Steve Geary is adjunct faculty at the University of Tennessee's Haaslam College of Business and is a lecturer at The Gordon Institute at Tufts University. He is the president of the Supply Chain Visions family of companies, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly.
As consumers we're accustomed to next-day, or even same-day, delivery with a point and a click. Those expectations are now flowing from the B2C (business-to-consumer) world into the B2B (business-to-business) space. That, all by itself, is a challenge. Then a disruption happens. Strike. Trade war. Flood. Hurricane. Tornado. Wild fire. The list goes on.
When it comes to responding effectively to disruptions, commercial supply chains could find inspiration from a surprising source: the public sector. One good place to start is the Defense Logistics Agency (DLA).
With about US$35 billion in annual sales and 27,000 employees around the globe, DLA is perhaps the largest distributor you've never heard of. Headquartered just outside of Washington, D.C., DLA is the U.S. Department of Defense's (DoD's) logistics support agency. DLA manages a global supply chain—from raw materials to end user to disposition—for the U.S. Army, Navy, Air Force, Marine Corps, Coast Guard, 10 combatant commands, other federal agencies, and partner and allied nations.
If DLA was a publicly traded company, it would be in the Fortune 100, bigger than Coca-Cola. DLA supplies about 85 percent of the military's spare parts and nearly 100 percent of its fuel and troop support consumables (including food), manages the reutilization of military equipment, provides catalogs and other logistics information products, and offers document automation and production services to a host of military and federal agencies.
Earning its keep
What is interesting about DLA—and makes it a relevant comparison for commercial distributors—is the way it's funded. Unlike most U.S. government operations, DLA is not funded directly by Congress. Instead, it earns its keep.
In practice, DLA runs similarly to a commercial business. DLA maintains what is called a working capital fund, originally created decades ago, and it uses this fund to procure inventory. DLA then "resells" that inventory to its government customers with a modest markup and collects the proceeds. Working capital flows back into the fund, with markup used to fund continuing operations.
Naturally, the government has a name for the markup. They call it a "cost recovery rate." Every year, DLA adjusts the recovery rates to keep ongoing operations running at breakeven. DLA runs like a business, and it competes.
And it does so while operating a globally ready and responsive enterprise. After all, answering rapid shifts in demand patterns is an essential part of any humanitarian relief mission, natural disaster response effort, or military operation.
Ready position
The private sector could learn a thing or two from DLA about handling supply chain disruptions. One key part of handling a disruption is simply readiness. Donnie Thompson, chief of Deployment and Training for DLA Distribution's Expeditionary Logistics division, says that it's imperative for operations to be prepared that things might not go according to plan. "Contingencies happen at a moment's notice," he says in an article published by the DLA Public Affairs Office. "We have to be adaptable, flexible, and understand that missions don't always go by the book—we have to be ready anyway."
How DLA does this is spelled out in its 10-year strategic plan: "The speed and complexity of global crises require resilient networks, robust partnerships, and quickly integrated teams. We will position resources for rapid use, build more deployable capabilities, and strengthen our partnerships using integrated logistics and contracting services."
As a case in point, consider what DLA Distribution calls its "deployable capability." For example, DLA Distribution has gone into the field after Hurricane Ike, dropped into two different locations in Afghanistan in 2010 and 2011, and supported Operation United Assistance—a response to the Ebola outbreak—in 2014. It provides a modular, scalable, and fully deployable distribution capability. When activated, the assessment team arrives on site within 48 hours, and the main body deploys within 96 hours. If force protection is required, the military provides it.
Most operations are not able to deploy this fast, but some do. Waffle House has a fleet of mobile restaurants on wheels. The Red Cross can set up in a matter of hours. The U.S. Federal Emergency Management Agency (FEMA) has essential life-support supplies cached around the country, ready to mobilize on demand.Â
In each of these cases, the mission defines the operational strategies. DLA's published mission is to "provide an agile, global DoD Distribution network that delivers effective and efficient distribution solutions." That mission means that DLA has to be ready to go anywhere at any time, including inserting into dangerous places. They find a way.
That concept flows down to another pillar of the 10-year strategic plan, a reliance on partnerships to achieve adaptability, flexibility, and agility. Specifically, the plan advises DLA to "work with industry to ensure a capable defense industrial base, generate innovative and efficient solutions, and maintain a secure and resilient supply chain. By building on our strong relationships with industry partners we'll deliver cost-effective, innovative solutions. An agency supplier engagement plan will guide us. We will continuously assess the strength of our industrial capabilities and develop responses to vulnerabilities, reduce single points of failure, and implement best practices." The days of a vertically integrated supply chain are over; we need to work as a team across organizational boundaries.
We all benchmark against our commercial counterparts. Maybe it's time to include capable government operations in the mix. DLA has over 200 locations in the continental United States and another 30 or so dispersed around the world. Go knock on its door; the people there would love to show you around. (I recommend checking out DLA Distribution's Susquehanna facility, located in New Cumberland, Pennsylvania.) They know the warfighter comes first, but they understand that the taxpayer is not far behind.
The venture-backed fleet telematics technology provider Platform Science will acquire a suite of “global transportation telematics business units” from supply chain technology provider Trimble Inc., the firms said Sunday.
Trimble's other core transportation business units — Enterprise, Maps, Vusion and Transporeon — are not included in the proposed transaction and will remain part of Trimble's Transportation & Logistics segment, with a continued focus on priority growth areas following completion of the proposed transaction.
Terms of the deal were not disclosed but as part of this agreement, Colorado-based Trimble will become a shareholder in Platform Science's expanded business. Specifically, Trimble will have a 32.5% stake in the newly expanded global Platform Science business and will receive a Platform Science board seat. The company joins C.R. England, Cummins, Daimler Truck, PACCAR, Prologis, RyderVentures, and Schneider as a key strategic investor in Platform Science along with financial investors 8VC, Activant Capital, BDT & MSD Partners, Softbank, and NewRoad Capital Partners.
According to San Diego-based Platform Science, the proposed transaction aims to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which will give customers access to more applications and offerings.
From Trimble customers’ point of view, they will continue to enjoy the benefits of their Trimble solutions, with the added flexibility of the Virtual Vehicle platform from Platform Science. That means Virtual Vehicle-enabled fleets will receive access to the Virtual Vehicle Marketplace, offering hundreds of new and expanded applications, software, and solution providers focused on innovating and improving drivers' quality of life and fleet performance.
Meanwhile, Platform Science customers will enjoy the added choice of Trimble's remaining portfolio of transportation solutions which will be available on the Virtual Vehicle platform, the partners said.
"We believe combining our global transportation telematics portfolio with Platform Science's will further advance fleet mobility and provide our customers with a broader portfolio of solutions to solve industry problems," Rob Painter, president and CEO of Trimble, said in a release. "Increased collaboration between the new Platform Science business and Trimble's remaining transportation businesses will enhance our ability to provide positive outcomes for our global customers of commercial mapping, transportation management, freight procurement, and visibility solutions. This deal will result in significant synergies along with tremendous opportunities for employees to continue to grow in a more-competitive business."
The acquisition comes just five months after Platform Science raised $125 million in growth capital from some of the biggest names in freight trucking, saying the money would help accelerate innovation in the commercial transportation sector.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”