DC Velocity - April 2015

newsworthy

THE MATERIAL HANDLING INDUSTRY FACES AN acute shortfall of human capital to manage and maintain increasingly sophisticated technologies, a gap likely to widen as a blizzard of IT innovations demands a level of employee training that is currently lacking. Those findings come from the second annual report on the state of the industry, released March 25 by the material handling trade group MHI and the consultancy Deloitte.

The report, which relied on findings from a survey of
more than 400 high-level supply chain executives across
multiple verticals, showed that 31 percent considered the
absence of adequate talent to work with new technologies
to be “a significant barrier to their implementation.” MHI
CEO George Prest said in the report that the “sophistica-
tion of the skillsets” needed to operate today’s equipment
and systems “requires an equally sophisticated and well-
trained work force.”
The report was released on the third day of ProMat,
the material handling industry’s biennial event. The 2015
trade show and conference, held in Chicago, drew more
than 35,000 attendees and 807 exhibitors. (Automate, a
sister conference held in conjunction with ProMat, drew
another 300 exhibitors.) Most of the exhibits at the two
shows featured whiz-bang technologies designed to infuse
the material handling infrastructure with more automation
than ever before.

IT advances in recent years have focused on productivity
gains and labor savings achieved by automating warehouse
and distribution center functions that were traditionally
handled manually. Today, material handling users have
access to powerful predictive data
analytics and modeling software;
increasingly robust smartphones
and tablets; wearable devices like
eyewear and watches; 3-D printing
equipment and technology;
and drones and driverless,
or autonomous, vehicles.
These technologies hold out
the potential to yield enormous
productivity and service improve-
ments. However, managing these
tools demands a level of skill
and knowledge that the U.S.
work force, on balance, appears to lack.

In the initial report, issued in 2014 in what was billed as a long-term roadmap for the industry, MHI and Deloitte estimated 1. 4 million jobs would be created in the logistics and supply chain management industries by 2018. However, the report cited 2012 data from the World Economic Forum that 600,000 manufacturing positions in the U.S. are unfilled due to a lack of qualified workers.

TECHNOLOGY UPS THE ANTE

The supply-demand mismatch of labor also takes on added importance as the new technologies gain broader acceptance. The current adoption level of 24 percent for predictive analytics is expected to reach 70 percent in three to five years and 77 percent after six years, according to the report. Adoption levels for mobile and wearable technology—including smartphones, wireless devices, and “smart glass”—is projected to reach 64 percent in three to five years, up from 23 percent today.

Another challenge is the dramatic change in customer expectations. Today, it is commonplace for end users to order products online via a variety of digital tools and then demand that their goods be delivered on their timetables. This has put enormous strain on supply chain management practitioners, many of whom have been accustomed to supporting just the brick-and-mortar retail channel, not meeting the demands of end customers. In the 2015 survey, executives cited customer pricing pressure, demand for faster response times, and rising customer service expectations as their three greatest problem areas. Most respondents said they were holding more inventory closer to their end customers than ever before. In addition, respondents reported more collaboration with other companies to evaluate and implement suitable technology and process-driv-en solutions, according to the report.

In what may be the most profound trend of all, these fast-paced changes are occurring as the material handling industry’s decades-long mission—to drive improvements within the warehouse and DC—is giving way to a new world that extends beyond the building. “Material handling can no longer stand alone as an efficiency play inside the four walls of a warehouse,” said Mike Hayden, director of Deloitte’s logistics and distribution practice.