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3PL Americas

THE 2015 IWLA CONVENTION + EXPO

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· Returns Processing and Refurbishment: Sorting, Inspecting, Re-Manufacturing, Parts Distribution all driven by Scalable Technology Solutions

Technology to increase your competitive edge· RF Inventory Management Technology

· Real Time Tracking, Traceability and Transparency for optimal inventory management and quality control

· Resident IT Resources to address your current and changing Supply Chain needs

Transportation services to move your goods· Asset Based Shuttle Services; heavy permitted equipment to reduce your transportation costs and your carbon footprint

· Refrigerated and Ambient Load capabilities

· Local, Regional and International Brokerage Services

Commercial Space to grow your business· Clean Modern “fl ex” space – build to suit

· Superior amenities – from free / well lit on - site parking to close proximity main thoroughfares

· Immediate access to; local, regional, national and international transportation routes – NYS Thruway, Buffalo-Niagara International Airport and US /Canada crossings

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Regionally Based; Globally Capable.

Sonwil offers four highly focused, independently managed operations collaborating with you to tap your economic strengths locally, regionally and globally.

Logistics to power your distribution· Warehousing and Distribution; Cold and Ambient, Food Grade, Rail Served, FTZ Certifi ed supported by a dynamic Technology Driven WMS

· Value Added Services; Cross Dock, Pick and Pack, Re-Casing / Re-Packing and Display Builds

· Returns Processing and Refurbishment: Sorting, Inspecting, Re-Manufacturing, Parts Distribution all driven by Scalable Technology Solutions

Technology to increase your competitive edge· RF Inventory Management Technology

· Real Time Tracking, Traceability and Transparency for optimal inventory management and quality control

· Resident IT Resources to address your current and changing Supply Chain needs

Transportation services to move your goods· Asset Based Shuttle Services; heavy permitted equipment to reduce your transportation costs and your carbon footprint

· Refrigerated and Ambient Load capabilities

· Local, Regional and International Brokerage Services

Commercial Space to grow your business· Clean Modern “fl ex” space – build to suit

· Superior amenities – from free / well lit on - site parking to close proximity main thoroughfares

· Immediate access to; local, regional, national and international transportation routes – NYS Thruway, Buffalo-Niagara International Airport and US /Canada crossings

Move your fi xed expenses to variable by selecting just the services you need when you need them, reducing your costs and signifi cantly improving your bottom line.

We’re in the center of it all.

A Total Solution for getting it from here to thereTRACKING The most sophisticated tech-nology at your fi ngertips to get precise tracking information of your goods.

TRACEABILITY We use the latest software providing a global, multi-carrier shipping solution. Scalable from a single location to a global enterprise solution, it’s accessible online for tracing and confi rming delivery.

TRANSPARENCY Get the peace of mind of being able to virtually see the shipping process from start to fi nish. No surprises.

providing a global, multi-carrier shipping solution. Scalable from a single location to a global

A Responsive Strategic Partner, Working with You. Contact Dave Harper: 716.206.1842 • [email protected]

www.sonwil.com

Sonwil, your strategic partner providing solutions to protect your economic future.Take Advantage of the Power of Four.

PUBLISHED FOR:

International Warehouse Logistics Association Steve DeHaan, president & CEO 2800 River Road, Suite 260 Des Plaines, IL 60018 USA Tel: (847) 813-4699 Email: [email protected]

Managing editorJohn Levi, IWLA Canada

Copyright © 2015, International Warehouse Logistics Association (IWLA). All rights reserved. No part of this publication may be reproduced by any mechanical, photographic or electronic process, nor may it be stored in a retrieval system, transmitted or otherwise copied (except that members of IWLA may copy all or part of this publication exclusively for personal use or use in the operation of that member’s business, but excluding any publication) without prior written permission from IWLA. For permission, contact the publisher, J.M. Levi & Associates Ltd.

Consulting editorDavid Long

Associate editorKim Biggar

IWLA liaisonMorgan Zenner

Sales representativesCheryl Ezinicki, Jennifer Rezny

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PublisherJ.M. Levi & Associates Ltd. PO Box 30039 RPO New Westminster Thornhill, ON, Canada L4J 0C6 Tel: (877) 305-6587 Fax: (905) 756-1115 Email: [email protected]

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3PL AmericasTHE MAGAZINE OF IWLA IN NORTH AMERICA • WINTER 2015

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Cover photo courtesy of Georgia Ports Authority – photographer Stephen B. Morton

3PL Americas


PORT OF SAVANNAH

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6 IWLA — Envisioning the FutureBy Steve DeHaan

7 2014 — The Year in ReviewBy Tom Herche

8 IWLA Events Calendar

10 “What’s the Big Deal if I Sign This Contract?”By Marc Blubaugh

12 The 2015 3PL Selection and Contracting ReportFrom Eyefortransport

17 ALAN Brings 2015 IWLA Convention Themes to LifeBy Kathy Fulton

20 See You in Savannah!By Rob Doyle, CWLP

22 The Hope-Driven Leader: Creating a Culture of PossibilityBy Libby Gill

24 Port of Savannah: North America’s Largest Single-Operator Container Terminal

25 Future Issues of 3PL Americas

29 When Will You Get Smart Glasses?By Michael Rogers

31 Creating the Lean Warehouse: Evolution not RevolutionBy Robert Martichenko and Chris Luery

32 Advertiser Index

33 Leading with Trust: Principles and PracticeBy Chip Scholz

37 The Good, the Bad and the Ugly: Pharmaceuticals in a 3PL WorldBy Morgan Zenner

3PL Americas — Winter 20156

PRESIDENT’S MESSAGE

IWLA — Envisioning the Future

THE IWLA VISION STATEMENT – “To be the most valued trade as-sociation for our members” – drives all that we do. And the association’s

mission is timely: “To help our members run high-quality, profitable warehouse logistics businesses.”

If you’ve attended our sessions or heard our members discuss IWLA, you know that’s exactly what’s happening. However, to better serve members and maintain that “most-valued” status, IWLA must plan for future success!

In 2014, the IWLA Board of Directors developed a strategic plan to map out our desired direction for 2015 and beyond. Here are some highlights.

■ Government AffairsIWLA has a fantastic Government Affairs Program. As we look ahead (and

at the various government departments affecting our businesses), there is a lot more to do. The board has challenged the IWLA Government Affairs Com-mittee to identify eight to 10 legislative issues that impact and will mobilize our membership. All of these issues have the underlying goal of improving our members’ ability to better serve their warehouse logistics customers and their communities.

IWLA will develop these concerns into issue papers that include an executive summary. Our hope is that these will provide sufficient detail for members to use when they speak with their employees, fellow businessmen and/or con-gressmen. These papers will provide the knowledge and basis it takes to deliver an effective message. (Issue papers will be available in the “Members Only” sec-tion of the IWLA website.)

In addition, we will communicate these issues via our magazine and newslet-ter, and through meetings in Washington directly with our congressmen. IWLA will also invite our sister associations to participate in these discussions, as the issues relate to the whole industry. We need the whole industry to step up. IWLA will continue to provide leadership in these arenas.

Because most of our members deal with labor, transportation and safety regulation issues, we plan to form a Congressional Caucus. This would be a core group of congressmen willing to be more educated about the business issues that affect logistics and the supply chain network. I invite you to watch for more information in March or April, when the issues are developed. After the new congressmen are seated, find their offices and have new staff in place, we will be in Washington calling on congressmen on April 27 and 28 during the IWLA Legislative Fly-in. Plan to join us.

■ Your ParticipationIn order to have an effective reach on legislative issues, IWLA needs its mem-

bers to participate. The IWLA Political Action Committee (IWLA-PAC) raises funds for congressional elections. While many members may not like donating money to elections, they do understand that if they hope to have a listening

Continued on page 8

The association’s mission is timely: “To help our

members run high-quality, profitable warehouse logistics businesses.”

ear and/or a voice, they need to participate.

