Tag Archives: distribution system

Are Your Reverse Logistics Leaking Profits?

Reverse Logistics Leaking One of the issues many growing companies face is obsolete inventory and customer returns. These have a nasty habit of sucking up cash and bringing otherwise profitable firms to their knees. In this episode of the Supply Chain Cowboy Podcast, I talk with Curtis Greve to get his expert advice on how best to handle reverse logistics.

Reverse logistics are kind of funny in that they tend to fly under the radar. Returns usually aren’t thought of as one of the most attractive parts of operations. However, improving how you handle obsolete inventory and returns by just a fraction could be the best thing you can do for your bottom line.

You can listen to or download the podcast from the link above, or check out the full transcript. Also, please subscribe to the podcast through iTunes to receive new episodes automatically.

About Curtis Greve

Curtis Greve managed returns for Walmart, ran the 3PL GENCO as its CEO, and started his own consulting firm, Greve-Davis. He’s also one of the founders of the Reverse Logistics & Sustainability Council (RLSC), the premier group on advancing the field of reverse logistics.

RLSC’s upcoming annual conference will be held on January 19-21, 2015, in Dallas. More information on the conference, as well as a wealth of advice and information, is available at ReverseLogistics.com.

“He Ships, He Scores!” Improving Your Supply Chain with Games

Mario Fork Lift
Friday evening had arrived, and I was very excited to be on my way home. My wife and I were going on our first date in over four months – the first time we would leave our new daughter with family as we had some fun. After dinner, we went to one of my all-time favorite places: The Nicklecade. The Nicklecade is an arcade full of older games that each only cost $0.05 to play. Ten dollars can keep two people playing the gaming classics all evening. As we played Ski-ball, Dance Dance Revolution, San Francisco Rush racing, and even Guitar Hero, I was struck by how motivated I was on a Friday night.

I had just spent an entire week in typing emails at a computer and occasionally helping with repetitive physical tasks in the warehouse. Now, on a Friday night, I was in front of computers again pressing buttons and tossing ski-balls up the ramp over and over to try and beat my wife’s high score (which I was unable to top). How could the similar skills and activities be so fun and motivating as I worked for tickets, and less so as I worked for paychecks?

The Game of Work

My question caused me to recall a business book classic called The Game of Work by Charles Coonradt. Written in 1984, before a generation was raised on videogame achievements and scores, Coonradt was struck by a similar question to mine regarding construction workers. They would slowly plod along building a house, but during lunch time, they’d run to a local basketball court and give everything they had to obtain 4-on-4 lunchtime victory. Realizing that the principals of games could increase motivation and productivity in the workplace, Coonradt defined five rules of gamification – harnessing the power of game thinking in traditionally non-game work.

  1. Clearly defined goals – Put the basketball through the basket
  2. Better scorekeeping and scorecards – The score is 87 to 89, our team is down by two with a minute left in the game.
  3. More frequent feedback – The scoreboard tells you immediately if you made a goal, and a referee’s whistle will sound every time you break a rule
  4. A higher degree of personal choice of methods – Score points; it doesn’t matter if they are lay-ups, dunks, field goals, or 3-pointers
  5. Consistent coaching – whenever I have a question, I can look over to my coach for guidance or call a time out for more detailed help

Supply chain and operation works lends itself directly to this type of job enhancement. Below are some examples of how gamification has helped boost productivity.

Charles Schwab Throws Out a Challenge

In Dale Carnegie’s book, How to Win Friends and Influence People, the story of Charles Schwab keeping score is a fun example of early gamification.

“Charles Schwab had a mill manager whose people weren’t producing their quota of work.

“How is it,” Schwab asked him, “that a manager as capable as you can’t make this mill turn out what it should?”

“I don’t know,” the manager replied. “I’ve coaxed the men, I’ve pushed them, I’ve sworn and cussed, I’ve threatened them with damnation and being fired. But nothing works. They just won’t produce.”

This conversation took place at the end of the day, just before the night shift came on. Schwab asked the manager for a piece of chalk, then, turning to the nearest man, asked: “How many heats did your shift make today?”

“Six.”

Without another word, Schwab chalked a big figure six on the floor, and walked away.

When the night shift came in, they saw the “6” and asked what it meant.

“The big boss was in here today,” the day people said. “He asked us how many heats we made, and we told him six. He chalked it down on the floor.”

The next morning Schwab walked through the mill again. The night shift had rubbed out “6” and replaced it with a big “7.”

When the day shift reported for work the next morning, they saw a big “7” chalked on the floor. So the night shift thought they were better than the day shift did they? Well, they would show the night shift a thing or two. The crew pitched in with enthusiasm, and when they quit that night, they left behind them an enormous, swaggering “10.” Things were stepping up.

