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DG&A's Transportation Consulting Blog

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We live in a remarkable era. When people look back at this era 15 or 20 years from now, many will say that this was a golden era for jobs. Most people interested in working have jobs. Employment in Canada and the United States is at almost record levels. Looking ahead to the future, this could change dramatically. If you examine many of the core sectors and jobs in our economy, they are being transformed by technology.

Many manufacturing jobs are being replaced by robots, automation and off-shoring to counties with a lower cost structure. Low-skilled, repetitive factory jobs can now be performed by machines. Similarly, as products are being manufactured, robots allow companies to pack more products into their warehouses, and to speed up picking, so that they can put more products into rapid fulfillment. As an example, Amazon expects to hire another 100,000 workers in the next eighteen months, many of them in their fulfillment centers.

Autonomous and semi-autonomous trucks may soon be able to take most of these goods to their destinations. Many of the almost 4 million truck driving jobs in our economy, specifically the long-haul trucking jobs, could become obsolete.

Ecommerce is having a profound impact on both wholesale and retail jobs. Consumers can now place an order online and have the products delivered directly from the manufacturer to their homes, by-passing a warehouse and/or retail store. In a recent blog (http://www.dantranscon.com/index.php/blog?view=entry&id=290 ), I highlighted the number of malls and stores being closed throughout North America. While some retail jobs may be replaced by warehousing positions, many will be lost.

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As baby boomer logistics leaders move into retirement, their successors are tasked with directing the company’s distribution operations. Informed business leaders realize that we are in a period of profound changes. Companies such as Amazon and Uber are disrupting current business models. Technology and automation are altering manufacturing processes. Ecommerce and omni-channel distribution are upsetting existing retail processes. As my colleagues and I meet with shippers, we find many companies are exploring their options. Should they try to manage these changes in house or should they enlist the support of outside resources?

In-House or Outsource?

It is important to understand that business leaders do not face a binary choice. The field of Logistics is more complex than it has ever been. Senior logistics professionals must possess a variety of business skills and possess a depth of knowledge in a range of areas such as supply chain design and management, warehouse and inventory control, customer service, transportation and information management. These leaders must then be able to adapt and apply their skills and knowledge to specific companies in the manufacturing, distribution and retail sectors, including bricks and mortar and eCommerce organizations. This leads to a fundamental question for every organization. Does the company have a set of leaders who possess this range of skills and knowledge?

While it is unlikely that one senior executive will possess all of these attributes, the broader question is does the company possess these skills across its logistics management team. If not, what skills and knowledge does it need to import from external sources? This article outlines how to create a leadership plan (http://www.supplychainquarterly.com/news/20170428-how-to-plan-for-future-supply-chain-leadership/?utm_medium=email&utm_campaign=Executive%20Insight%20 ).

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Over the past couple of weeks, I have had the privilege of sitting in on a discussion and reading some papers on the Future of Freight Transportation. I specifically would like to acknowledge the work of Steve Sashihara at Princeton Consultants and a recent Supply Chain Digest report that helped shape my ideas for this blog. While I previously had some sense of what was going on (i.e. ecommerce, Amazon) in this sector, I was surprised by the range and profound nature of the changes that are taking place. I would like to share some of the major changes with you.

Manufacturing in the Future

The big drivers of change are automation, digital technology, and robotics. Manufacturing is increasingly being performed by robots; automated systems are sorting the products and then loading them on trucks. Sensors are becoming ubiquitous and are now on products, pallets, SKUs, drivers, facilities, tractors and trailers. Conveyor systems move the right product to the right piece of trucking equipment at the right time. Loading software tells you how and where to load the product on the truck or trailer to maximize cube utilization and avoid load imbalances.

With the advent of 3D printing and artificial intelligence, companies can manufacture their products in the locations closest to their customers and/or distribution facilities. What this tells you is that the jobs of assemblers, sorters, fork lift drivers and loaders will increasingly be replaced by machines. While some manufacturing may come back to the United States or Canada, many of the traditional jobs will not.

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As we enter a New Year, many people create a set of resolutions to burn off a few pounds, to quit smoking or to achieve whatever goals are meaningful to them. On a professional level, this is a time for smart shippers to set in motion a series of resolutions to improve their company’s freight operations and their personal career trajectory. Here are a few to consider.

1. Follow the Donald . . . closely

President-elect Trump has promised to make a number of changes to both the domestic economic situation in the United States and to the current world order. As an individual who campaigned as an “outsider,” Donald Trump threatens to upend a range of current business practices. Keep a close eye on his trade policies, his efforts to boost manufacturing jobs in America, his government spending programs, his policies on climate change and on infrastructure spending. Initiatives in these areas would have an impact the flow of goods and services, on economic growth and on freight transportation.

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It is still the morning after the night before. Thus, it is somewhat early to draw any conclusions about how Donald Trump and The Republican Party achieved such a major victory in the US elections this week. Having said that, there were some powerful business lessons that emerged from this election process. Here are some that immediately come to mind.

Understand the Needs of your Customers

Everyone is acknowledging today that Donald Trump heard the voices of white working class Americans and other disaffected groups better than anyone in the Democratic Party. He heard their concerns about the challenges of lost jobs, technological change, stagnation in wages and other troubling issues. Moreover, he channeled this dissatisfaction and anger into an unprecedented, historic victory.

Key Takeaway: Business leaders must take the time to tune in to their customers, to peel away the layers of the onion to hear their true concerns and then to meet their needs. It was clear from this bitter election campaign that the Democrats, the party of the working class, were not in tune with many Teamsters, working class people and other groups that have aligned with them for so long.

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