3PL Americas — Winter 2015 7

CHAIRMAN’S MESSAGE

2014 — The Year in Review

FOR THE PAST YEAR OR TWO, I’ve been active with the IWLA Partner Member Committee. This group, comprising representatives from suppli-

ers to the warehouse logistics industry, meets regularly to discuss how its mem-bers can better reach out to and assist warehouse logistics companies.

These companies used to be referred to as “Associate Members” in the asso-ciation. They became “Partner Members” after a change to the bylaws in 2013. This name more accurately reflects how strategic suppliers want to be viewed – and the value that this membership group brings to IWLA.

My work with these professionals reveals just how important these team-mates are in what you and I do each day in our warehouses: Without the sys-tems, technology, tools, services and expertise these companies provide, we could not as successfully meet – or exceed – our own clients’ demands. Truly great partners transcend the client/vendor relationship: They use their exper-tise to help us predict what our customers will need tomorrow, next year and in the next decade.

That’s a relevant aspiration for us as providers of warehouse logistics ser-vices: Wouldn’t it be great if all of our customers viewed us strategic partners?

It is this goal that drove IWLA to alight on “Connect. Discover. Innovate.” as the theme for the 2015 IWLA Convention & Expo. To achieve that true partner status, we need to be seen as innovators in the industry. I would highly recom-mend in Savannah that you take the opportunity to meet with those partners that will add value to your business.

This will be my last Chairman’s Message in 3PL Americas. I have been hon-ored to serve the association as chairman this past year. I want to thank our wonderful staff, our board, and all of the other member volunteers who made this past year successful.

I have had the privilege to serve in Steve DeHaan’s first full year as our presi-dent & CEO. Steve has made many positive changes that will benefit the associa-tion and our membership for years to come. Our finances have been as good in 2014 as in any year this century. Our membership is poised for growth in the coming year, after remaining steady for the last few years. The IWLA Insurance Company has seen substantial growth this past year. We had record attendance at the IWLA Convention in March 2014, and the educational offerings were more plentiful that ever before.

Thank you again and I hope you enjoy our convention and the great city of Savannah, Ga.!

Tom HercheChairmanInternational Warehouse Logistics Association

[The term Partner Member] accurately reflects how

strategic suppliers want to be viewed – and the value

that this membership group brings to IWLA.


The association, when it speaks col-lectively for its members through the IWLA-PAC, has a very large voice.

During the 2014 election cycle, the IWLA-PAC spent in excess of $140,000. We achieved a 100-percent success rate in electing the represen-tatives we supported. The elections in 2016 are extremely important for our nation, families, businesses, em-ployees and so on. IWLA will not be shy about representing members and working hard to support appropriate and positive changes for the future.

Another program, the IWLA Pub-lic Policy Center, raises money to fund research that illustrates the business impact particular actions may have on the supply chain. Our best argument in both the congres-sional and regulatory environment is having concrete facts. Our industry, with its variety of 3PL warehouses, is somewhat fragmented. The PPC cat-egorizes data and commissions stud-ies tackling topics where we want to have maximum impact. The program literally yields millions of dollars back into our industry.

For example, the PPC funded stud-ies that revealed the negative effect of service taxes on area commerce and warehouse operations. We completed two different studies previously and, combined, have been very successful in defeating proposals and having taxes repealed. The next battle on that front appears to be in Illinois, where the IWLA office is located.

Your involvement in the IWLA Congressional Contact Program (CCP) will help educate lawmakers. While many congressmen have never been to a warehouse, they and their staffs may think they understand sup-ply chain and logistics. Inviting your congressmen to your facility and ask-ing them to speak with your employ-ees will help them understand how delicate and sensitive the marketplace is to changes in regulations or laws.

During the next two years, IWLA asks that 60 member companies step up and say, “We will host a represen-tative or senator and introduce them to our employees.” We already know the impact this can have on legisla-tors… but it can also have a great impact on your employees. Your staff members may be confused when it comes to election time. They may not know how to sort through the information that might impact their families, incomes and jobs. It’s very effective for employees to meet a con-gressman first hand.

■ NetworkingIWLA is working to enhance mem-

ber networking. Members who have been around for three years (or more) and who have participated in IWLA events cite professional connections as the greatest association benefit. However, members new to the as-sociation may not understand that their involvement is a prerequisite to getting the most from IWLA.

IWLA’s education programming and meetings are at the heart of build-ing a professional network. It is here that our members meet and discuss particular topics, talk about hurdles in their business, and motivate each other.

Many members use IWLA educa-

tion programs to train their staff to help their companies. As a bonus, they get their staff linked with or in-troduced to similar people in other companies. These professionals can then confer with each other. These enduring networks would never happen if not for IWLA classes. Our members’ businesses would never benefit from the power of having mul-tiple minds put to an issue for their company.

To this end, IWLA is focused on further honing its education pro-gramming and attracting new mem-bers. In fact, we are offering some first-year members incentives to get involved in IWLA education. We are working to create an IWLA mentors program. We are expanding the reach of MasterMind groups. In addition, we will survey members to ascertain what education they believe is most important.

We will also work to facilitate networking and gain member feed-back through a new opportunity: I’ve been asked to start approximately eight discussion groups consisting of about 10 members each. These groups will discuss different industry issues. These will be great sessions. If you receive an invitation, I highly recommend you do your best to get involved, as we will have some of the greatest minds on these calls.

Another opportunity is the return of IWLA regional meetings. These short, in-person meetings will bring IWLA education closer to many members’ locations. If you have an opportunity to participate, you will find them very beneficial. Of course, IWLA continues to provide support for different state issues; to be in-volved with industry segments (such as food or chemical, for example); and to network with our sister as-sociations.

Virtual networking is also part of our plan. We will be creating a List-Serve for company CEOs. A ListServe will allow the industry to start talking to itself via discussion threads using a low-cost and very convenient way of learning and sharing. If you’re a CEO, watch for an invitation to join.

PRESIDENT from page 6

IWLA Events Calendar

★ IWLA California Warehouse Labor Law Webinar 2015January 28 – Webinar

★ 2015 IWLA Convention & Expo – Connect, Discover, InnovateMarch 8 to 10 – Savannah, Georgia

★ 2015 IWLA Economics of Warehousing & 3PL Sales CourseMay 13 to 15 – Niagara Falls, New York


■ GrowthTo build your network, and to

sustain the association, IWLA has a membership-growth strategy. While the number of warehouse logistics companies seems to have stagnated, primarily because of marketplace con-solidation, there are still numerous 3PLs that are not part of IWLA. Mem-bership growth will help IWLA across the board, from developing its Gov-ernment Affairs Programs to enhanc-ing basic services for all members.

To attract and retain members, we need to tell our story. IWLA’s com-munication and public-relations pro-gram has really come alive in the last year. We produce very high-quality products (i.e., magazine, newsletter, blog, website, print promotions, ad-vertising, press releases and apps) and we represent the industry through numerous speaking opportunities.

We know our efforts are working, as government officials, legislative staff, federal agencies, and attorneys all call us for insight. IWLA is very well respected within the warehouse logistics community. Within the next

few years, we hope to use this high level of respect to our advantage to improve and add to our communica-tions mix:• We will develop more blogs with

company issues defined for our members.

• We will improve our great graph-ics capability for print, digital and visual presentations.

• We will create more (and im-proved) on-demand educational programs and webinars.To ensure that we maintain mem-

ber involvement, we are formally supplementing our volunteer-led retention efforts with an outreach program from our CEO, vice presi-dent and membership representa-tive. We are very intent on learning more about what’s happening within our industry and sharing this data with our members. It will then benefit their businesses as they compete with non-members.