Shortly this mill, which had been lagging way behind in production, was turning out more work than any other mill in the plant. The principle?

Let Charles Schwab say it in his own words: “The way to get things done,” says Schwab, “is to stimulate competition. I do not mean in a sordid, money-getting way, but in the desire to excel.”

Quoted from Dale Carnegie’s How to Win Friends and Influence People

A Jewelry Manufacturer Keeps High Scores

A factory that made recognition jewelry created a very simple computer program in the 1980s. The employee would log in his or her manufacturing job, say polishing 100 medallions, and the computer would time him. After the employee completed the work, he or she would see how quickly he or she had accomplished the work. The computer then ranked him or her against personal past records as well as everyone else. The program let the employee know whether the score was above or below average – and by how much. This simple program quickly increased efficiency of the entire factory as everyone tried to beat their coworker and their own records.

Real-time Shipping Dashboard Focused our Warehouse

A couple years ago, as our company quickly grew, we felt a need for better visibility to our warehouse operations. I had worked at Sonic in high school where little TV screens showed each order and helped me know how many hamburgers to make. Could we make a dashboard that showed us what orders we had to ship? With some VBA coding, I was able to create a real-time shipping dashboard that did just that. Every ten minutes, the computer would automatically update from our system database and show the orders we needed to ship and had shipped already that day. If an order went late, it would show up in red. As long as everything was green on the dashboard, we knew we were shipping on time and winning for the company. The dashboard was so effective that I was able to completely step away from warehouse operations as the team worked together to keep the dashboard green – or score points –rather than a manager directing every step.

Ideas for Gamifying Your Supply Chain

Having a better grasp of the principals of gamification, how can you better apply them in your supply chain? Here are some ideas:

  • Vendor Scorecards – We’ve been working extensively on a comprehensive vendor-scoring program. We are giving quarterly feedback on how key vendors are doing on dimensions important to our success. We also hope to build a “Vendor of the Year” award to reward good scores. Without the scorecard, however, our vendors can’t be confident in how they can better serve us as their customer.Crosstraining
  • Cross-training Achievements – An easy way to turn long-term training into a game is to create a grid of people and processes. As employees learn new processes, they receive a sticker that becomes a badge of cross-training achievement. Fast-food restaurants do this all the time. When we put this together in our warehouse, I was amazed by how quickly people began asking their supervisor to train them on new skills so that they could mark it off on the grid.
  • Pick-to-voice Warehouse Picking Systems – Wearing a headset that tells you where to pick your next order is a popular technology in large warehouses. These pick-to-voice systems often track efficiency and set goals for each picker. Taking that technology a step further, you could keep score on a large screen or let pickers “level up.” As employees reach certain scores, they could be rewarded with more difficult orders to pick – or move into new zones of the warehouse. Even adding the “1UP” sound from Super Mario and other video game trademarks could make order picking more engaging.
  • Pallet Wrapping Competition – If you have 30 pallets to wrap by hand, divide everyone into three teams and see who can wrap 10 in the shortest amount of time. Whenever students from local colleges tour our company, I ask them to compete in a “warehouse Olympics” game to see how they fare with the most basic of supply chain tasks. I quite enjoy watching college students race, and often struggle, to tape boxes, sort returns, and wrap pallets.
  • Vendor Terms Competition – Our CEO created a list of vendors that he wanted a dozen employees to contact and ask for extended payment terms. Each Vendor had an employee assigned to it. The list was in a Google spreadsheet we all shared, which allowed us to see each other’s progress in real-time. We could approach the request any way we wanted, and we even received a small gift card when we achieved our goal.
  • Real-time Dashboards and Metrics – Building on our shipping dashboard, we now have a large handful of other real-time dashboards. Purchase Orders, Accounts Receivable, and Accounts Payable are just a few examples of how we keep score. Our jobs become a game of keeping the dashboards free of red lines, which helps us focus on activities that help the company.

Supply chain is the ideal place to apply gamification principals. Large amounts of real-time data make keeping score much more achievable than in other less data-driven disciplines.

Whether it’s PlayStation 4, the NFL, or Monopoly, everyone on my team has a passion for games. Tweaking processes to channel that passion has helped my company in powerful ways. Applying Coonradt’s five “Game of Work” principals helps everyone better achieve results that help the company and enjoy their work more. Most importantly, that increase in motivation helps us become a stronger company and a more competitive supply chain.

Now instead of getting back to work, get back to gaming.

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If you’d like to learn more, please check out the below sites that were a source for parts of this article.

Could Driverless Vehicles Lead to More Pollution?

The operations and logistics departments of a company often have a greater impact on the environment than most other business functions. This is why when a company wants to “go green,” it often looks to its supply chain to play a leading role. Best practices in sustainability are becoming more crucial to a supply chain’s success as managers balance the triple bottom line of financial, social, and environmental good. All of this led to my interest in a recent Freakonomics podcast on environmentalism.

