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IWLA’s 2005 Business Outlook - page 9

3PLExecutive SUMMER 2005

The

THE OFFICIAL PUBLICATION OF THE INTERNATIONAL WAREHOUSE LOGISTICS ASSOCIATION • www.iwla.com

More Productivity Out Of Your Warehouse

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SUMMER 2005


Contents Fe a t u re s 9 IWLA’s 2005 Business Outlook by Joel R. Hoiland

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Squeezing More Productivity Out of Your Warehouse

I W L A Ed u c a t i o n & Tr a i n i n g S c h e d u l e July 20-21

* Marketing & Sales Conference Chicago

Sept 8-9

* Information Technology Conference Chicago

Oct. 2-7

* The Essentials Course in Logistics Chicago

Nov. 3-4

* Safety & Risk Conference Chicago

4Q of 2005

* Regulatory Compliance Chicago

by A.J. Stinnett

15

Safe and Efficient Borders Post 9-11 security technology and U.S.-Canadian border crossings may help speed freight moving between the two countries. by Michael Fickes

18

3PL Professionals Add Value to Their Knowledge Base at Annual Convention

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Adding to the Bottom Line with Voice Direction Technology by Michael Hogue

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Lead Generation: New Rules for Success by Jim Bierfeldt

De p a r t m e n t s 5 7 8 26

IWLA Education & Training Schedule Letter from the Chairman Legislative News Buyers’ Guide & Trade List

March 19-23, * 115th Annual Convention 2006 The Wynn Las Vegas Luxury Resort, Las Vegas * Qualifies toward completion of IWLA’s prestigious Certified Logistics Professional (CLP) designation. The 3PL Executive is published four times a year for the The International Warehouse Logistics Association 2800 River Road, Suite 260 Chicago (Des Plaines), Illinois 60018 847-813-4699, fax 847-813-0115 www.iwla.com by Naylor Publications, Inc. 100 Sutherland Avenue Winnipeg, Manitoba R2W 3C7 800-665-2456, 204-947-0222 fax 204-947-2047 www.naylor.com Publisher Kathleen Gardner Editor Leslee Masters Senior Sales Manager Allen Reimer Sales Manager Steve Urias Publication Director Kim Davies Advertising Sales Robert Bartmanovich, Jeff Bunkin, Bert Eastman, Jim Ebling, Shayne Froelich, John O’Neill, Dawn Stokes Research Allie Hansen Advertising Art Melanie Meilleur Layout & Design Catharine Snell No part of this publication may be reproduced without permission of the publisher. Opinions expressed in this publication may or may not reflect the views of the Association and do not necessarily represent official positions or policies of the Association or its members. The association does not guarantee or endorse, unless expressly stated, any advertised product or service. The 3PL Executive staff works diligently to produce factually correct, error-free copy, but does not accept liability for printer or clerical mistakes. Appropriate retractions or corrections will be made upon proper written notice by readers. Published June 2005/IWL-Q0205/4119

THE 3PL EXECUTIVE

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ESSENTIALS course

No matter how you define it, you know you need IWLA’s Essentials Course. This comprehensive, weeklong course is the warehouse logistics industry’s premier training course. To be held October 2-7, 2005, The Essentials Course in Logistics Management covers the fundamentals and latest trends essential to the success of your career and company. These range from efficient warehouse design and construction, RFPs and warehouse law, to government

October 2-7 2005 in Chicago

regulations, risk management and insurance planning. It’s taught by leading industry experts with years of hands-on warehouse management experience. The Essentials Course is a key requirement for the distinguished Certified Logistics Professional (CLP) designation.

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SUMMER 2005


L e t t e r f ro m t h e C h a i rm a n

D

ear fellow members: Well, the Annual Convention is over, and I certainly hope you were one of the more than 400 attendees lucky enough to be able to travel to Orlando in March. If so, you witnessed one of the most successful meetings I’ve ever experienced! The thought-provoking general sessions and relaxed networking opportunities were second to none and, speaking for myself, provided inspiration and ideas about value-added warehousing services that I already have begun using in my own business. But I also have additional responsibilities as the new IWLA chairman. I feel very privileged that you, my fellow warehouse professionals, have entrusted me to lead this great organization. I hope to build upon the accomplishments of my predecessor and dear friend Tony Becker and work with members and the board to advise our talented Association staff as they position IWLA to better promote, advance and serve the thirdparty warehousing industry and its customers. We are fortunate to operate in a rapidly growing segment of the logistics outsourcing industry. Over time I hope we can demonstrate to our members (current and prospective) and customers that we offer the most valuable solutions and that we are the “talked about” trade association and the one you must be part of. A lofty goal, but one that I believe is within our grasp with sustained focus. I share with my predecessor the belief that the Association is at its best when member-driven, and I commit to continue his efforts to increase member participation in the leadership of our committees and councils. In addition, I have identified several priorities that I will be working to achieve during my tenure as chairman to make substantive progress toward achieving our long term goals. They are: 1. Growing the membership and increasing the role of the IWLA in facilitating regional and local council activities. These regional and local activities should provide a great source for the overall direction of our Association. 2. Improving the marketing support the Association provides with a particular focus on techniques to improve the lead generation skills of our members and enhance the utility of the LSL. 3. Making tangible progress on establishing our Association as the acknowledged source of operating standards for our trade – a true “Standards of Excellence” program. In addition, the Board of Directors plans to launch an initiative whereby Darrel Lake of Saddle Creek will assist the IWLA Insurance Committee in exploring the possibility of expanding the types of coverages available to smaller members and Canadian companies through the Association. THE 3PL EXECUTIVE