Our message is clear – and our benefits are easy to communicate. If you and your company want a place that makes it easy to:

1. get the information you need for your company;

2. find those resources you need to be effective in serving your customers;

3. ramp up your involvement in the legislative and political process so your business can benefit from be-ing involved in leading-edge infor-mation;

4. have some of the best-trained and knowledgeable employees; and

5. manage for future success… and to do all of this in a friend-

ly, family environment, you need to maintain an IWLA membership and participate in supporting a great in-dustry.

IWLA is always here, as we have been for nearly 124 years. Be sure to check out IWLA’s redesigned web-site: www.IWLA.com.

Steve DeHaan, CAE President & CEO International Warehouse Logistics Association


MOTOR CARRIERS are regularly presented with contracts by their pro-spective or existing customers in a “take it or leave it” fashion. The motor

carrier quickly weighs in its mind the benefit of the very real and immediate business opportunity (i.e., top-line revenue and a possible long-term customer relationship) against what appear to be distant, theoretical risks (e.g., freight loss or damage, shipment delay, a personal injury or non-payment) that may never come to pass. Oftentimes, without a clear understanding of the contract, or without even reading the contract at all, the motor carrier simply signs and moves forward. Not until a high-dollar cargo claim or a catastrophic personal injury arises does the motor carrier begin reflecting on the significance of the piece of paper that it has signed. Of course, by then, it is too late.

Motor carriers who are in transportation for the long term should take a more-thoughtful approach, particularly when transporting high-value freight or doing business with sophisticated shippers whose contracts may strip the motor carrier of many traditional rights. At the very least, any motor carrier should understand and, where appropriate, walk away from the following contractual provisions:

■ No Limitation of LiabilityIn the ordinary course of business, motor carriers have the benefit of a limi-

tation of liability in their bills of lading or transportation contracts. After all, a motor carrier cannot be the virtual insurer of every high-value load. However, too often, motor carriers neglect to consider the ramifications of entering a transportation contract without a limitation of liability. For instance, earlier this year, a federal court entered judgment against a motor carrier for $5.9 million, because a load of cellphones that it was hauling was stolen. The motor carrier undoubtedly had no appreciation for the fact that it could be liable for the entire value of the load – and certainly did not have a $5.9-million cargo-insurance policy in place. The motor carrier would have undoubtedly charged a great deal more than it did for its services (or refused to haul altogether) if it knew that its exposure could approach $6 million. Consequently, every motor carrier should ensure that it has a limitation of liability in place with its customers. A limita-tion of liability of $100,000 to $250,000 per occurrence is fairly typical. Higher limits can be negotiated under special circumstances.

■Broad,UnilateralIndemnificationA mutual indemnity obligation between a shipper and a motor carrier is fairly

typical. However, increasingly, certain shippers have attempted to cram down one-sided indemnity agreements upon motor carriers. A motor carrier who agrees to indemnify a shipper for the shipper’s own negligence can find itself fac-ing extraordinary liability. For example, a shipper’s negligent loading (resulting in an unstable trailer) could cause a fatal highway accident. Even though the ship-per is at fault, the motor carrier may end up paying for the shipper’s attorneys’ fees, as well as any judgment taken against the shipper if the indemnity agree-

TRANSPORTATION CONTRACT LAW

“What’s the Big Deal if I Sign This Contract?”By Marc Blubaugh

Too often, motor carriers neglect to consider the

ramifications of entering a transportation contract

without a limitation of liability.


ment is sufficiently broad and unilat-eral. Of course, while most states now have some version of an anti-indem-nification statute that prohibits the enforcement of such provisions under many circumstances, the better part of caution is to avoid these provisions altogether in the first instance.

■ Lien WaiverMotor carriers in most jurisdic-

tions have a lien upon the freight that they are transporting in order to se-cure payment of freight charges. This provides the motor carrier with le-verage if a payment dispute emerges between it and its shipper before the load is released. For instance, with over-dimensional loads, many factors may ultimately inform the amount due from the shipper. The parties to such contracts are not always as clear as they should be when memorializ-ing a pricing structure. The presence of a carrier lien, which may permit the motor carrier to hold the freight “hostage” pending a resolution of the freight-charge dispute, can motivate resolution. Many shippers, however, will try to require a motor carrier to waive its lien and sacrifice this cus-tomary right. Indeed, they may even include a contractual provision im-posing an award of attorneys’ fees in favor of the shipper if the motor carri-er attempts to exert a lien of any kind.

■ Set-offTraditionally, the law has treated

the payment of freight charges and the payment of freight claims as sepa-rate and distinct obligations. Indeed, prudent motor carriers expressly prohibit a shipper from setting off a freight claim against freight charges due and payable. However, shippers are increasingly imposing a contrac-tual right to set off freight claims against freight charges at their discre-tion. Permitting such a set-off in the event of a freight claim can dramati-cally affect the motor carrier’s cash flow. As transportation is typically a “pennies business,” the unilateral set-ting off of a high-dollar freight claim against freight charges can function-ally bankrupt a motor carrier. The

shipper is essentially making itself judge and jury of the freight claim regardless of the actual merits of the claim. Similarly, the shipper will of-ten fail to mitigate damages if it can simply perform a set-off.

■ Consequential DamagesConsequential damages are dam-

ages that flow naturally, but not nec-essarily, from a breach of a carrier’s obligations. Examples of consequen-

Including a waiver of consequential damages in a transportation contract is essential.

■ No Duty to MitigateA basic principle of contract law is

that both parties to a contract must use every reasonable means to lessen any damages caused by the other. When a freight claim arises, the ship-per has the burden of proof to dem-onstrate the amount of damages that

tial damages include lost profits, lost customers, third-party contractual penalties, and the like. Typically, a motor carrier expects its shipper cus-tomer to waive pursuit and recovery of these damages. After all, conse-quential damages can be of extraordi-nary magnitude and are not covered by conventional cargo policies or oth-er insurance policies. Nevertheless, more and more shippers are attempt-ing to strike such a waiver or even include an affirmative statement that such damages are recoverable – par-ticularly if they are involved in a “just-in-time” operation. Such contractual provisions (or even the mere absence of a waiver) could mean that a motor carrier that intended to make a tiny profit off of a load is now suddenly exposed to exponentially greater lia-bility arising from having a plant shut down by virtue of a delayed shipment.

it has suffered. The shipper must also try to salvage the freight or otherwise mitigate its damages. This is because the shipper is likely the party who is in a better position to dispose of damaged goods since the shipper is in the business of trading in the type of merchandise involved in the first place. However, when a shipper’s contract states that it has no duty to mitigate, these traditional obliga-tions are thrown out the window. For instance, a consignee who sees one pallet with some ants crawling on it might wrongfully reject the entire load, and the shipper may conclude under the contract that it has the discretion to donate the pallets to a landfill. If the motor carrier has agreed in the contract that the ship-per has no duty to mitigate, the motor carrier has now once again exposed

Continued on page 15


■ IntroductionThe 3PL industry is on the verge of a major crossroads,

one the industry hasn’t faced since the implementation of the GPS and the invention of the 3PL. On the one hand, 3PLs are fighting to maintain relevance in an increasingly commoditized service area. On the other hand, technology is playing, and has the potential of playing, an immense role in changing how the industry operates and how 3PLs can claw back the margins they’ve been losing over the last decade.

This report outlines the results of a survey of more than 400 logistics and supply chain executives representing the key decision-makers in the field of 3PL contracting from the manufacturer and retailer perspective and the logis-tics service provider (LSP) perspective. The survey provides an unprecedented glimpse into how these industry players are coping with contracting. It spells out the challenges associated with the con-tracting process, but also looks toward pain-points affect-ing the decision-making behind 3PL service procurement, and the level of service customers are experiencing.

