I don't like the crying about a lack of supply chain talent

Why do supply chain papers and people constantly complain about their not being enough staff?

This has been annoying me lately, the amount of articles and studies that seem to be constantly put out by the supply chain industry media machine that concentrate on how there is such a lack of talent, that they are so understaffed, and that there is no one that is willing to work for them.  I think that this is a lot of baloney.  To executives and hiring managers – you spend all this money maintaining an HR department, did you ever think to look at the resumes that they have?  

I can picture what your going to say: “yes, but they don’t have the skills in this area…, they don’t have experience in that…”  

I have become to believe that the reason that there aren’t enough people in supply chain is because supply chain firms do not invest in creating positions that new recruits can grow into.  The problem is that there are just not that many firms that see a benefit in developing talent over time.  Look at firms like Loblaws and Canadian Tire.  I don't believe that they have difficulty attracting new talent, because they spend money on creating programs where new blood can circulate through the company, try different areas, learn the business.  On the other hand, I can feel the attitude of supply chain firms is the same for middle management talent as it is for truck drivers.  They expect to open their door and have perfectly qualified, educated, experienced people just banging down the door to get in.  

Young people today are more unemployed than recent generations and I think more hungry to work.  They don’t have big expectations, and will do a lot for not a lot of money.  And you have a very well educated cohort to choose from.  So I would venture to say that we stop complaining about a lack of talent, and start complaining about a lack of space available in training programs in companies.  Just my two cents.

Trailer Drop Yards: A Freight TDM Strategy Targeting Truckload Carriers

Transportation planners have had many successes in the recent past in managing flows on transport networks with Transportation Demand Management (TDM) strategies.  These include: staggering hours of work to level out demand across longer periods of the day, road pricing strategies, and Intelligent Transportation Systems (giving travellers better information like those pixelly signs you see on the highway).  However, on the freight side, there have been fewer TDM initiatives, especially in the North American context.  Here, I am proposing a strategy that is specifically targeted at reducing the empty miles travelled in urban areas by North American Truckload carriers.  

This strategy is explained in the following video.  This presentation shows how the construction of Trailer Drop Yards can be promoted by governments to reduce the empty miles travelled along highways in urban areas.

If you would like a copy of this presentation, please contact me at paul.jakubicek(at)gmail.com.

Running all Trucks from Electricity is Possible

With oil prices reaching new heights, it is time to suggest somewhat outlandish ideas in order to curtail the use of diesel in our transportation systems.  So with this in mind, consider: a system of electrification on limited access highways that could power trucks.  From a technical feasibility standpoint, it doesn’t seem too difficult.  Power lines could be hung above the right lane on the highway, and trucks could extend a pantograph from the top of the truck to electrical lines above while driving along the highway, and then retract this pantograph when leaving the highway.  A battery could be charged from the overhead lines and when the vehicle needs to operate off the highway to make trips to shippers, receivers, and other yards, the vehicle could utilize battery power.  Local delivery vehicles would still have to run off of diesel to some extent, due to the proportion of time that they spend off highway, but long distance trucks in corridors like the 401 could easily be accommodated to run on purely electric power because they do not travel more than a few kilometres from highways the vast majority of the time. 

Today, Robert Transport is beginning the use of trucks powered by natural gas on the 401 corridor, at a large expense because of the cost of the new technologies.  Electric trucks would be expensive as well, but electric vehicles last for extremely long periods of time (how old are the TTC streetcars now?)  For all those who say that electric vehicles are only as good as the source of the power that they draw from, I would argue that this is false for two reasons.  First, if the source of electric power is to be changed, then it requires governments to make massive investments that take decades to be completed, but are still easier then trying to replace a decentralized, retail fuelling network with something else.  A coal plant can be retrofitted with clean coal technology; renewables can be brought on line and used to power the transportation system.  Secondly, electric engines are a lot more efficient than internal combustion engines. An internal combustion engine converts fuel to movement at a rate of 15% while an electric engine operates at 88%.[1]  This is because electric engines don’t have to spend energy on moving oils, coolants, pistons and valves around the engine, the power goes straight to the wheels. 

Would anything like this ever actually be feasible?  Well, if you believe in peak oil (I just filled up for $1.12/L), solutions like these begin to be more appealing.  As long as the transportation authority goes along with the idea and the money that transportation companies spend on buying fuel could go into paying off the cost of constructing the system, why not?  If Robert transport can coordinate the establishment of their own natural gas fuelling network along the 401, why can’t large carriers get together and create their own electric power authority that could construct such a system and extract rents from carriers to use it, decoupling the freight transportation system from oil? 

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[1]  Source: ‘Debunking the Myth of EVs and Smokestacks.’ At: http://www.electroauto.com/info/pollmyth.shtml

Are Low Interest Rates Creating Fragile Supply Chains?

With interest rates lower than they have ever been, there have to be some impacts upon the structure of supply chains.  The first thing that comes to mind is the reduction in inventory costs.  Firms are undoubtedly tempted to hold more inventory where possible in order to fulfill customer demands more rapidly.  But another possible impact could be occurring; the increasing tendency to centralize facilities in response to low costs of capital.  As the costs of capital have decreased, it makes more and more sense for firms to invest in large, complex facilities that are highly automated.  But this has resulted in the closure of smaller facilities that offer some redundancy within supply chains as well as offering a smaller carbon footprint, as inbound freight is generally less energy intensive than outbound freight to retail locations. 

So will centralized facilities make sense in the near future? There are two looming issues that could make these facilities less cost-effective.  First, interest rates literally have nowhere to go but up.  Inventory costs as well as the cost of all those automated systems will rise as this happens.  Secondly, centralized facilities are more vulnerable to fuel price increases as their outbound movements are longer. 

The trend of centralizing facilities has been happening over the past few years in Canadian supply chains, for example in the grocery sector with the construction of Sobey’s new facility in Vaughan[1], as well as their recent announcement of the creation of  a similar facility in Quebec[2].  Another example is the consolidation of Canada Bread facility[3].  Now, there are of course other reasons for consolidation, especially in the food industry when you consider the increasing costs of compliance with health and safety regulations.  And, when labour costs are high, then a consolidated facility with more automation and less total workers across the entire supply chain is cost effective. 

Further counterpoints must be considered as well.  The increased use of technologies and practices such as virtual inventories have been reducing the costs associated with, and amounts of inventories required across supply chains.  The increased visibility across supply chains may lead to the outcome of managing more expensive inventories cost-efficiently, mitigating the impacts of higher financing costs.  The increased use of technologies is making it possible to use slower, cheaper transportation, which is evident in the rise of domestic intermodal transportation to all time highs, along with harder-to-coordinate supply chains like Ikea’s Direct-to-Store Truckload strategy.

Predicting the future is always fun, because we are almost always wrong.  The firms that are consolidating facilities are reducing their costs today because of the low cost of both capital-intensive facilities and high but still affordable transportation costs.  The risk exists that a spike in interest rates, along with sustained increases in transportation costs will render the consolidated supply chain strategies incompatible with future cost structures. 

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[1]  “Sobeys Opens Leading-Edge Distribution Centre.” November 10, 2009. Link: http://smr.newswire.ca/en/sobeys/sobeys-opens-leading-edge-distribution-centre.

[2] “Sobeys to open Quebec DC.” January 28, 2011.  Link: http://www.canadianmanufacturing.com/distribution-and-transportation/news/sobeys-to-open-quebec-dc-21781.

[3] “Canada Bread to close facility.” January 6, 2011. Link: http://www.canadianmanufacturing.com/food/news/canada-bread-to-close-facility-19836.