Speaking of the board, I’d like to welcome the other newly elected officers: Vice Chairman David Pettit and SecretaryTreasurer John Zevalkink. Other newly elected or re-elected directors are: Bruce Abels, John Auger, Ben Gordon, Tommy Hodges, Linda C. Hothem, Jock Menzies and Bob Moran. They join continuing board members Tommy Grimes, Kent Hunter, John Kelly, Richard Murphy Jr., Doug Sibilia and Jere Van Puffelen. I’d also like to thank retiring board members Gary Owen, Steve Jacobus, Darrel Lake, Lance McRoberts and Gary Shimbashi for their time and effort on behalf of the Association. It is because of the dedication of talented individuals such as these that IWLA has flourished for more than 100 years. As the Association moves forward on these initiatives, the board and I welcome member input and participation, and I encourage you to pick up the phone or boot up the e-mail to offer suggestions. Remember, this is YOUR association and the membership’s participation is needed to continue our current success. You will not be disappointed in the benefits you reap. Warm regards, Robert Auray, CLP, IWLA Chairman AFH Logistics Solutions

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2 0 0 5 I W L A St a f f and Leadership

L e g i s l a t i ve Ne w s

New Bankruptcy Law Safeguards Warehouseman’s Lien by Patrick O’Connor

T

hird-party warehousing and logistics is an industry that few from the outside world fully comprehend. That is certainly the case when it comes to legislators and regulators in Washington, D.C., and in individual state capitals. To effect legal change, our industry can work in alliance with other industries. But often we must “go it alone” because of our unique role within the commercial system, a role spelled out in the Uniform Commercial Code (UCC). An important “win” came earlier this year in the form of passage of the new federal bankruptcy law. This past April, President Bush signed into law the biggest rewrite of the bankruptcy code in a quarter-century. It marked the culmination of eight years of effort by banks and credit card companies to revise the bankruptcy laws. The measure primarily rewrites consumer bankruptcy law, requiring people with incomes above a certain level to pay some or all of their credit-card charges, medical bills and other obligations under a court-ordered bankruptcy plan. But buried deep in the bill is a small but important provision that directly affects bankruptcies by companies that use the services of a third-party public or contract warehouse. Section 406 of the new law prevents a bankruptcy trustee from avoiding a warehouseman’s lien under the UCC or similar state law. SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES CODE. Section 546 of title 11, United States Code, is amended – (1) by redesignating the second subsection (g) (as added by section 222(a) of Public Law 103–394) as subsection (h); (2) in subsection (h), as so redesignated, by inserting ‘‘and subject to the prior rights of holders of security interests in such goods or the proceeds of such goods’’ after ‘‘consent of a creditor’’; and (3) by adding at the end the following: ‘‘(i)(1) Notwithstanding paragraphs (2) and (3) of section 545, the trustee may not avoid a warehouseman’s lien for storage, transportation, or other costs incidental to the storage and handling of goods.” ‘‘(2) The prohibition under paragraph (1) shall be applied in a manner consistent with any State statute applicable to such lien that is similar to section 7–209 of the Uniform Commercial Code, as in effect on the date of enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, or any successor to such section 7–209.’’

The legal impact of this change is that it is now much harder for a bankruptcy trustee to argue that the warehouseman’s lien was not in force at the time of a bankruptcy filing, and therefore, invalid. But there is more to this story. IWLA took a lead role is developing this important amendment and worked hard for many years to ensure its eventual enactment. The problem with bankruptcy trustees was highlighted by IWLA’s legal counsel in the late 1990s. This was followed by a chance conversation between IWLA’s government affairs counsel and Sen. Charles Grassley (R-IA), who planned to sponsor the bankruptcy reform legislation. This was followed by a conference call arranged by IWLA between the Senator and an IWLA member based in Des Moines, IA. These key steps resulted in Sen. Grassley adding the IWLA amendment to his bankruptcy bill on the floor of the U.S. Senate in 1999. Due to controversy over unrelated provisions in the bankruptcy bill, it took nearly five years for the measure to become law. Nevertheless, IWLA relentlessly pursued the

ELECTED LEADERSHIP Chairman Robert R. Auray, Jr., AFH Logistics Solutions President & CEO Joel R. Hoiland, CAE Vice Chairman David Petitt, CLP, American Distribution Centers Secretary/Treasurer John Zevalkink, CLP, Columbian Logistics Network Immediate Past Chairman Anthony Becker, CLP, Port Jersey Logistics DIRECTORS Bruce Abels, Saddle Creek Corp. John C. Auger, Brook Warehousing Systems Ben Gordon, BG Strategic Advisors Tommy Grimes, Grimes Logistics Linda C. Hotham, PACAM Tommy Hodges, Goggins Warehouse Co. Kent Hunter, JD. Smith & Sons John Kelly, CALYX Transportation Group Jock Menzies, The Terminal Corp. Bob Moran, CLP, Amware Logistics Richard Murphy, Jr., Murphy Warehouse Co. Jere Van Puffelen, Prism Team Service Doug Sibila, Peoples Services STAFF Joel R. Hoiland, CAE President & CEO Alex C. Glann Vice President & COO James “Jamie” Wagner Director of Marketing & Communications Nathan Noy Director of Legal & Regulatory Affairs Linda Wood Director of Education Scott Brewster Director of Member Services Charles Schmidt Consulting Director of Media Relations Faith Ramey Member Services Coordinator Sheresa McClain Administrative Coordinator – Accounting Barbara Glann Receptionist Rocio Lemke Administrative Assistant

continued on page 26 8

SUMMER 2005


More Productivity Out of Your Warehouse by A.J. Stinnett

W

ebster defines productivity as “the state of being productive,” which means yielding results, benefits or profits. To squeeze more productivity out of your warehouse, you must examine five key areas: operations, people, information technology, financial management and overall management. OPERATIONS

It is important to examine each part, or function, of your operation. Then design a series of incremental steps to improve that function and reduce its cost. One way to do this is to create an action team consisting of a member from each part of the warehouse operation. A seasoned manager should serve as the team captain to manage the nitty-gritty work of examining each function of the operation and documenting the work of the team. The team captain must report to the CEO or senior executive of the warehouse. An action team should do the following: • Identify the processes used throughout the warehouse. • Take each process apart to determine: Why do we do it? Can we stop doing it? Can we do it faster or cheaper? Can it be combined with something else? What does it cost? Then, change the process as needed. • Identify the output or result of each process. • Identify or establish the quality and schedule requirement for each output or result. THE 3PL EXECUTIVE

• Test the changes made to each process to be certain the output result is acceptable. • Document how the process is to be performed, the output or result to be produced, and the quality and schedule requirement for the result. Retrain the people who do the work. • Track the performance of each process to determine to what extent it meets, exceeds, or fails to meet the quality and schedule requirement. • The manager responsible for the process must determine the cause of failure to meet the requirements and take the proper corrective action. This may include having the action team re-examine the process. • Only the CEO can disapprove a change the action team recommends. The CEO should serve as head cheerleader for the action team.