The report’s findings are fascinating. First of all, 3PLs appear to be on their back foot as service satisfaction drops, renewal rates decrease and contract length re-mains low. The report explores, for the first time, the impact of cutting-edge technologies on the industry, and the perceived value they might serve in the industry in the coming years. These technologies represent promis-ing areas that might change the industry forever, and provide 3PLs with future potential growth opportunities and value-added service areas. The industry is clearly at a crossroads, but with huge untapped potential in technol-ogy, new markets, existing markets and service levels, the capacity for growth is huge.

■ The State of the IndustryChina has been the quintessential emerging market

for the last decade. 3PL survey participants once again selected it as the best region for them to find opportuni-ties, which some might find a bit difficult to understand, as China presents a level of complexity that is much higher

LOGISTICS INTELLIGENCE

The 2015 3PL Selection and Contracting ReportFrom Eyefortransport

than that of other growing markets; it has, among other things, a difficult regulatory environment, a lack of infra-structure beyond the east coast and major competition from local providers that understand local customs and business practices. Should these barriers prove surmount-able, China boasts one of the biggest consumer markets on the planet, providing plenty of room for growth in the 3PL sector, not the least of which is in the eCommerce space

which is currently booming in China, with giants such as Alibaba and even forays by Amazon into the area.

North America, on the other hand, while not an emerging market, under-standably offers substantial opportuni-ties for logistics providers. It has an established network, a growing econ-omy, and a consumer base that is sig-nificant. Furthermore, with shifting manufacturing strategies, space for in-novation in the distribution of consumer products, and so on, North America has

plenty of room for companies to gain market share. There have been some difficulties in North America, as well, that do play against it: a driver shortage limiting capacity, and a shifting regulatory environment that many have seen as unfavorable toward business.

The regions selected by manufacturers and retailers as offering them the best opportunities for business closely reflect those chosen by 3PLs. As 3PLs look to enable their customers’ access into new areas, we can see this alignment as a positive in terms of 3PL/shipper alignment. From the shipper perspective, entry into China seems more obvi-ously attractive, given the growing consumer base in the country, and the enablement through companies such as Alibaba to reach them via eCommerce.

One major difference exists in the manufacturer/re-tailer and 3PL perspectives on regional business oppor-tunities in relation to Western Europe/Africa. Africa and Western Europe presented equal opportunities for 3PLs, with just over 24 percent of respondents selecting these regions as areas of potential growth. For manufacturers and retailers, on the other hand, Africa was out of the top seven areas, while Western Europe was fourth, with 37.5 percent of respondents seeing opportunity in this area.

3PLs are fighting to maintain relevance in an

increasingly commoditized service area. Technology

is playing an immense role in changing how

the industry operates.


If we think of 3PLs as facilitators of market access, we can begin to under-stand why Africa rates so low on the manufacturer/retailer perspective; Africa is still in the midst of develop-ing its 3PL infrastructure, making manufacturer/retailer entry difficult. Western Europe has one of the most complete 3PL networks in the world and a sizable consumer base, making it attractive to manufacturers and retailers, but not an area to expand business for 3PLs.

■ New Technologies and DemandWe all know how important inno-

vation is in the 3PL space. While it is unsurprising that the bulk of respon-dents are not yet exploring the use of drones, 3D printing, driverless vehi-cles and augmented reality, it is inter-esting that a not-insignificant number of respondents have expertise in each of these four technology spaces, and they’re already providing expertise, knowledge and services in these areas, apart from augmented reality.

Overall, roughly a quarter of re-spondents were engaging in work – whether developing expertise, or providing expertise or full-fledged service – in the areas of drones, 3D printing, driverless vehicles and aug-mented reality. This illustrates that, despite the lack of innovation in the logistics space, there are a significant number of LSPs that are forward-looking and willing to not only em-brace new technologies but also use resources to turn these ideas into value propositions.

The overall manufacturer/retailer expectation was that their 3PL would not be in tune with the cutting-edge technologies mentioned above. How-ever, one quarter of respondents did think their 3PL should have some knowledge or expertise in the area, with some manufacturers and retail-ers going so far as to expect expertise now and services in the area in the future. As 3PLs strive for innovation, methods to create value-added ser-vices, and to differentiate themselves from one another, based on these

results, cutting-edge technology – for those with the budgets – looks like a good area in which to gain expertise.

If we combine all of the manu-facturers interested to any degree in having their 3PL have at least some knowledge of these cutting-edge technologies, 32 percent want their LSPs to have at least some knowl-edge of augmented reality, 30 per-cent want some knowledge of drone delivery, 33 percent want LSPs to have some knowledge in the area of 3D printing, and 42 percent want their 3PLs to have some knowledge of driverless vehicles. These are sig-nificant numbers of shippers looking to their 3PLs for leadership in the technology space.

Conversely, 3PLs don’t seem pre-pared to acquire knowledge or exper-tise in these technologies, with only 20 percent having some knowledge of augmented reality, 18 percent drones, 25 percent 3D printing and, in the biggest separation between shipper and 3PL, only 24 percent driverless vehicles.

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This is certainly a space worth watching in the coming year to see how these results shift from No to Yes, and how 3PL/customer align-ment develops.

■ 3PL SelectionManufacturers and retailers saw

reputation and testimonials as the number-one thing they look for when choosing a new 3PL. 3PLs, on the oth-er hand, felt size and scope of their business is primarily why they are chosen by customers. There are some clear differences between 3PLs and their customers on the perceived value of contract logistics services. It’s inter-esting to see, a little further on, how, when dissecting contract renewal, the different priorities begin to mismatch.

The top three reasons 3PLs felt customers would not renew their contracts were poor service, an al-ternative 3PL offering lower prices and relationship-management issues (breakdown in a personal relation-ship with management of 3PL). In contrast to the answers provided

regarding the performance of cur-rent providers, poor service and price were ranked top as reasons for ship-pers changing providers, which begs the question: Why aren’t these con-cerns ranked as high when it comes to selecting providers?

It’s clear that the 3PL/customer relationship is one of the most critical aspects affecting contract renewal. The more a 3PL can plug itself into its customer’s business, the better the service it can offer, and the more it is capable of managing price. But, with such short contract length (we see the majority of 3PLs having con-tracts with their customers lasting fewer than three years), developing a lasting and meaningful relationship with customers is challenging. With 53 percent of respondents indicating that relationship-management issues are a key reason for the non-renewal of contracts, it’s clear that this is an area that 3PLs need to reimagine and focus more efforts on to secure longer contracts, increased business and more-satisfied customers.

■ Contract NegotiationThere has recently been an in-

crease in discussion on the role of procurement at manufacturing and retail companies as they look to cut costs wherever possible and stay in control of expenditures. While these are clearly important priorities for these companies, there has been some frustration expressed from the supply chain and logistics side of the industry due to the lack of specialist expertise in the department. As such, procurement has gained notoriety for slowing down the procurement process, and hampering, to some de-gree, the contract process. Based on responses, we see how embedded procurement is in the contracting process; almost 60 percent of respon-dents view it as playing a role in the process. Further, 46 percent indicat-ed that it has a “serious influence” in the contracting process and a further 11 percent indicated it was the most important influencer.

As cost continues to be a major factor in the operations of manu-

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facturers and retailers, we are likely to see procurement executives have more and more involvement in the contracting process. Forty percent of 3PL respondents see the procure-ment department’s role increasing in the future.

We also polled manufacturers and retailers on this matter to under-stand what level of agreement they had in terms of the involvement of the procurement department. Gener-ally speaking, they were in alignment with procurement playing a signifi-cant role in the contracting process.

