In Europe, Baxter International's experience with "horizontal collaboration," where two or more shippers share transportation movements, has been so successful that the company plans to expand the program beyond its current boundaries.
In Europe, it's estimated that nearly one-fourth of the trucks running along the continent's congested roads are empty. These empty trailers— which are typically on their way back from deliveries or en route to pick up goods—are exacerbating the area's traffic and air-quality problems while also wasting money. If companies would work together on moving goods, then those empty miles could be reduced, thereby easing congestion and curtailing air pollution, including greenhouse gas emissions.
That's why the European Union (EU) has begun encouraging what it calls "horizontal collaboration." Horizontal collaboration involves multiple, independent shippers working together in communities to consolidate compatible freight flows. These bundled freight flows are then outsourced to and physically executed by a logistics service provider.
One early mover in this initiative is Baxter International Inc. Since 2011, the health-care products company has been collaborating with other businesses to share transportation movements across Europe. After three years of participating in horizontal collaboration, the company has seen some significant advantages and demonstrated the viability of the concept, says Ludovic Menedeme, Baxter's director for transport and distribution services.
Early mover in collaboration
Headquartered in Deerfield, Illinois, USA, Baxter is a global business with expertise in medical devices, pharmaceuticals, and biotechnology. In 2012 the company reported about US $14 billion in worldwide revenue, with approximately 29 percent of its sales in Europe. Baxter manufactures in 27 countries and sells its products in more than 100 countries.
The company took part in its first European transportation collaboration in 2011. It teamed up with the Belgium-based pharmaceutical manufacturing company UCB to share shipping to six Eastern European countries: Bulgaria, the Czech Republic, Hungary, Slovakia, Slovenia, and Romania.
Baxter and UCB were brought together in 2010 by Tri-Vizor NV, a neutral third party that orchestrates shipper collaborations. The Belgian service provider's database showed that the two companies had significant overlap between their freight flows out of Belgium and could benefit from shared transportation. "Eastern Europe was chosen because the destination points of UCB and Baxter were close to each other in the vicinity of the capital cities, and because the distance [to the final locations] from the Baxter and UCB distribution centers in Belgium was quite large," explains Sven Verstrepen, business development director for Tri-Vizor. "The larger the distance, the bigger the savings opportunities of flow bundling."
Baxter and UCB now use a motor carrier to make full truckload shipments to all of the Eastern European destinations except for Romania, where co-loaded containers move via railroad. For the over-the-road shipments, the truck stops first at a UCB plant in Belgium and then proceeds to Baxter's facility in nearby Lessines. The truck goes to UCB first due to the first-in, last-out loading sequence for pallets: At each destination in Eastern Europe, the truck delivers to Baxter's customer first and then to UCB's consignee.
That synchronization also extends to how much product each company ships. Normally, Menedeme says, UCB places three pallets on the truck. If the Belgian pharmaceutical maker wants more than three pallets, Baxter will ship fewer of its own pallets on that truck.
In 2012, Tri-Vizor suggested Baxter collaborate with another shipper, Donaldson Company Inc., a maker of filtration systems. Now Baxter and Donaldson co-load shipments from Belgium to Ireland. A truck picks up raw materials from Baxter's and Donaldson's facilities in Belgium and then takes a short-sea ferry from the port of Zeebrugge, Belgium, to Dublin, Ireland. From there the truck travels to Castlebar, Ireland, where a Donaldson manufacturing center is located near a Baxter plant.
The importance of a neutral trustee
In both of the cases just described, Tri-Vizor, acting as a neutral trustee, helped to set up the agreement between the shipping partners. As an impartial third party, Tri-Vizor can make sure that all costs and savings from the collaboration are distributed equitably. It also can synchronize the two shippers' daily operations so that one is not favored over the other.
Tri-Vizor coordinates the shipments through its Web portal. Baxter and its shipping partners place shipment orders through the Tri-Vizor portal, which automatically synchronizes the shipments and assigns them to a carrier on a pre-approved list. The portal also handles all aspects of the collaborative arrangement, including invoicing, Menedeme says. As part of that process, Tri-Vizor tracks such key performance indicators as number of loads consolidated, pickup and delivery performance, and claims, as well as monetary and greenhouse gas savings.
There are limits on what any party can see through the portal, as Tri-Vizor makes sure to guard companies' confidential data. "Community members can review performance indicators for the community and for their own business, but not for another company," Verstrepen explains.
Since it began those collaboration projects three years ago, Menedeme says, Baxter has realized freightcost savings of around 10 percent on the collaborative trade lanes. In addition, the company has witnessed a 30-percent reduction in its transportation-related carbon dioxide (CO2) footprint as a result of the consolidated truck shipments and the use of short-sea shipping and rail. "The additional benefits are that we achieved a higher service level because of the more frequent combined departures as well as saving on CO2," Menedeme explains. "If you don't put halfempty trucks on the road, you ease congestion."
From CO2 to CO3
Baxter has now begun working with the European consortium Collaboration Concepts for Co-modality, informally known as CO3. Tri-Vizor is a key member of that consortium, which was launched with a grant of 2 million euros from the European Commission. The organization's goal is to promote shared supply chains as a way for Europe to reduce its dependence on foreign oil, ease traffic congestion, and cut greenhouse gases. Comprising 17 members, CO3 is developing a legal framework that allows companies to work together without violating antitrust law. It's also conducting pilots to demonstrate the value of shared supply chains from both a monetary and a sustainability standpoint.