Track and record your employees’ performance every week, without fail. Record only the superior or substandard work. Don’t record any of the work that is not superior or substandard. That will give you the information you need to make decisions about your people (i.e., who to trust, who to promote, who needs help, etc.). Every three months, share the performance record with the employee and listen to his or her comments. Always end the meeting with a sincere question: Do you need any help to continue the superior work or the good work or to improve the substandard work? At the end of a year, you will have four quarterly performance records that the employee has seen. Once you combine those four records, you will have the annual performance record, which is based on facts rather than poor memory, emotion or personal bias.

PEOPLE

If people know they are expected to manage their own performance and produce acceptable results, remarkable things happen. Begin this process of self-management by making certain that each person understands and accepts two rules of performance: do the job right every time; and do as much work as is needed to be done. Employees must also know that you will remove obstacles that block their performance and that your help is close by. You must tell them this frequently.

INFORMATION TECHNOLOGY

Your warehouse must be accessible. Information arrives verbally, by fax, phone, the internet or on paper and may be routine or critical to you or your customer. The process to receive and act on incoming information must be as near perfect as possible. If you’re not internet-connected, become so now. This will give you instant access to worldwide business opportunities and allow you to offer better, more rapid service to your customers. 13


Squeezing More Productivity cont’d Internal information is the lifeblood of your warehouse. It must be managed and protected so everyone has instant access to the information they need. Your computers, servers or mainframes must be interfaced properly – not abused, maintained regularly and updated as needed. Every employee must be trained and retrained to use the computer systems (including the CEO, long-tenured employees and every new employee). Outgoing information must be managed and treated with as much critical importance as internal information. That’s because it is the smiley face you present to your customers and if it’s vague, inaccurate, late, incomplete or missing it makes your warehouse look disorganized and unprofessional. The remedy: put your action team to work examining every way information is used by your warehouse. Change and retrain if needed.

FINANCIAL MANAGEMENT

Your financial manager must fully utilize the present generation of information system tools. For example, a spread sheet program should be used to perform a wide variety of both basic and advanced financial management tasks and programs. The improvement in accuracy and time savings can be substantial. Plus, financial managers should be expected to set and accom14

plish specific objectives for their area just as operational managers do (or should). Two examples that are appropriate for nearly any warehouse: manage the cash flow to maintain a proper balance; and optimize the use of cash to minimize the cost of financing. Finally, push part of the responsibility for P&L reporting and results to the lowest level of management. Consider getting your lead people involved in this also. The more people involved in this, the more training will be needed. MANAGEMENT

One of the most critical areas to examine in determining how to increase warehouse productivity is overall management. Managing is the process of getting things done through others. That’s true regardless of whether their title is lead person, manager, vice president or CEO. To be profitable and successful, a manager must do the right things, do them consistently and do them well. The right things include planning, organizing, staffing, directing and controlling. • Planning is predetermining a course of action and requires that you forecast, set objectives, set the sequence and timing of steps to complete the objectives and establish procedures. • Organizing is arranging things and requires that you define duties for people, group them to focus on customers, link suppliers, employees and customers with communication webs, and provide the tools people need. • Staffing is hiring and keeping competent people and requires that you recruit good people; orient them to the job, the standards, you and the company; train them to be proficient; and develop them for a better job. • Directing is working toward objectives by assigning work to people, enabling (motivating) them to perform, coordinating people and groups and managing conflict.

• Controlling is ensuring progress toward those objectives and requires that you expect your people to do their job right every time and do as much work as is needed, record the performance of people and the group, praise superior work and help poor performers improve. Sounds easy, doesn’t it? But are you actually performing all those tasks? To test yourself, answer these questions: 1. Do you set objectives (results) for the future or just react to what comes along? 2. Is your company organized horizontally to focus on customer requirements? 3. Do you hire and train your people to work efficiently and develop them for the future? 4. If your people know what, how, when and why to do the work, can you trust them? 5. Are your people expected to do their work right the first time, every time? Are you? If you answered yes to all five questions, congratulations. You are managing your warehouse effectively. If not, consider what you must do to become a more effective manager. To prepare this article, I’ve tapped the experience and wisdom of a superb group of people: Dr. Jane Thurston, Jane Landwehr Thurston consulting; John R. Ness, president, ODW Logistics; Wendell T. Long, Long Consulting; John P. Stinnett, PMP, Sogeti USA; Richard A. Inkrot, CPA, controller, Liberty Tire Services; and Ava M. Stinnett, editor, Zaner-Bloser Educational Publishers. A.J. Stinnett is an organization development consultant based in Columbus, OH. He works to help executives and managers become more effective and their organizations more efficient. He has worked with numerous warehouse operations in the U.S. and other countries. He can be reached at MSP@StinnettGroup.com. SUMMER 2005


Safe And Efficient Borders

Post 9-11 security technology at U.S.-Canadian

border crossings may help speed freight moving between the two countries.