While procurement clearly plays a significant role in the 3PL contract decision-making process, we asked manufacturer and retailer respon-dents to highlight the top decision-maker (individual) in the process. From the shipper perspective, this was the most-senior logistics execu-tive at their organization; 29 percent of respondents claimed this. Second-highest was the CSCO or most-senior supply chain decision-maker, at 23 percent. All other job roles were in the single-digit percentages, with CEO and COO coming third and fourth respectively. As such, while procure-ment plays a role in the process, the ultimate decision still lies squarely with the top logistics-specific deci-sion-maker in the shipper organiza-tion.

■ The Contracting ProcessDespite challenges outlined above,

the renewal rate of contracts is quite high, with 37 percent of respondents having a 90 percent to 100 percent contract-renewal rate. A further 47 percent have their contracts renewed between 70 percent and 90 percent of the time. With many shippers choos-ing short contract lengths to help them maintain controls over costs, expectations and so on, it makes sense that the majority of contracts are renewed. Clearly, many 3PLs are succeeding in the relationships they’ve fostered with their customers.

With contracts being generally short in nature, it’s logical that nego-tiations are often crammed into the last year before the contract is due to

itself to damages in excess of what the law would typically impose – and un-doubtedly in excess of what its cargo policy will pay.

■ A § 14101(b)(1) WaiverMost parties’ eyes quickly glaze

over when seeing a reference to 49 U.S.C. § 14101(b)(1) in a transporta-tion contract. These parties wrongly assume that the reference to federal statute is nothing more than boil-erplate “legalese,” and have no idea what it means. However, a waiver under this statute has extraordinary significance because it permits par-ties to waive all rights and remedies granted under the Carmack Amend-ment if done expressly and in writ-ing. In other words, among other things, this statute permits shippers and carriers to agree to be bound by a freight-claim liability regime other than that provided in the Carmack Amendment. In addition, it can affect overcharge and undercharge liabil-ity, freight-charge audit rules, credit rules, and the like. Perhaps most im-portantly, the waiver can result in the loss of federal preemption that favors the motor carrier. Reasonable people can debate whether or not one should in fact waive these rights and rem-edies pursuant to § 14101(b)(1) since,

despite the risks mentioned above, sometimes it is to the parties’ benefit to memorialize all of their rights and remedies in the contract rather than rely upon federal law as a gap filler. However, either way, sophisticated shippers and motor carriers must necessarily recognize that the waiver is an important term. One should not hastily sign a contract containing such a waiver without reflecting on the significance of doing so.

In summary, motor carriers need to be increasingly vigilant about the terms and conditions contained in the contracts that they sign so that they do not end up facing catastroph-ic liability that they could have other-wise avoided. Good contracts make good business partners, just as good fences make good neighbors. More-over, good contracts can chill dubious claims. Particularly in the current, tight-capacity environment, motor carriers have leverage and can afford to push back against their shipper customers when presented with an unfair contract containing the trou-bling provisions mentioned above.

Marc S. Blubaugh is Partner and Co-Chair, Transportation & Logis-tics Practice Group with Benesch, Friedlander, Coplan & Aronoff LLP Columbus, Ohio.

CONTRACT from page 11

renew. The study found that 30 per-cent of contract renegotiations take place three to six months before the end of the contract, giving shippers plenty of time to evaluate the 3PL’s service level, while avoiding the com-plications of a last-minute contract negotiation.

Manufacturer and retailer respon-dents to the survey questions sug-gested that they renew their contracts with 3PLs less often than their 3PL counterparts believe. Only 16 per-cent of manufacturers and retailers renewed their contracts at a rate of 90 percent to 100 percent; the bulk of respondents, about 46 percent, renew their contracts 70 percent to 90 percent of the time. This plays into the notion that contracts are gener-ally short-term, allowing shippers the

flexibility to switch providers should cost requirements or changing strat-egy make doing so necessary.

In 2013, 50 percent of 3PLs re-sponded to 80 percent to 100 percent of the RFPs they received. In 2014, that number has plummeted to 23 percent, with many more respond-ing to only 40 percent to 80 percent of the RFPs they receive. The shift in RFP responses is a difficult one to explain, but some reasons that this might be the case are:

• 3PLs are more conscious than ever of how much their service of-fering has to line up with customer expectations and are not willing to entertain RFPs that might not fit;

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a rapport prevents a company from responding to every RFP; and

• RFPs are becoming increasingly commonplace given shortened con-tracts; 3PLs are concentrating more on long-term prospects.

Ultimately, this is a question we’ll have to put back to the 3PL commu-nity to understand why in 2014 they are no longer responding to the bulk of their RFPs.

How Would You Rate the Overall Performance of Your Current 3PL?

This is one of the key questions we ask manufacturers and retailers every few years to understand how 3PL services are evolving in the eyes of their customers. We last asked this question in 2012.

In comparison with 2012 results, in 2014, we see more dissatisfac-tion among 3PL customers, with a 4-percent jump, from 9 percent to 13 percent, in less-than-satisfied manu-facturers and retailers. Furthermore, despite a focus on value-added ser-vices and innovation in recent years,

more shippers than before – 68 per-cent compared with 65 percent – are just satisfied with their 3PLs’ services.

It is clear that the fight against commoditization is ongoing for 3PLs, as customers are not seeing the ben-efits of differentiation and the value-added services we’ve been hearing about from 3PLs over the past few years.

Asked whether or not they’ve re-cently switched or plan to switch their 3PL provider, more than 55 percent of respondents said yes. In addition, despite the focus in the supply chain on cost controls, service was the pri-mary driver for change of provider. It was also the primary driver for ‘keep-ing’ one’s 3PL. As a consequence, service satisfaction is very important, especially given that the number of those just ‘satisfied’ and those ‘dis-satisfied’ is growing. With shippers using service as a major factor in staying with a 3PL, for 3PLs to retain business, a renewed focus on aligning their services to their customers is go-ing to be necessary.

■ ConclusionThe story regarding 3PLs has

many similarities with other recent reports: The required service level is increasing, margins are squeezed, contracts are short and customers are demanding more than ever. How-ever, the 3PL industry is coming to a crossroads where the path of margin squeezes and so on is paved with new technologies, new business models, new approaches to customer relation-ships and the prospect of growth in the coming year.

3PL services may be commod-itized, but they are not doomed. With real innovation on the horizon, po-tential abounds. We look toward 2015 to see improved partnerships, in-creased revenues and more value in logistics services.

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AS I REFLECTED on this year’s IWLA Convention & Expo theme of “Connect – Discover – Innovate,” I couldn’t help but think how closely it

resembles the ideals espoused by the American Logistics Aid Network, or ALAN. For those of you unfamiliar with us, ALAN is a 501(c)(3) non-profit organization whose mission is to save lives and reduce suffering for disaster survivors. Our work is focused in the United States and involves engaging industry to supple-ment non-profit organizations’ logistics capabilities. This includes facilitating donations of logistics services, providing education, and building cross-sector relationships before, during and after disasters.

Those convention motifs of connect, discover and innovate can be viewed side by side with ALAN’s three program areas of relationship building, educa-tion and disaster relief. I hope you’ll consider how these ideas can be expanded beyond the few days of the convention. I offer below a few ways these concepts can be applied in engaging your business and employees in disaster-relief activi-ties. The benefit of this application is improved disaster response and prepared-ness not just for our businesses, but also for our communities and the nation.

Connect. The concept of connecting is at the heart of everything ALAN does, and can be compared with our program of building relationships among businesses, non-profits and government agencies. We seek to create active rela-tionships that can be drawn upon during disaster preparation, response and re-covery. The guiding principle for our relationship-building program is, “A more connected nation is a more resilient nation.” Indeed, disaster-relief operations are proven to be more effective when the organizations working together trust one another and work toward shared goals. Trust doesn’t come with a single handshake or with one email exchange. The relationships must be maintained year round.

