigger view.
Q: A lot of criticism has been leveled at transporting food great distances. Any comments?
A: I’ve had long experience working the food industry, hauling its products. I don’t know any source of exact figures, but based on experience, up to a third of trucks which probably had a Beast price on commercial tires in Atlanta, GA on the road carry food products, so it’s an important segment of the whole system. I’ve even shipped frog legs from Bangladesh. They’re pretty good and arrive in great shape.
The North American food transport system is among the best on earth, but still has too much waste. For example, we lose about 15% shrinkage in produce at the wholesale level, and at least as much at retail. Cutting that by half would significantly reduce the number of truck loads.
Preservation of food depends on controlling temperature and humidity all the way through the system. Take grapes coming from say, South America. The key is to “chill” them immediately after harvest, down to 29ºF and 99% humidity. At that humidity, grapes won’t freeze, but stay almost unchanged for 2-3 months. But warming by only 6-7 degrees for a few hours will cut storage life by two weeks. Once the grapes hit local distribution, storage temp rises. At a store, they may last a couple of weeks, and after sale, a couple more weeks, and if well chilled, maybe longer before mold starts degrading them. The key to reducing waste in transported food is maintaining a consistent temperature all along the supply chain.
Many food products are flash frozen for preservation through the supply chain. Even products like organic Orowheat bread is flash frozen for preservation, so its shelf life really starts after thawing at the distribution center just prior to delivery to a store. Non-organic bread has additives that delay onset of mold for a few weeks at room temperature. Obviously, if we eat locally grown food immediately we use less energy and fewer trucks, but doing that on a big scale re-invites old pre-industrial wastes of seasonality, local food preservation, and unbalanced nutrition. A lot more people can grow gardens or supply local produce and make a dent in this, but totally reverting to our pre-industrial situation does not sound inviting either.
Obviously, changes in growing areas to reduce transport distances would have an impact, but this cannot take place overnight. My ideas for reducing the number of trucks on the road assume little change in amount of food consumed or distances carried.
Q: Can you summarize the kind of program you have in mind?
A: Yes, strategically improve the three main functional areas of logistics with a simple integrative strategy, because these three factors interact with one another.
- Packaging. A high percentage of trucks load up by cube, but they’re far below max weight. So much potential exists that just redesigning the worst-case packages would have appreciable effect. For example, cereal cartons have 1/3 or so empty space at the top, with flakes loosely packed in the bottom 2/3. More than half the potential is in denser packaging, think.
- Load Planning. Too many trucks leave the dock without a load optimized by weight and cube. And more can be done to load and off-load quicker. More side-loading trucks would simplify this — fewer instances when a skid wanted is ten skids back in an end-loaded trailer. Trucks sized for a route would make a difference too.
- Route Optimization. The more optimized routes and milk runs with pick up and drop off at each stop the better. For instance, suppose UPS and FedEx routed cooperatively. Won’t happen of course, but imagine how that volume could be optimized; denser loads and more efficient delivery to the end customer.
Much can be done before looking at the strategic possibilities of an entire system redesign, but strategic possibilities increase if companies start regarding almost all operations as only nodes in a bigger system.
For example, postponement is a strategy long used by manufacturers. One of the originals was the Coca-Cola bottling plant system. Computer companies like Dell and HP have long configured each order at a point close to the customer, and even they can do more with this. Simple configuration at retail or by the customer is best. If we get away from thinking economy of scale at the plant level, and think system, we can devise a much more distributed manufacturing system, and that’s the way that we’re most likely to reinvent manufacturing in high cost countries.
Q: Can this become a real program?
A: Yes, IKEA is a good example. The company ships tightly packed knock down kits from a high-cost country into the United States. Customers love the designs and the price, so they will incur the inconvenience of assembling IKEA products themselves. Then one can ask why they have to ship from Sweden. But when already assembled products like filing cabinets or even dishwashers are shipped, they are boxes full of air.
Wal-Mart has long demonstrated the cost impact of logistics closer to optimum transport. Some of their suppliers dislike the disciplines needed to hit shipping times on the nose, but cost savings to Wal-Mart are in the billions, a major reason they are a low-cost leader, and Wal-Mart still has much more potential. Collaborative cooperatives could do something similar. Even without Compression objectives in mind, all companies look at cost-saving ideas.
Distributing operations is a long-term strategy. Consider smaller-scale operational points in a logistics network. Too many companies still try to optimize distribution out of one or two large plants. As they grew market, logistics was an afterthought, and it’s still an afterthought when they decide to move a plant to China. But with transportable CAD/CAM and good skills training they could add more value much closer to the customer.
Q: How can we start thinking this way?
My framework of thought borrows from an old P&G model with six steps for analyzing an end-to-end process from the view of an individual order, named the “Perfect Order,” perhaps for only one unit:
- Take order
- Input order
- Inventory (stock) is available to ship
- Ship on time
- Arrive on time
- Pay on time
The idea is to develop all systems until this is done every time with no special interventions. It just happens. Note that this is an outbound logistics view of Toyota’s ideal of one-piece flow all the way through the system – a bigger system view than just a plant. It can be expanded to inbound logistics. And something like it can be curled into a loop to map out reverse logistics to manage returns from a full life cycle process if that is needed to meet goals for energy and materials use in Compression.
All current supply chains have been built over the years on one fatally flawed assumption, one not usually calculated in supply chain costs: “cheap fuel.” But cheap fuel is gone and not returning. Now we have to factor that in.
Thus manufacturing and distribution concentrated in low cost labor areas is untenable in some areas now, and it will become untenable in many more. We must go “Back to the Future,” to our roots of distributed manufacturing and distribution, but today we can rely on technology to configure, postpone, and optimize while maintaining reliability. This can be done if we choose to do so.