A

t 5 a.m. Pacific Standard Time on May 3, 2005, the Blaine, WA, border crossing between the U.S. and Canada reported a 20-minute delay for commercial vehicles. The delay would grow longer as dawn turned to morning. One of the smaller border crossings between the U.S. and Canada, the Blaine crossing moved goods valued at more than $35 million per day into the U.S. and Canada during 2000 – the year before the 9-11 terrorist attacks on the U.S. Back THE 3PL EXECUTIVE

by Michael Fickes

then, the Federal Highway Administration estimated that delays at Blaine cost shippers and receivers $40 million a year. Since 9-11, trade moving both ways across the U.S.-Canadian border has faced even more expensive delays, thanks to security routines implemented by U.S. and Canadian Customs agencies. A study by the Ontario Chamber of Commerce released last April estimates that border delays cost the U.S. economy US$4.1 billion per year. In June of 2004, an earlier Ontario Chamber

study set annual losses to the Canadian economy at C$8.3 billion (US$6.7 billion). But that may be changing as officials of both countries institute advanced technology programs designed to tighten security and speed freight movements. Consider the Automated Commercial Environment (ACE) being developed by U.S. Customs and Border Protection (CBP), for instance. “When we first heard about ACE, we were worried,” says Peter Beaulieu, president of Muir’s Inter15


Safe and Efficient Borders cont’d national Inc. of Concord, Ontario, a subsidiary of CALYX Transportation Group. “But after studying the program, we’ve come to believe that it might be a way to move traffic faster than it moved before 9-11.” ACE is a commercial trade processing system being developed by CBP to enhance border security while expediting freight movements. ACE will eventually become the primary U.S. tool through which advanced electronic manifests detailing shipments from Canada to the U.S. will be submitted to CBP. ACE will consolidate the capabilities of a host of existing systems under one head-

ing, replacing, for example, the aging Border Release Advanced Screening and Selectivity (BRASS) system; the Customs Automated Forms Entry System (CAFES); and the Pre-Arrival Processing System (PAPS). Shippers or third-party logistics suppliers (3PLs) will send electronic manifests to ACE, while carriers will submit information related to drivers and equipment, explains Beaulieu. ACE will link manifests to individual carriers, pieces of equipment, and drivers and forward the data to appropriate customs brokers. A security software application behind ACE will evaluate the data, looking for shipping patterns that deviate from norms.

Custom’s ABCs: What all those acronyms mean ACE: Automated Commercial Environment, or ACE, is Customs and Border Protection service’s electronic receptacle for manifests describing the contents of shipments entering the U.S. ACE will eventually replace PAPS, BRASS and CAFES. ACI: Advance Commercial Information. The Canadian version of ACE. BRASS: Border Release Advanced Screening and Selectivity. An old line-release method of clearing customs. Being phased out by PAPS and ACE. CAFES: Customs Automated Forms Entry System. A system that accepts electronic manifests with advance information about inbound truck cargo. Slated to be replaced by ACE. CBP: Customs and Border Protection, an agency within the U.S. Department of Homeland Security. CSA: Customs Self Assessment. Canada’s version of the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT). C-TPAT: Customs Trade Partnership Against Terrorism. A voluntary, incentive-based program established by CBP. Open to all importers and carriers, C-TPAT participants conduct a comprehensive self-assessment of the security of their supply chains. Benefits include reduced inspection times at border crossings. FAST: Free And Secure Trade program under which carriers may apply to use FAST lanes at border crossings. FAST approval is required for membership in C-TPAT. PAPS: Pre-Arrival Processing System. A U.S. and Canadian system that accepts electronic manifests slated for eventual replacement by ACE and ACI. PIP: Partners In Protection, a Canadian program dealing with security issues not covered by CSA.

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When – or if – the security software and customs clear a shipment, ACE will inform the shipper and the carrier that the goods can cross the border. “As with the current systems, a shipment must clear an hour before the truck arrives at the border,” says Beaulieu. “Trucks arriving too early can be fined $5,000.” ACE is now being pilot tested at the small, delay-ridden Blaine crossing, and CBP hopes to roll the system out to other crossings in 2006. Until then, shippers, warehouses and carriers will have to make do with the current system and its quirks. Today, for example, a driver picks up a truckload shipment at a customer’s site or warehouse, proceeds to the border, crosses and makes the delivery. Since the carrier doesn’t know what is on the shipment, the shipper or 3PL must fax the manifest to a customs broker, who should, but often doesn’t, provide proof to the driver that the manifest has been delivered to CBP. “The driver needs proof when arriving at the border so that if there is a problem, the carrier won’t be fined,” Beaulieu says. “We ran into this once where our driver arrived before the manifest had cleared. CBP was going to fine us. Fortunately, we were able to prove that the customs broker didn’t submit the documents to Customs on a timely basis.” ACE will solve these kinds of problems. When ACE is implemented, shippers will be required by law to submit manifests. Carriers will also supply their information. The ACE technology will marry the two. But ACE will also raise new issues. Not everyone has a system that can format data appropriately for submission to ACE. Beaulieu says that data intermediaries are springing up to solve that problem. Muir’s is working with Crimson Logic, a Singapore company with offices in Toronto. Crimson Logic is building SUMMER 2005


FAST program, is one example. Designed to speed carriers through U.S.-Canadian border crossings, FAST is a joint initiative among CBP, the Canada Border Services Agency (CBSA) and Citizenship and Immigration Canada (CIC). While FAST membership is largely voluntary, companies interested in participating in the U.S. CTPAT program and the Canadian CSA and PIP programs must first join FAST. In addition, as of May 1, only FAST-approved drivers can de-

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U.S.-CANADA COOPERATION

ACE is a U.S. system designed to secure and speed the delivery of goods being imported by U.S. buyers. Canada plans to implement its own version of ACE technology, called Advance Commercial Information, or ACI. Likewise, CSA, or Customs Self-Assessment program, and PIP (Partners In Protection) combine to reflect Canada’s approach to the issues addressed by the U.S. C-TPAT program. “Eventually, the border security programs being rolled out by the U.S. CBP will show up in parallel Canadian programs,” says Beaulieu. In fact, the U.S. and Canada have already implemented joint efforts. The Free And Secure Trade, or THE 3PL EXECUTIVE

liver shipments clearing customs under the BRASS system. U.S. and Canadian authorities view these emerging programs as tools that will strengthen border security. In a bid to make the new security measures acceptable to shippers, 3PLs and carriers, officials from both countries have insisted that new technologies used to implement security must also help resolve underlying problems that have delayed cross-border freight movements over the years.