Driverless Truck Polluting

Electric Cars Could Cause More Pollution

In the podcast, Harvard economist, Ed Glaeser, suggests that electric cars, marketed as a “greener” travel option, could actually do more environmental harm than good. His reasoning is that the incremental cost of driving one more mile in an electric car is drastically less expensive than one more mile on gasoline. Naturally, this will lead to increased driving distances. Although that mile also impacts the environment to a lesser degree, the increased mileage might actually have an overall negative impact on the environment. If each mile produces half the pollution, but you drive three times farther, then you’re not moving forward environmentally.

Driverless Vehicles Means More Driving

This concept of unintended environmental side effects made me rethink one of my favorite technologies – driverless vehicles. I’m passionate that the future of logistics is in driverless semi-trailer trucking. It may be fifteen or more years away, but the pressures to reduce freight costs will eventually lead to driverless freight transport. However, as driverless shipping becomes cheaper, it will likely encourage more trucking.

For example, the main reason that I don’t go on more road trips is not the price of gas but the personal discomfort of driving. If I could simply sleep and then wake up at my location, I would travel by car much more often.

Extrapolating to the logistics arena, I foresee that driverless freight making shipping drastically less expensive. This would affect companies in numerous ways. For example, big-box retailers such as Walgreens could start shipping inventory between their stores to level out over stocks and stock outs. Freight could travel more quickly to greater distances, which would reduce the number of needed warehouses. If UPS and FedEx deliveries could make driverless deliveries, small parcel shipments would skyrocket. Online retailers would grow in dominance as the cost to serve consumers would drop.

Yet with my enthusiasm for the benefits of driverless vehicles, I had not considered the environmental consequences this technology might have. As the cost of freight decreases from not having to pay drivers, the number of miles that trucks drive will increase. The rise in pollution from trucks driving day and night could easily cancel out the advances in fuel efficiency we hope to make in the next few years. However, the decrease in costs and risk to human life involved in accidents still make the widespread use of driverless vehicles appealing.

Now What?

This is article is an open-ended thought, not a call for immediate action. The world is moving toward logistical automation, so anticipating each aspect of that future paradigm is essential. Widespread use of driverless vehicles will require support from society and public policy. Awareness of all the consequences will help the supply chain industry usher in this next generation of technology.

If you’re interested in the topic, here are a couple more articles worth reading:

Thoughts on Driverless Trucks by Kevin Gue of Auburn University

Daddy, What Was a Truck Driver? by Dennis Berman of the Wall Street Journal

The First Driverless Cars Will Actually be a Bunch of Trucks by Evan Dashevsky of Tech Hive

How will driverless vehicles influence your supply chain? Will our society allow the widespread use of driverless trucks? What other consequences must we consider to best utilize driverless trucks?

Please leave your thoughts in a comment below. In addition, if you’re interested in starting a venture into driverless trucks, please let me know. I’d love to be part of the endeavor.

Future of Distribution: Army of Warehouse Robots [Video]

This video shows a potential method of warehousing that amazed and inspired me. Amazon owned Kiva has developed software that radically redefines warehouse operations. Small robots, just slightly larger than Roomba vacuums, act as carriers to bring storage locations to human pickers. Automated vehicles are nothing new, but the fluid and automated network of how they interact is fascinating.

Take a look below:

You can see more videos and case studies on KIVA’s site.

Although the $1-2 Million price tag is a bit more than most small businesses can invest, the KIVA system shows the direction supply chain technology is headed. Price reductions and further technology advances could one day make these little robot pickers as plentiful as forklifts and pallets.

More than anything, this video inspires creativity and spurs a vision of what operations can look like – smooth and automated while maximizing value added by human employees.

To take the concept a step further, imagine operations beyond picking. As driverless cars become street legal, a similar distribution network could extend outside the warehouse and onto the streets. Trucks could drive all day and night in a network to move product with very little human input. Much as electronic data moves seamlessly through the internet, physical product could move through a physical internet. Instead of trucks loading in California and driving straight to New York, product would move in small routed jumps: California to Nevada, Nevada to Utah, Utah to Colorado, etc. While this seems like a lot of loading and unloading, it actually could be quite easy if everything were in easily transferrable containers. A nationwide logistics network of short trips would allow truckers to stay close to home and move product quicker with less environmental impact. The National Science Foundation, as explained on Wikipedia and the Physical Internet Initiative‘s page, has championed this concept for several years.

It’s exciting to think about how product will get to my house twenty years from now. The KIVA system gives just a hint of what that path of product might be.

What are your thoughts about the KIVA system? Where do you see the world’s supply chain in twenty years?

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