At the moment, Baxter is engaged with two other test projects under the auspices of CO3. One of those involves the consumer goods company Kimberly-Clark, which got under way in March 2013. Kimberly-Clark and Baxter now send full truckloads back and forth between France and Belgium. The project is being managed by Tri-Vizor and another CO3 consortium member, Giventis, a Dutch information services company. Giventis developed a platform that automatically detects co-loading and round-trip opportunities beween multiple logistics networks. In another project, Baxter is working with three other companies— Belgian retailer Colruty, the building-products company Eternit, and Ontex, a manufacturer of hygienic personal care products—to run full truckloads between Belgium and Spain. That project is making use whenever possible of short-sea shipping between those two countries.
The key to successful horizontal collaboration, Menedeme says, is having compatible organizations that can work together in an operational alignment. "To make this work," he says, "you need a good fit between the parties and buy-in by senior management, because horizontal collaboration becomes rapidly a key element in your supply chain strategy."
Future expansion
Based on its previous successes, Baxter has even more plans for collaboration in the future. Menedeme says his company is now working with the consumer goods giant Procter & Gamble to explore the possibility of creating enough shipment volume to run dedicated cargo trains within Europe.
Baxter isn't limiting itself when it comes to identifying additional opportunities for horizontal collaboration. "We're looking to expand this geographically and work with many more companies," Menedeme says. "We want to use transport modes such as ocean and air. This will be not only for Europe but on a global scale."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
Jason Kra kicked off his presentation at the Council of Supply Chain Management Professionals (CSCMP) EDGE Conference on Tuesday morning with a question: “How do we use data in assessing what countries we should be investing in for future supply chain decisions?” As president of Li & Fung where he oversees the supply chain solutions company’s wholesale and distribution business in the U.S., Kra understands that many companies are looking for ways to assess risk in their supply chains and diversify their operations beyond China. To properly assess risk, however, you need quality data and a decision model, he said.
In January 2024, in addition to his full-time job, Kra joined American University’s Kogod School of Business as an adjunct professor of the school’s master’s program where he decided to find some answers to his above question about data.
For his research, he created the following situation: “How can data be used to assess the attractiveness of scalable apparel-producing countries for planning based on stability and predictability, and what factors should be considered in the decision-making process to de-risk country diversification decisions?”
Since diversification and resilience have been hot topics in the supply chain space since the U.S.’s 2017 trade war with China, Kra sought to find a way to apply a scientific method to assess supply chain risk. He specifically wanted to answer the following questions:
1.Which methodology is most appropriate to investigate when selecting a country to produce apparel in based on weighted criteria?
2.What criteria should be used to evaluate a production country’s suitability for scalable manufacturing as a future investment?
3.What are the weights (relative importance) of each criterion?
4.How can this methodology be utilized to assess the suitability of production countries for scalable apparel manufacturing and to create a country ranking?
5.Will the criteria and methodology apply to other industries?
After creating a list of criteria and weight rankings based on importance, Kra reached out to 70 senior managers with 20+ years of experience and C-suite executives to get their feedback. What he found was a big difference in criteria/weight rankings between the C-suite and senior managers.
“That huge gap is a good area for future research,” said Kra. “If you don’t have alignment between your C-suite and your senior managers who are doing a lot of the execution, you’re never going to achieve the goals you set as a company.”
With the research results, Kra created a decision model for country selection that can be applied to any industry and customized based on a company’s unique needs. That model includes discussing the data findings, creating a list of diversification countries, and finally, looking at future trends to factor in (like exponential technology, speed, types of supply chains and geopolitics, and sustainability).
After showcasing his research data to the EDGE audience, Kra ended his presentation by sharing some key takeaways from his research:
China diversification strategies alone are not enough. The world will continue to be volatile and disruptive. Country and region diversification is the only protection.
Managers need to balance trade-offs between what is optimal and what is acceptable regarding supply chain decisions. Decision-makers need to find the best country at the lowest price, with the most dependability.
There is a disconnect or misalignment between C-suite executives and senior managers who execute the strategy. So further education and alignment is critical.
Data-driven decision-making for your company/industry: This can be done for any industry—the data is customizable, and there are many “free” sources you can access to put together regional and country data. Utilizing data helps eliminate path dependency (for example, relying on a lean or just-in-time inventory) and keeps executives and managers aligned.
“Look at the business you envision in the future,” said Kra, “and make that your model for today.”
Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”
In McCaskill’s comparison, just as a doctor might have to break some ribs through energetic CPR to get a patient’s heart beating again, a failing warehouse might need to recover by “breaking some ribs” in a business sense, such as making management changes or stock write-downs.
Once the business has made some stopgap solutions to “stop the bleeding,” it can proceed to a disciplined recovery, she said. And to reach their final goal, managers can use the classic tools of people, process, and technology to improve what she called the three most important key performance indicators (KPIs): on time in full (OTIF), inventory accuracy, and staff turnover.