What’s the revenue payback from the IT investments you can make?

“The Economics of IT”

an application service provider (ASP) that will house web sites for Muir’s, as well as other carriers, shippers and 3PLs. Muir’s will submit data required by CBP electronically to the ASP, which will translate the data and forward it to ACE. Once approved, ACE will send a message to the ASP, which will inform Muir’s. Similar data intermediaries will be available for shippers and 3PLs, who will also have to communicate with ACE. When CBP announced ACE in 2003, use of the system required membership in the Customs-Trade Partnership Against Terrorism (CTPAT), a voluntary CBP program open to all importers and carriers. CTPAT participants conduct comprehensive self-assessments of the security of their supply chains according to CBP criteria. In return, CBP loosens border restrictions for C-TPAT members. Last February, CBP eliminated the requirement of C-TPAT membership for ACE users in the hopes of boosting ACE usage. According to CBP, ACE participation will eventually be made mandatory.

New Sessions and Speakers! Find out where the IT Revolution is Headed Learn the latest in WMS and TMS See what’s beyond WMS: Labor Management Technology, Vendor Managed Inventory, Telephony, Security, CRM, Office Automation Network with your Peers Product Demos and Individual Vendor Appointments Available

For more information, go to www.iwla.com or call 800-525-0165.

September 8-9 2005 in Chicago

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3PL Professionals Add Value to Their Knowledge Base at Annual Convention

M

ore than 400 logistics practitioners from across North America gathered in Orlando at the end of March to attend IWLA’s 2005 Annual Convention. Considered by many to be the premiere educational and networking event in the logistics industry, the convention lived up to its billing with an information-packed agenda that included two keynote presentations from best-selling authors and another from an acknowledged innovator in the logistics industry (Herb Shear of GENCO Supply Chain Solutions). In addition, a number of panel discussions and breakout sessions touched on topics ranging from how to market value-added warehouse services and the value of foreign trade zones to warehousing merger and acquisition success stories and how technology can enhance value-added services. Attendees also had ample time to mingle and network at no fewer than five receptions, several of which were held in the Exhibit Hall to allow members to sample the wide variety of innovative products and services offered by participating vendors. In addition, the Convention began with the ever-popular IWLA Golf Classic, which was won by the team from Verst Group Logistics. IWLA also continued its tradition of holding a pre-convention Business Conference. This year’s event focused on helping owners and senior management of third-party warehouses maximize their company’s market value. The Chairman’s Banquet concluded the three-days of activity, with the leadership gavel being officially passed from 2004-05 Chairman Tony Becker, Port Jersey Logistics, to Robert Auray, president and founder of AFH Logistics Solutions. Of special note was the awarding of the Association’s Distinguished Service Leadership Award to Robert J. “Bob” Carwell, CLP (flanked by Gary Owen and Tony Becker in photo at left). Bob, a longtime IWLA supporter and former chairman of the Association, is chairman and CEO of MTE Logistix, Edmonton, Alberta.

IWLA’s 115th Annual Convention will be held March 19-22, 2006, at the Wynn Las Vegas Luxury Resort. For information on this exciting event as it becomes available, visit

Standing room only: Attendees flocked to the interactive breakout sessions where they were able to get “up close and personal” with senior warehouse executives and ask questions on topics that ranged from merger advice to tips on purchasing the right technology to the best ways to market value-added services.

www.iwla.com Exhibitors should contact Director of Member Services Scott Brewster at sbrewster@iwla.com. Renewing acquaintances: Tommy Grimes, David Pettit, Perry Ozburn and Becky Grimes are just several of the many long-time IWLA members that renewed their friendships at the 2005 Annual Convention last March in Orlando.

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SUMMER 2005


Danke Schoen: Immediate Past Chairman Tony Becker seems to be imitating Wayne Newton as he reminds Convention attendees that next year’s gathering will be at the Wynn Las Vegas Luxury Resort.

Saving the industry: Bob Rose and IWLA COO Alex Glann look like they’ve just solved all of the 3PL industry’s problems during a break in festivities at the Chairman’s Banquet. The three-day event brought to a close one of the Association’s most successful meetings on record.

Newly installed IWLA Chairman Bob Auray and his wife Marion dance cheek-to-cheek as they have the first dance at the Chairman’s Banquet. The event closed out a very successful IWLA Annual Convention in Orlando.

Security concerns: National security expert and noted author Dr. Steve Flynn spoke about security threats to the world’s supply chain, identified shortcomings of the current plan for homeland security and outlined his own approach.

Passing the gavel: 2004-05 Chairman Tony Becker presents the ceremonial leadership gavel to incoming 2005-06 Chairman Bob Auray.

A gathering of past and present IWLA First Ladies: Eileen Becker, Joanne Owen and Marion Auray.

Ready to go on tour: Team Verst, consisting of Paul Verst, Willie Fox, Dave Verst and Jim Stadtmiller won the IWLA Golf Classic. Paul also took home the award for longest drive.

Jock Menzies, Steve Jacobus and Linda Hothem listen intently to keynote speaker and industry innovator Herb Shear, who discussed how his company creates and implements value-added supply chain services. The next American Idols? Bob Moran, Bob Auray, Dennis McGinley and Gary Owen get down and funky with the members of Alive n Kickin’, which provided top-drawer entertainment at the Chairman’s Banquet. THE 3PL EXECUTIVE

Wheeling and dealing: Rick DeShone of Codeworks describes his product’s key features to Howard Li during a networking opportunity in the Annual Convention Exhibit Hall. Attendees got to sample the product and service offerings of more than 50 warehouse industry vendors.

