DC Velocity - November 2015

Economist says logistics
field well positioned to
weather possible
“modest” U.S. recession

The U.S. economy could enter a modest recession by 2017, but logistics companies can weather the squall and help lead the country out of any doldrums, according to an economic forecast delivered Oct. 5 at the industry organization MHI’s annual conference in Ponte Vedra Beach, Fla.

The broader economy should produce reliable growth during the next one to two years, said Jason Schenker, president and chief economist at Prestige Economics LLC. In addition, U.S. supply chain management companies reported solid results in September, the most recent economic figures available, the company said. MHI has retained the Austin, Texas-based forecasting firm to create a monthly economic model tailored to the logistics and supply chain industry, called the MHI Business Activity Index.

The index shows that logistics firms polled about their business activity in the past month have seen modest expansion, with 52 percent of respondents reporting growth. About 78 percent reported growth in future new orders, 65 percent reported an expansion of shipments, and 52 percent reported a rise in unfilled orders.

However, the report also revealed a few sour notes, such as just 39 percent reporting a rise in new orders (a separate category from “future new orders”) and a mere 27 percent reporting an increase in exports. At the same time, corporate leaders are seeing increased economic risk on the global stage, with events like the Chinese currency devaluation, the strengthening of the dollar, and a slowdown in oil and gas revenues causing turmoil and volatility, Schenker said.

“We’re looking at a slowdown, but the U.S.
economy is not monolithic,” said Schenker.
“The oil and gas sector is going to face some
very difficult times, but the service sector and
new housing starts are rocking.”
Companies in the logistics and supply chain
sector of the economy could see a “modest pull-
back” from current conditions, but in the long
view, the impact will merely be a slowdown of
current growth rates from record-high levels,
Schenker said

—Ben Ames

Distribution center operators worldwide are equipping their workers with new mobile and voice technologies in an effort to reduce expensive picking errors while keeping up with the fast pace of e-commerce fulfillment, a new survey shows.

Shoppers have embraced e-commerce for its flexibility, convenience, and quick delivery, but the online shopping trend is straining many DCs’ ability to meet the tight fulfillment deadlines, according to a survey conducted by the market research firm YouGov of Palo Alto, Calif., for Honeywell Sensing and Productivity Solutions of Minneapolis.

Currently, nearly two-thirds of DCs support omnichannel distribution, defined by Honeywell to mean they have the data capture and asset-tracking systems required to fulfill orders both from retailers and from consumers purchasing online.

The problem is that in the rush to keep up with the pace of e-commerce, warehouse workers tend to make more mistakes. The average DC loses more than $400,000 every year on picking errors, according to the survey responses. The study tracked hundreds of IT decision-makers across the U.S., U.K., France, and Germany.

The average global cost of one picking error is $59, survey findings showed. The average cost of a mis-pick in the U.S. ranks highest ($67), followed by France ($60), Germany ($52), and the U.K.

($50), IT decision-makers told Honeywell.

In response, warehouse managers are turning to mobile technology to increase their order fulfillment accuracy while improving customer service, Honeywell found. Nearly nine in 10 global DC operators plan to adopt new mobile devices and voice-direction technology within the next five years.

Specifically, DCs plan to invest in mobile computers, printers, and scanners featuring more reliable data capture technology, and in wireless headsets that provide voice direction to improve accuracy and speed. Voice technology can add one hour of productive time per worker each month, survey respondents told Honeywell.

Survey respondents included 263 professionals who worked in a manufacturing or distribution operations, supply chain/logistics, safety/training, or IT role at organizations with more than 500 employees worldwide.

—B.A.

go figure …

20%

The percentage of UPS Freight trailers that move around empty each day. UPS acquired broker Coyote Logistics in part to help fill the LTL equipment and reduce network variability that’s causing equipment imbalances.