There are some very practical (and simple) ways you can connect within your own community. First, get to know the emergency-management and non-profit professionals in your town. Invite them for a tour of your facilities, or host an information session about what 3PLs do. Chances are they will be beyond sur-prised at what happens on your campuses. There is an ongoing shift in how emergency management responds to disasters, and emergency managers are increasingly interested in understanding the resources and capabilities resident in their local jurisdictions. No longer do they try to have full inventories of all items needed for disaster survivors. Instead, they focus more on restarting private-sector activities. This may mean that facilities with critical supplies re-ceive priority for clearance of roads or power restoration. The more your local emergency manager knows about your business, the more they’ll understand why helping you is important to expediting response and recovery.

Discover. “Discover” closely matches ALAN’s education program, whereby we teach non-profits how to improve their logistics operations, and businesses how to better prepare their supply chains for disruption. Discover is closely re-lated to connect. Once you’ve established relationships and trust, then you can start to learn from one another. Go visit the food banks, shelter facilities, and

DISASTER RESPONSE

ALAN Brings 2015 IWLA Convention Themes to LifeBy Kathy Fulton

[ALAN’s] mission is to save lives and reduce suffering

for disaster survivors… [by] engaging industry

to supplement non-profit organizations’ logistics

capabilities.


emergency-management operations centers. You’ll find many of them have fascinating supply chain op-erations. I’ve seen food banks that establish miniature shopping cen-ters for their clients or convert close dated fresh and packaged foods to hot meals, and I’ve seen emergency-operations centers with technology to rival NASA’s. Chances are these orga-nizations are doing something unique that you’ll want to see.

Visiting these groups also provides a great opportunity for you to gain a better understanding of how your business activities can align with their needs. Having visibility to their processes will allow you to more eas-ily work with them if needed. This is also a chance for your staff to discover ways they may be able to give back and to apply their talents to helping the organizations improve. Talent retention will be a hot topic for our industry for some time to come, and interesting work continues to be a top priority for job seekers. Why not al-low your employees to discover their passion while helping others?

Innovate. Though it may seem old hat by now to those who know us, ALAN’s approach to disaster relief is still regarded as innovative. Our position as a connector organization

between businesses and non-profit and government agencies is unique. There is no other organization that does exactly what we do in the way we do it. Investing in personal rela-tionships and then delivering when called upon has been crucial to gain-ing trust across our constituencies. We enjoy robust brand recognition and excellent rapport with the emer-gency-management and non-profit community because they trust that the network will step up when called upon. Our capabilities and credibil-ity derive directly from what IWLA and our other partner associations do to support disaster response and recovery.

Innovating can be embedded in your approach to connecting and dis-covering. Perhaps you have an in-novative way to help your employees prepare for disasters, or for helping your communities. If you need ideas on how to be innovative with your company’s preparedness or philan-thropic activities, give us a call. Disas-ters will continue to occur, and ALAN will continue to be there to help – and we need you!

■ Looking Back2015 marks 10 years since Hur-

ricane Katrina ravaged the gulf coast,

killing over 1,800 people and causing more than $100 billion in damages. The logistics challenges that played out on national television inspired the creation of ALAN; it was founded on the idea that logistics profession-als and businesses have the resources and know-how to get the right relief supplies to the right people at the right place at the right time. A decade later, our mission continues to be to bring together the assets, resources and expertise of the logistics busi-ness community to support disaster response – to save lives and reduce suffering for disaster survivors.

Every step of the way, the IWLA family has been fully engaged and supportive of the American Logistics Aid Network as an extension of the active philanthropy and goodwill of the third-party warehousing indus-try. Through in-kind, networking, information and financial contribu-tions, IWLA and its staff, members and partner members continue to support ALAN.

During the past 10 years, ALAN has grown from a kernel of an idea to a highly respected member of the disaster-response community. That respect has been earned by remain-ing a neutral organization focused on connecting the generosity of busi-nesses to the needs of the emergency-management and non-profit groups that aid disaster survivors. From our earliest formal response to Hurri-canes Gustav and Ike in 2008, to our response to the Ebola outbreak in West Africa, IWLA has been a major contributor of that generosity. Time and time again, we’ve been able to match needs for warehouse space, transportation and expertise with an IWLA member.

Our work in 2014 was no different: IWLA members had a role in nearly every response in which ALAN par-ticipated.

• Early in 2014, we were assist-ing non-profits with their U.S.-based logistics needs related to Typhoon Haiyan (Yolanda). IWLA member Palmer Logistics provided the con-nection to arrange delivery of wa-ter-filtration units, and member Port


Jersey Logistics provided transporta-tion of meals ready to eat (MREs) to the airport for transport to Tacloban.

• Allied Logistics shared a busi-ness perspective of the effects of the water shortage when a chemical spill in West Virginia’s Elk River left up to 300,000 people without usable water.

• Requests made to customers on behalf of ALAN by Saddle Creek Lo-gistics Services resulted in donations of custom boxes for sorting donations following the devastating tornadoes in Arkansas.

• Similarly, States Logistics Servic-es arranged for a donation of energy bars and provided the transporta-tion to the airport for delivery to U.S. citizens stranded in Cabo San Lucas following Hurricane Odile.

• Commercial Warehousing pro-vided short-term storage of soap for a non-profit that creates hygiene kits, some of which were sent to South Texas to support the response to the unaccompanied-minors crisis.

• Evans Distribution donated gloves to non-profits cleaning up af-ter the destructive flooding in Detroit.

• Our most protracted response was in providing U.S. ground logistics support to a consortium of non-profit groups responding to the Ebola out-break in West Africa. Those activities were supported by Hall’s Warehouse and HWC Logistics, both of whom

provided short-term storage of per-sonal protective equipment prior to it being delivered to doctors working to combat the Ebola outbreak.

These are just a few examples of charitable activities to which ALAN has visibility. We know that many of you support local food banks, Red Cross chapters, and other non-prof-its. As an industry, the volume of good works being done is tremen-dous. We’re proud to help facilitate some portion of that!

In 2014, we had some staff and volunteer changes. Former IWLA ex-ecutive Joel Anderson agreed to come out of retirement to volunteer as an industry liaison. Joel’s primary role is fundraising to support continued sus-tainability of our operations. IWLA members have been generous in pro-viding financial support; we appre-ciate those contributions and hope they will continue. While we strive to do as much as we can with donated in-kind resources, the reality is that financial contributions are critical to the continued success of ALAN. If you are not already a sponsor, Joel will be happy to share with you how you can become one. We’re grateful to have Joel and Barbara on the team!

We continue to heal from the wound left by the untimely passing of our founding president and friend, Jock Menzies. Jock was so closely linked with ALAN, and ALAN with

Rob Doyle providing a tour of Commercial Warehousing.

Jock, that it is difficult to think of one without the other. Those who knew him well will also know that Jock would be the first to say that ALAN is not about an individual, but about the network of networks, the com-munity and, certainly in the case of IWLA, the family of organizations that work together to support disas-ter response and recovery. Despite the loss of our leader, friend and mentor, ALAN is strong and contin-ues to fulfill our mission.

■ A Final ThanksWe recognize that, without the

friendship and support of the IWLA family, this enterprise we call ALAN would either not exist or not be nearly as successful, and for that we are grateful. We feel a tremendous re-sponsibility to honor the trust you have placed in us and strive always to be good stewards and to portray a character in keeping with IWLA’s values.

Kathy Fulton is executive director of the American Logistics Aid Network. More information about ALAN is available at www.ALANAid.org.

IWLA members Paul Delp (L), Jere Van Puffelen and Andy Smith at disaster simulation.