19


Adding to the

Bottom Line With

20

SUMMER 2005


by Michael Hogue

Voice Direction Technology

T

echnology, like time, marches on. The distribution world has certainly seen and marched through its share of technology in the past century, starting with fork trucks and conveyors and then moving on to higher technology with the emergence of PLC controls and computers. Distribution technology took a giant leap with WMS, bar codes and the development of radio frequency (RF) technology. Now the buzz revolves around the “new” technology of voice-directed systems. But the use of voice direction in manufacturing and distribution is really not new, just greatly improved and more available to large and small operations. And in many cases, voice technology is proving to be far more affordable because of its rapid payback potential. Industrial voice direction has been with us for nearly 20 years, but the past three to four years have seen a rapid advancement in the technology, both in hardware and software. Voice-directed systems use mobile computers and headsets worn by associates that permit real time, twoway communication between the associate and a voice system server. The voice system software provides instructions to each associate to direct them through a process (receiving, put away, order selection, kitting, replenishment, loading, etc.). The associate talks with the

THE 3PL EXECUTIVE

system to confirm location, confirm quantity, provide inventory count and request additional information. A voice system also uses an RF network to link the voice server with the devices worn by the associates. Then to complete the system, a link to the host computer [WMS or Enterprise Resource Planning system (ERP)] is created to provide a constant flow of data for inventory, supervision and tracking purposes. There is a perception by some that voice is just another form of data collection, like using an RF scanner to capture data and pass it along to a WMS. However, data collection is only half of the picture, according to Bob Footlik, president of Footlik & Associates, an Evanston, IL, consulting firm. “Given the requirements of most tasks, bar code verification is fine, but there is a lot more that can be accomplished with the right prompts and directions to ensure that the individual goes to the right spot to do the right things in exactly the optimal sequence.” Because of the two-way dialogue going on between the voice server and each associate in the facility, a voice system has the power to instruct, direct, confirm and thereby optimize each operation. STRATEGIC ADVANTAGES

3PL executives are always looking for an edge, a strategic advantage to

capture new business, expand business with an existing customer and to improve profitability. How can voice-directed systems help? Let’s put things in perspective. First of all, voice-directed solutions should be considered a tool to improve business process. Footlik comments that “dollar for dollar the greatest value will come from enhancing control and information systems rather than investing in hardware to solve operational problems that should never have existed.” Now consider how voice technology can help provide top notch service to the customer while at the same time putting dollars on a 3PL’s bottom line. Paul Schwartz is the CIO of Appleton, WI-based Warehouse Specialists Inc. (WSI). He implemented a voice-directed system three years ago to improve order selection and cycle counting in a distribution center WSI operates for Johnson Diversey, a major consumer products company. The voice-directed system implemented by WSI is linked to a WMS, replacing a paper-based picking system. At any given time 15 or more associates are performing cycle counts and selecting orders, each receiving detailed instructions from the system and feeding information back to the host system and WSI supervisors. The fulfillment center selects some full pallet orders, but also selects case level and individual units. 21


Voice Direction Technology cont’d According to Schwartz, WSI increased the volume through the facility by 40 percent without increasing staff. “The system also allows us to respond to inventory discrepancies in real time and eliminates the need for a yearly physical inventory count. The benefits coming from this technology are a reality,” he says. Productivity increases in the range of 20-50 percent are common with voice-directed systems. These increases come about primarily due to associates having both their hands and eyes free and having instructions spoken to them rather than using paper pick lists, labels or scanners. Instructions to provide special packaging or labeling can be voiced to the associate to help reduce the number of touches and minimize additional labor. Voice systems that are specifically tailored to the needs of the operation can provide an additional boost in productivity which in turn increases the rate of return on the initial investment. The drive to improve productivity with an existing labor force will take on more significance in the years to come. In his keynote address at the recent IWLA Annual Convention in Orlando, Herb Shear, CEO of GENCO Supply Chain Solutions, offered an upbeat forecast for the 3PL industry as a whole, but contained a rather ominous set of predictions regarding the future labor situation: • Health care costs will continue to rise. • The workforce is projected to decline as baby boomers begin to retire. • As the economy grows, the creation of new jobs will add to the potential labor shortage – a gap of 30 million workers, according to Shear’s information. • The implication is that we will face significantly higher labor costs by 2010. It’s no wonder 3PL executives and their clients are looking to technology 22

to help them increase productivity without increasing overhead. As Shear reports, “Our customers are looking for more use of technology.” The technology GENCO is evaluating, says Shear, includes RFID, labor management software, flexible robotics and voice technology. Voice-directed solutions offer more to 3PL’s than labor productivity. Factor in error reduction, reduced training time, multi-lingual capability, reducing manual key punch activity and safety and most operations achieve an ROI in less than 18 months – many in less than a year. That’s what Remington Arms and their 3PL partner Ozburn-Hessey Logistics are achieving in their Memphis distribution center. John Fox, director of logistics systems for Remington Arms, a Madison, NC, firearms manufacturer has good things to say about the voice system and their partnership with OHL. In fact, OHL played a significant role in developing the specifications for a voice-directed system. The voice system is used for picking case quantities of ammunition and gun-related accessories. Interestingly, the voice system replaced an RF scanning system “because we wanted to increase our productivity. Don’t be afraid of the technology change,” says Fox. Fox says that the original ROI calculation indicated a 14-month payback, based largely on productivity increases (more than 15 percent), but also factors in error reduction as part of the justification. The voice system operated by OHL has been active for a year and Fox says they are right on track to get the ROI they expected.

sociates. Until recently the mobile units were proprietary devices manufactured by a limited number of companies and they had only one function – voice direction. But as indicated earlier, technology marches on. The new breed of voiceenabled mobile devices are smaller, multi-modal (voice, scanning, key pad) and, in many cases, less expensive than the voice-only units. “The move to an ‘open platform architecture’ means the applications can be written in industry standard programming languages and even the voice recognition engine can be readily swapped out as newer, better ones are developed,” reports Jeff Slevin, COO of Lucas Systems Inc., a voice system provider. The manufacturers of the multi-modal devices are household names to distribution professionals – Symbol, Intermec and LXE to name a few. All of this means users now have far more flexibility and options. For example, the new breed of devices will give 3PLs an ability to use the unit as a scanner for receiving in the morning, then as a voice device in the afternoon for order selection. Or for voice applications that may require an occasional scan to capture large amounts of data, the new devices provide both functions in one unit. Voice-directed systems have come a long way and 3PLs are beginning to take advantage of the technology. Properly done, voice systems can be a tool to direct and instruct associates while capturing critical data in real time. And with a little creativity, voice can be used dock-to-dock to greatly improve a 3PL’s overall process, and add a little extra to the bottom line.

