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Logistics Customers Demand Greater Technology and Talent

By APICS staff | 14 | 16 | August 19, 2014

Logistics and transportation companies particularly struggle to meet customers’ needs for technology and talent, CFO reports. Executive recruiting firm Korn Ferry interviewed finance chiefs at companies ranging from DHL, Coyote Logistics, BDP International, and Delta Air Lines. “We didn’t know if there were going to be common denominators among these different kinds of [logistics and transportation] companies,” says Beau Lambert, principal in the financial officers’ practice at Korn Ferry. “But what we found was incredibly consistent. They all had the same pain points. They’re all struggling with technology and talent, issues that other industries faced years ago.”

Customer demands for innovative solutions create pressure on logistics firms to leverage new technologies, which tends to stretch capital. According to another 2014 study, about 98 percent of third-party logistics (3PL) users cite information technology capabilities as a necessary element of services. However, only 55 percent of respondents are satisfied with their 3PL capabilities.

While logistics customers want their providers to innovate, they aren’t willing to pay for it, says Neil Collins, Korn Ferry’s global sector leader for logistics and transport. Now, logistics companies are “starting to view themselves as technology companies [that] just happen to be serving the logistics sector … rather than viewing themselves as logistics providers who move boxes on trucks and may play around with technology a little bit,” Collins says.

“Factoryless” Manufacturing Classification Delayed

A controversial proposal to classify so-called “factoryless” producers as US manufacturers has been shelved, the Milwaukee Journal-Sentinel reports. The proposal would have applied to companies that outsource all or most of manufacturing to offshore facilities and included companies as large as Apple and Nike. However, a “large number of public comments” contributed to the US Office of Management and Budget scrapping the classification.

Another reason behind the proposal’s failure is the layers of complexity that would be added to the collection of economic, trade, and employment data at these companies.

As “factoryless goods producers,” any business that performs design, patenting, branding, distribution, and carrying the risks of production but which contracts production elsewhere would be labeled a domestic manufacturer. Currently, these types of businesses are relatively invisible, falling into categories such as wholesalers, engineering firms, and other service providers. The proposal would have made these companies’ employees considered as manufacturing workers, potentially overstating the number of US manufacturing jobs by millions without actually adding people to the workforce.

Kellogg Vows to Cut Supply Chain Emissions

Kellogg’s, in an effort to become more accountable for its contributions to climate change, will set greenhouse gas reduction targets for its global supply chain, Reuters reports. Kellogg follows rival General Mills, which announced a similar policy to cut supply chain emissions after an Oxfam campaign, “Behind the Brands,” urged major global food companies to be more transparent and reduce carbon emissions.

“We recognize that upstream agriculture emissions are the single largest source of emissions in our value chain and will focus our efforts on achieving agricultural emissions reductions,” Kellogg representatives say. As part of Kellogg’s pledge, key suppliers will be required to measure and disclose emissions and reduction targets.

Kellogg, which owns brands ranging from Corn Flakes to Pringles, also will expand on its voluntary pledge to reach zero net deforestation in its supply chain, even in high-risk segments such as soy, sugarcane, palm oil, and packaging fiber.

Midwesterners Preparing for Tough Propane Season

After a brutal winter left many without heat, propane suppliers around the United States are preparing for spikes and irregular demand as customers seek to avoid a repeat performance, Reuters reports. Last winter, large parts of the country were forced to ration, pay record high prices, and face reduced farming productivity as propane distributors struggled to deliver fuel. As a result, consumers are buying more and buying earlier.

Propane is the main fuel source for rural areas that don’t have access to natural gas pipelines. It’s used not just to heat homes but is a major contributor to farming throughout the Midwest. While another polar vortex is not expected this season, a record corn crop and elevated drying season could eat into propane reserves before the start of winter.

Propane users are at the mercy of an unstable supply system that depends on door-to-door deliveries, competition for infrastructure with larger oil and natural gas markets, and an international market that is pulling more propane away from the United States. Unlike with oil, there are no government restrictions on propane exports and no state-run emergency reserves. 

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