FIRST AND FOREMOST, I hope that all of my fellow IWLA members had a great holiday and have a very happy, healthy and prosperous new year.

2015 marks the 124th year for the IWLA and, as we approach our quasqui-centennial anniversary, it seems very fitting to have our convention in the oldest city in Georgia… and one of the oldest cities in the country.

Savannah – “The Garden City” – awaits us, and I am very humbled and ex-cited to be the chairman of the 2015 IWLA Convention Planning Committee. I hope to see you all at the convention from March 8 to 10.

The committee and the IWLA staff have been working hard to make sure our time spent in Savannah is fun, informative and memorable. We have top-notch speakers lined up that will inspire and educate. Of course, we have many social events planned to allow us to catch up with old friends and make new ones.

The three general-session speakers will inspire you:• Keynoter Bill Courtney is CEO of American Hardwoods and the subject of

the Oscar-winning documentary Undefeated. His best-selling book is Against the Grain.

• Libby Gill will speak about innovation, leadership, brand development and communication.

• Author and futurist Michael Rogers focuses on change for business and in-dividuals, blending technology, economics, demographics, culture and human nature.

In addition we have a strong list of breakout sessions with speakers who are warehouse logistics experts – in law, planning, safety and marketing.

The 2015 convention theme is Connect, Discover, Innovate. The lineup of speakers and our social events should allow us to do all three!

In regards to innovation, we are excited to announce that our first-ever IWLA Innovation Awards will be given to the exhibitors that offer the most innovative


See You in Savannah!

By Rob Doyle, CWLP

CONVENTION CHAIR

The committee and the IWLA staff have been

working hard to make sure our time spent in Savannah

is fun, informative and memorable.


Warehouse Logistics Supplier Partners: Let Your Innovation Show

IF YOU ARE A SUPPLY CHAIN SUPPLIER PARTNER, IWLA, the resource for warehouse logistics, wants to showcase your company’s innovative products and services during the 2015 IWLA Convention & Expo. Each exhibitor during this event can opt in to an attendee-voted contest recognizing the best new product or innovative service highlighted during the expo.

Participation is easy:• Secure a booth during the March 8–10 IWLA Expo. (Complete a contract

from the 2015 IWLA Convention Prospectus or register online at www.IWLA.com.)

• Indicate that you will have an innovative product/service to showcase.• Submit a 100-word description of your product/service explaining its in-

novation.• Choose a competition category: Innovative Product or Innovative Service.• Promote your participation to your clients and to prospects who are attend-

ing the 2015 IWLA Convention.• Encourage voters to choose your offering. IWLA will provide you with booth

signage noting your participation in the contest. In addition, the IWLA mo-bile app will cite your company as an “innovator.”

• Attend the March 10, 2015, IWLA Chairman’s Dinner. Winners in both cat-egories will be announced during this celebration.

Prizes

IWLA wants to reward your success. The top vote-getter in each category will receive a $500 IWLA voucher good for credit at any IWLA event through the 2016 IWLA Convention & Expo in Orlando (restrictions apply).

Questions: Contact IWLA at 847.813.4699 or [email protected].

product and service. (See sidebar.) Winners will be chosen based on the votes of our warehouse members. This is a great opportunity for our partners to showcase their products and services, and to allow greater interaction with our warehouse mem-bers. This is also an opportunity for us to see the latest and greatest our partner members have to offer, as we continually try to evolve and keep up with our customers’ needs while increasing revenue and profit.

IWLA Chairman Tom Herche did an outstanding job in picking such a great city and location in the Westin Savannah Harbor Golf Resort & Spa. The resort sits right on the Savannah River and is adjacent to the histor-ic Savannah River District, which is filled with great restaurants, nightlife and a variety of historical sights to see. There will be no shortage of options for those who seek after-hours enter-tainment and networking, as well.

The Majestic Realty IWLA Golf Classic Tournament will be played at an amazing golf course right on the property. It is a rather forgiving 18 holes for those, like me, who will not be playing on the PGA tour anytime soon. Golf-tournament co-chairmen Mark DeFabis and Chip Scholz have a great tournament planned, and I can-not wait to hit the links.

In addition, plans for the annual IWLA Political Action Committee dinner have been finalized. You won’t want to miss the great entertainer, and the food will be excellent. Many thanks to Mark DeFabis, Bob Bianco and Mike Christie for organizing this evening.

I am excited to also announce that the IWLA Emerging Leaders pro-gram will be highlighted at the 2015 convention. There will be a breakout session at which 15 to 20 of our tal-ented young professionals will have a chance to meet. The session will serve as a kick-off point for what is going to be a very thorough and thoughtful training and mentoring program for them. These are, after all, the people who will sustain our companies and our association for the next genera-tion and beyond. Anyone under 40

ing, fun and worthwhile few days. You will be able to identify members of this hard-working committee by the colorful ribbons on their name badges. If you think of it, thank them, as well; any success this convention has is due to them and the IWLA staff! That reminds me: A special

can attend this event and be part of the re-energized emerging leaders program. Look for this event on the convention schedule.

I look forward to seeing you in Savannah for what promises to be a great event. I want to thank the entire IWLA Convention Planning Commit-tee for ensuring this will be an excit-

The Westin Savannah Harbor Golf Resort & Spa



THERE’S AN OLD JOKE... “If you’re leading and nobody’s following, maybe you’re just taking a walk.” In any industry – but especially in one

such as warehouse logistics that features complex systems and constant engage-ment across vast geographic and cultural divides – powerful leadership is key.

So what are those elusive qualities of leadership that create the kind of engaged and collaborative followship that drives high performance? That’s a question that has been discussed and debated by everyone from Alexander the Great to Jack Welch.

I believe that there is one leadership quality that is simultaneously the most significant and the most overlooked. That quality is hope. And for the nearly 30 years I’ve been involved in helping shape excellence in the workplace, first in the corporate world and now as an executive coach and leadership consultant, I’ve observed how hope, or the lack of it, affects performance. And I’m not alone.

In a Gallup poll of more than 10,000 workplace participants, the four traits cited most often as what followers wanted from their leaders were compassion, stability, trust and hope. Needless to say, absent those leadership qualities – as is sometimes the case in the midst of growth or change – employees are often not at their most productive. When Gallup asked workers if their managers and leaders made them feel hopeful about the future, among those who said yes, 69 percent also scored high on a scale of engagement in their work. Of those who said their managers did not instill a sense of hopefulness about their futures, only 1 percent scored high on the engagement measure.

■ Willpower and WaypowerThe word hope is derived from the Old English word hopian, which some

suggest may be connected to hop, meaning “to leap forward with expectation.” Hope plays such a pivotal part in our lives that scientists have endeavored to define its role in what’s known as “hope theory.” The concept was pioneered by the late Dr. C.R. Snyder, a professor of psychology at the University of Kansas at Lawrence. Encouraged by the noted psychiatrist Dr. Karl Menninger, who once spoke about hope at a conference of the American Psychiatric Association only to have his concepts derided by his colleagues, Dr. Snyder became intrigued with the significance of hope and its role in helping us reach our goals.

Dr. Snyder defined hope as based on both “willpower” and “waypower,” where one is able not only to create the pathways to realizing a vision, but also to sustain the mental energy and perseverance to travel those pathways effectively. He likened this process to the old adage of “where there’s a will, there’s a way,” citing both elements as critical to success. Today, with the workplace focused on ideas and innovation, rather than merely output, the most successful employees are often the most hopeful. One of the primary reasons is that they see multiple pathways, rather than the way, to arrive at a successful outcome.

Among the advantages of having a high level of hope (not to be confused

LEADERSHIP

The Hope-Driven Leader: Creating a Culture of PossibilityBy Libby Gill

The most significant – and often overlooked –

element in the workplace today, hope is the critical

component that drives success.