More Good News

As if higher productivity, reduced errors, eliminating physical inventory counts, faster training and accelerated ROI weren’t enough, there is actually more good news for 3PLs. It comes in the form of the new breed of hardware – the mobile devices worn by as-

Michael Hogue is a Sales Manager with Lucas Systems Inc. a software firm that specializes in voice-directed applications for manufacturing and distribution operations. He can be reached at (724) 940-7047 or hogue@lucasware.com. SUMMER 2005


Lead Generation: New Rules for Success by Jim Bierfeldt

A

Do-It-All Distribution sales rep called ACME Chemical and learned from its logistics director that ACME had no immediate need for services. Sensing there was little future opportunity, the sales rep did not follow up. Six months later, ACME management made a decision to outsource logistics and charged its logistics director with finding a chemical warehouse provider. She did a web search on “chemical warehousing” and was led to Your Way Logistics, which had just posted a press release on its new chemical distribution center. While on the site, she noticed an offer for a free white paper on transporting hazardous goods, which she downloaded after providing her name, company and e-mail address. Shortly after, she received a call from Your Way acknowledging her visit and asking how else they could help. She explained ACME’s intent, but noted that she was early in her analysis. Over the next six months, she networked with IWLA’s Council of Chemical Logistics Providers (of which Your Way was a member), attended a conference on chemical logistics (at which Your Way spoke) and read various trade articles on the subject (some of which quoted Your Way executives). She also received periodic updates from Your Way, including a link to a new white paper. During an internal meeting to determine which logistics providers, in addition THE 3PL EXECUTIVE

to Your Way, would be considered, ACME received a call from another Do-It-All sales rep asking if the company had any current warehousing needs. ACME’s logistics director simply said “no” and hung up. Today, products and services are bought, not sold. Buyers have unprecedented access to a world of objective information – about you, your competitors and a variety of solutions. Rather than “old boys” passively waiting to be educated about you and your products, today’s logistics professionals are smart, savvy “boy and girl wonders” who leverage this information, on the web and elsewhere, to help them make decisions. What’s the best way to get on their radar screens? Not with interruptive, one-way, sales-oriented communications. The answer is to give prospects a reason to find you – through speaking, publishing and networking opportunities that create visibility and enhance your reputation. The conventional assumption in industrial sales is that good salespeople identify prospects and convince them to buy. But examine your recent new business signings. This is more the exception than the rule. Today, the buyer takes the initiative. By using marketing tactics to create visibility and interest in your company at the top of the sales funnel, you free sales to do what they do best: build relationships and solutions for prospects that are ready to buy. Here are some suggestions for developing and improving your lead generation approach. Create content. Web content guru Gerry MacNamara says: “Content is written down intellectual capital. It is the lifeblood of the information organization.” In what areas do you have expertise or a unique approach or opinion? Figure it out, then stop selling to cold prospects and start educating – with white papers, case studies, articles. Too busy? Not sure how? Hire outside help to get it done. There are lots of hungry fish in the sea, but without the right bait you have little chance of catching them. Market your content. Don’t be shy. Seek speaking opportunities. Approach trade magazines with an idea for a customer case study. Submit an article or opinion to an online logistics forum. Write a press release about a new service or customer and distribute it through an 23


Lead Generation cont’d online service like PR Web (www.prweb.com). In a wired world, content is a marker that allows prospects looking for specific information to find you. And it’s important that they find your content not just on your web site, but on popular news sites and industry portals where credibility is inherent. Your web site should contain all your relevant content. Driving targeted traffic to this content should be a marketing priority. Search engine optimization (SEO) is one important way (see Winter 2004 3PL Executive). Another is pay-per-click (PPC) advertising, in which you purchase keywords on search engines and pay a fee only when the surfer clicks on your link. According to the Search Engine Marketing Professionals Organization, advertisers plan to increase PPC advertising 39 percent in 2005. While it takes time for SEO techniques to yield maximum benefits, results from a welldesigned PPC program can be immediate. Convert anonymous web site visitors to known prospects. What percent of your web site’s visitors take action on the site that allows you to identify them for future communication? This is your conversion rate. To improve conversion, don’t clutter your site with lengthy sign-up forms and flash content and images that get in the way of useful content. People come to

web sites to read. Give them good content, then entice readers with an offer of a free white paper or regular email tips, for which they would have to fill out a short sign-up form. A service like Constant Contact (www.constantcontact.com) allows any business to create and distribute professional looking e-newsletters, while managing the details of subscribing and unsubscribing recipients. The design of your site also impacts conversion rates. Rather than fewer pages containing varied content, consider segmenting the site into more pages that are each focused on a specific topic and rich in topic-related keywords. This approach will make your site more search engine friendly and will increase the likelihood that visitors will stay once they arrive. Don’t make the common mistake of focusing on increasing site traffic and ignoring conversion. Very small improvements in conversion rate have the same net effect as doubling your site visitors – and it’s usually much easier. Create a rich network of contacts. George Silverman, author of The Secrets of Word-of-Mouth Marketing, suggests people take action on one in 15,000 ads they see, but one in three recommendations they receive. People buy from companies they know. Your network should include influencers like logistics consultants and referral sources such as commercial real estate and eco-

