This Week in Logistics News (June 23-27, 2014)

By Adrian Gonzalez

Although the World Cup is dominating the sports news these days, something else caught my attention this week. Last night was the NBA draft, and one of the top prospects was Isaiah Austin, a 7-foot-1 center for Baylor University. A few days ago, however, he was diagnosed with Marfan syndrome, a rare genetic disorder that affects the body’s connective tissue, which not only ended his dream of playing in the NBA, but also ended his basketball career.

In a touching gesture, NBA Commissioner Adam Silver granted him a ceremonial first-round pick last night, saying, “Like the other young men here tonight, Isaiah committed himself to endless hard work and dedication to a potential career as a professional basketball player, and we wanted to make sure he fulfilled at least this part of his dream. So it gives me great pleasure to say, that with the next pick in the 2014 NBA Draft, the NBA selects Isaiah Austin from Baylor University.”

In an interview afterwards, Isaiah said “I’m going to dream again. I’m going go around and share my story with as many people as I can. I’m just hoping to touch people’s lives and let them know that any obstacle that they’re facing, they can get through it. All they have to do is keep a positive mind and thank God for every moment that they’re on this earth.”

Another example of the wrinkles in our lives, and how we respond to them.

In other news…

Several reports have been published in recent years underscoring the growing importance of supply chain risk management. The latest from Accenture revealed that seventy-six percent of companies that participated in its study describe supply chain risk management as important or very important, and “of the more than 1000 companies represented across 10 industries, 25 percent plan increased investments of at least 20 percent in supply chain risk management in the next two years.” This includes investments in “technology and/or organization that provides visibility within and/or across the Supply Chain that highlights trends and potential risks.”

This study confirms what the others have revealed too: that a growing number of companies are recognizing the importance of supply chain risk management. Unlike the other studies, however, this one suggests that companies are actually starting to take action to improve their risk management capabilities, which is a positive development. The fact that 24 percent of the respondents didn’t describe supply chain risk management as important or very important is still troubling, but it seems like that percentage is trending lower and lower each year.

Speaking of risk, the biggest one on the horizon is a shutdown of West Coast ports if a new labor agreement is not reached soon (the current agreement expires on June 30, but the negotiations will likely get extended). The last shutdown occurred in the fall of 2002, as retailers were preparing for the Christmas holiday period. It lasted 10 days and cost the U.S. economy billions of dollars. What’s at stake this time? According to a study conducted by the National Association of Manufacturers (NAM) and the National Retail Federation (NRF), a 10-day stoppage would reduce GDP $2.1 billion a day, disrupt 169,000 jobs, and cost the average household $170 in purchasing power. Here’s a quote from NRF President and CEO Matthew Shay:

“It is important for the parties at the table as well as others to fully understand the economic consequences of a port disruption. Any supply chain disruption, whether it’s a port slowdown or outright stoppage, would cripple international trade, stymie supply chains and hurt domestic employment and consumer spending. For retailers and their customers, a port closure would mean a delay in back-to-school and holiday shipments that could significantly drive up consumer prices.”

If you haven’t been preparing for this risk, ideally since the end of the last shutdown in 2002, there’s very little you can do now at the 11th hour.

In other news, LLamasoft and Chainalytics announced a partnership to integrate Chainalytics’ proprietary Freight Market Intelligence Consortium (FMIC) truckload data with LLamasoft’s and Chainalytics’ mutual North American customers. According to the press release:

The partnership will provide FMIC members and LLamasoft customers with a seamless environment to access, manipulate and load transportation rates into supply chain design models. Access to FMIC benchmarks will be included within LLamasoft’s cloud-based Data Services application, a supply chain design reference and benchmark data offering, and integrated into LLamasoft Data Guru, a data analytics application, to ready it for supply chain modeling in LLamasoft Supply Chain Guru.

As I’ve written before, the missing link in transportation business intelligence has always been understanding how your performance compares with others. The ability to integrate benchmark data with transportation management systems, both for planning and execution as well as modelling, is a growing trend. Chainalytics has been on the forefront of this trend (it has formed similar partnerships with JDA and Manhattan Associates), and LeanLogistics and other software-as-a-service TMS providers have also led the way. Simply put, this is now becoming a “must have” transportation business intelligence capability.

Finally, some interesting news last week from The Netherlands, where according to a Reuters report, “self-driving trucks could begin delivering goods from Rotterdam, Europe’s largest port, to other Dutch cities within five years under a plan by a group of logistics and technology companies [a consortium including the industry group Transport and Logistics Netherlands, DAF Trucks, Rotterdam Port and the Netherlands Organisation for Applied Scientific Research].”

I wrote about the “distracted driver” problem last year, and how automakers are embedding collision warning and emergency brake systems in their new cars and trucks (see Beware, Driverless Cars are Everywhere!). In my opinion, these technologies are just a step toward an inevitable future: trucks driven by robots (or, to use a more accurate term, self-driving trucks). It seems like The Netherlands is aiming to reach that future first. For related commentary, see Would Robot Drivers Check Facebook While Driving?

And with that, have a happy weekend!

Song of the Week: “Life on a Chain” by Pete Yorn