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SUMMER 2005


nomic development contacts, who are sometimes the first to hear of companies looking for warehousing space. Don’t forget existing customers. Logistics providers often know little about their customers’ broad logistics operations. And it’s not because customers won’t tell them, it’s because they haven’t asked. Create opportunities for strategic discussions with your most important customers where you learn all the touch points and pain points along their supply chain. This will put your current role in context and help identify additional areas where you could add value. Track leads to improve your ROI. 3PLs do a good job measuring operational performance but a poor job measuring marketing effectiveness. Set up both a process and a system to track lead generation efforts. The process requires a company-wide, uniform approach to logging inquiries and gathering relevant data. The system can be as simple as a spreadsheet. Questions your system should answer: How many inquiries do you receive within any given timeframe? What triggered the inquiry (e.g., search engine, online ad, yellow pages, direct mail, personal referral)? How many inquiries became sales opportunities? How many sales opportunities became customers (close ratio)? To improve lead generation, you’ve got to know what’s working and what’s not. Today, products and services are bought, not sold. Prospects are increasingly cynical toward one-way, salesoriented messages and more inclined to independently gather objective information about challenges, solutions – and providers. Want to win in this new environment? Quit beating your chest and, instead, look for ways to contribute to a knowledge exchange within your market. Share ideas. Express your opinion. Be heard. Be seen. Communicate information that helps prospects do their job better, faster and cheaper and you’ll get their attention faster than telling them how many square feet of warehouse space you manage. Jim Bierfeldt is a former 3PL marketing executive who is now president of Logistics Marketing Advisors, LLC, a firm specializing in marketing and public relations strategy and support services for 3PLs. Contact him at jim@logisticsmarketing.com. To learn more about generating leads and closing sales, check out IWLA’s Marketing & Sales Conference July 20-21 in Chicago. For more information, go to www.iwla.com. THE 3PL EXECUTIVE

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Champion Logistics Celebrates 25 Years Champion Logistics Group, Northlake, IL, opened its doors Feb. 7, 1980, in Elk Grove Village, IL, under the name Champion Airfreight. At that time, it operated as an air freight forwarder offering next-day and second-day services. Over the next 25 years, the company started offering customers a larger menu of expedited services and opened satellite offices across the country, beginning a line haul operation. It also founded a sister company, Just In Time Fulfillment Services, to handle warehousing and fulfillment. In 2004, Champion Transportation Services and Just-In-Time Fulfillment Services were merged to form the current Champion Logistics Group, headed by Chief Executive Officer Lance Lucibello.

Bu ye r s’ Gu i d e & Tr a d e L i s t BAR CODE DATA COLLECTION SYSTEMS Cadre Technologies, Inc. . . . . . . . . .4 BUILDING SYSTEMS Ceco Building Systems . . . . . . . . .3 FREIGHT CONTROL SOFTWARE Argos Software, Inc. . . . . . . . . . . .24 HVLS FANS MacroAir Technologies LLC . . . . .11 LIGHTING Sylvania Lighting Services . . . . . . .inside front cover LOGISTICS SERVICES Cotter Merchandise Storage Co of Ohio . . . . . . . . . . . . . . . . . .4 FST Logistics . . . . . . . . . . . . . . . .25 LOGISTICS SOFTWARE Argos Software, Inc. . . . . . . . . . . .24 MATERIAL HANDLING EQUIPMENT Litco International . . . . . . . . . . . . . .7 Ohio Rack, Inc. . . . . . . . . . . . . . . .25 Western Pacific Storage Systems . . . . . . . . . . . . . . . . . . .4 MEZZANINES Western Pacific Storage Systems . . . . . . . . . . . . . . . . . . .4

PALLET RACKS Frazier Industrial Company . . . . . . .6 Kingway Inca-Clymer Material Handling . . . . . . . . . . . .4 PICK MODULES Western Pacific Storage Systems . . . . . . . . . . . . . . . . . . .4 RUGGEDIZED COMPUTERS LXE Inc. . . . . . . . . . . . . . . . . . . . .10 SOFTWARE Softeon . . . . . . . .outside back cover STORAGE SHELVES Western Pacific Storage Systems . . . . . . . . . . . . . . . . . . .4 UNIT LOAD DESIGN PRODUCTS & SERVICES Millwood, Inc. . . . . . . . . . . . . . . . .26 WMS VENDORS & TECHNOLOGY PROVIDERS Argos Software, Inc. . . . . . . . . . . .24 LDS INC. . . . . . . . . . . . . . . . . . . . .6 Lucas Systems Inc. . . .inside back cover Provia Software Inc. . . . . . . . . . . .25 The Frederick Group Inc. (TFG) . . . . . . . . . . . .24

Legislative News continued from page 8

Kane “Able” for 75 Years In 1930, at the height of the Great Depression, Edward J. Kane traded his car for a used truck and thus was born Kane Freight Lines. In 1955, current Chairman Eugene J. Kane took over the family business and established Kane Warehousing in a 2,000 square foot facility as an adjunct to the trucking business. Today, Kane Is Able Inc., based in Scranton, PA, has evolved into a full-service, asset-based, 3PL provider for the entire Northeast U.S., operating more than five million square feet of warehouse space. “While the fleet and warehouse capabilities of our company far exceed the dreams of our founder, he would readily recognize our continued reputation for integrity and fairness.” Eugene says. “We have flourished for 75 years by emphasizing these values and focusing on satisfying our clients and their customers.”

26

warehouse amendment, making certain it survived every time a new bankruptcy bill was introduced and considered in Congress. This is only one of several issues on IWLA’s government affairs agenda. There is still more work to do on inventory tax legislation, import and customs issues, food safety and a host of other issues important to our industry. However, by exhibiting the same kind of determination evidenced in the bankruptcy reform effort, we will prevail. Patrick O’Connor is a partner in the Washington, D.C., law firm Kent & O’Connor and serves as IWLA’s Washington Counsel. For timely updates on legislative and regulatory issues, please see IWLA’s electronic newsletter, This Week @ IWLA, or go to www.iwla.com.

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SUMMER 2005


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