KEYNOTE SPEAKER


with optimism, which is a general-ized outlook on life independent of one’s actions and circumstances), Dr. Snyder’s research showed that hopeful people are more likely than non-hopeful people to:• Set a great number of goals;• Have goals that may be more dif-

ficult to attain;• Be more successful at reaching

their goals; and,• Have less distress and greater hap-

piness than low-hope people.

■ Belief and ExpectationAdding to the pioneering work of

Dr. Snyder is Harvard-trained on-cologist Dr. Jerome Groopman, one of the world’s leading researchers on cancer and AIDS. Author of How Doctors Think and The Anatomy of Hope, Dr. Groopman believes that hope is based on two key compo-nents: belief and expectation – more specifically, belief that change is pos-sible and the expectation that the actions of an individual can result in a better future.

As a clinician, Dr. Groopman learned that when he gave cancer pa-tients too much information regard-ing their prognoses, he often robbed them of hopefulness, which he and other scientists believe is instrumen-tal in the healing process. On the other hand, when he gave them too limited information, he ran the risk of creating the false impression that they had little about which to be con-cerned. It was the challenge of finding that delicate balance between true hope and false hope that propelled Dr. Groopman to advance the hope theory research.

■ How Belief Drives BehaviorAlthough Snyder and Groopman

approached hope theory from differ-ent perspectives – medicine and psy-chology – it is clear that both saw it as a combination of feelings and actions. Or, as I witness it in the workplace, it is the interconnection between beliefs and behaviors. If you believe that change is possible and that your ac-tions will have a positive influence on

outcomes, you’re less likely to defend the status quo and more likely to take positive risks, inspiring others with your behavior. Conversely, if you be-lieve the opposite is true, that change is impossible and it makes absolutely no difference what actions you take, you’re apt to stay stuck in mediocrity. Or, as Henry Ford famously put it, “Whether you think you can or think you can’t, you’re right.”

So why are some companies eter-nally energized with a sense of hope-fulness, while others are perpetually stuck in the hope-starved doldrums? Why do some leaders naturally in-spire an anything-is-possible con-fidence in their teams, while others struggle to keep employees even mar-ginally engaged? And what can you do to inspire positive beliefs that re-sult in effective behaviors? It’s not as difficult as you might imagine. Try these strategies for starters:

1. Find opportunities to feed hope, rather than starve it, with-in your organization. Leaders who inspire hopefulness, by listening deeply to others, taking suggestions seriously, and granting ownership and authority to team members, help infuse hope into the corporate DNA.

2. Encourage “original mis-takes.” While you don’t want your team members repeating the same mistakes over and over, when you al-low risk-taking and even failure, you reduce fear and foster innovation. Applaud the big, bold and “original” mistakes from which you and your team can glean new insights.

3. Recognize the difference between true hope and false hope. Set realistic standards and measure outcomes, rather than just processes, to ensure that you are moving aggressively toward pre-de-termined goals. Focus on what you can control and remain positive de-spite inevitable setbacks, but don’t hide behind rose-colored glasses.

4. Be tough on outcomes and tenderhearted toward your team. Being hopeful doesn’t mean you have to coax, coddle or, worse, simply hope that people will do their jobs. It means that you can hold them

accountable to extremely high stan-dards and measure them on results, while still treating them with trust, respect and kindness.

Here’s hoping for your great re-sults. See you in Savannah!

Libby Gill is an executive coach and consultant, and the former head of communications and PR for Sony, Universal, and Turner Broadcast-ing. She will be a keynote speaker at the 2015 IWLA Convention & Expo in Savannah.

thank you goes to Jay Strother, Liz Whitney and the rest of the IWLA staff, as they have been working tire-lessly on this effort.

Of course, we could not bring to-gether such a great convention (with great speakers and beautiful venues) without strong support from our sup-plier partners:

• I personally thank Sustaining Diamond Sponsor Zethcon for its ongoing contribution at the highest sponsorship level. Chris Oechsel and his team return for the 10th consecu-tive year to ensure IWLA can con-tinue to improve its convention.

• We also thank Impact Engineered Labor Solutions. This company is also a returning Diamond Sponsor and is underwriting our keynote speaker.

• We welcome first-time Diamond Sponsor Majestic Realty for its con-tribution. If you see any Majestic reps on the golf course, tip your club to them.

IWLA President & CEO Steve De-Haan and I wish you a happy New Year and look forward to welcoming you to Savannah in just a few weeks.

If you have any questions or sug-gestions, please feel free to reach out to me!

Rob Doyle is Vice President of Busi-ness Development for Commercial Warehousing in Winter Haven, Fla. He serves as IWLA Vice Chairman and as the Chairman of the IWLA Convention Planning Committee. He can be reached at 863.967.6801 or [email protected].

SAVANNAH from page 21


THE 2015 IWLA CONVENTION & EXPO is taking place in Savannah, Georgia. Because the city is an important Atlantic seaport, we took the op-

portunity to talk with the Port of Savannah to provide readers with information about the Port’s facilities and services. We spoke with Robert Morris, senior director of corporate communications for the Georgia Ports Authority (GPA).

1. Please describe the Port of Savannah’s facilities and infra-structure.

Garden City Terminal is the largest single-operator terminal in the nation. Its massive 1,200-acre footprint provides several advantages, including a single check-in process, eliminating the need to move between leased terminals; great-er flexibility to stage cargo for large vessels and multiple shipping lines; and 9,700 feet of contiguous docking space accommodating nine container berths, creating greater scheduling flexibility.

Currently, GPA operates 22 ship-to-shore cranes and 116 rubber-tired gantry cranes (RTGs) – more than any other terminal in North America. However, GPA continues to build for the future, with the recent purchase of another four ship-to-shore cranes and 20 new RTGs.

Garden City Terminal also features two on-terminal rail yards, served by

CONTAINER OPERATIONS

Port of Savannah: North America’s Largest Single-Operator Container Terminal

The Port of Savannah [is] the high-speed…

option to reach 44 percent of U.S. consumers.


Class I railroads Norfolk Southern and CSX Transportation.

Just off terminal, there is ware-house space of more than 3 million square feet available, and the largest concentration of import distribution centers on the East Coast.

The Port of Savannah has immedi-ate access to two major interstates: I-16 (East/West) and I-95 (North/South), and is situated within a four-hour drive of major markets, includ-ing Atlanta, Orlando and Charlotte.

Just downriver from Garden City, Ocean Terminal specializes in break-bulk cargo, ranging from super-sized project cargo to roll-on/roll-off cargo. Ocean Terminal features five deep-water berths, on-dock rail and truck access to allow loading direct from ships, and covered and open storage. Heavy lift equipment at Ocean Termi-nal includes gantry cranes, container cranes, a barge crane, forklifts and container-handling lifts.

2. How has the Port’s location made it possible for it to become the largest single-operator con-tainer terminal in North Amer-ica?

The GPA, formed in 1945, estab-lished Garden City Terminal to the west of the city of Savannah. Located beyond heavy commercial and resi-dential development, the GPA was able to acquire major tracts of land to accommodate future growth.

The terminal remains owner-oper-ated, instead of being leased to mul-tiple shipping lines, making it the largest single-operator terminal in North America.

3. The GPA set a record in Oc-tober 2014 for the movement of freight through its terminals in Brunswick and Savannah. How is the Port accommodating this growth? Do you have plans for further expansion?

At the Port of Brunswick, the GPA has installed auto staging areas for cargo that arrives by rail, and strengthened roads and bridges so that all three existing berths can now accommodate high and heavy cargo.

A planned new berth in Brunswick will speed service for our shipping

Future Issues of 3PL Americas3PL Americas is the magazine of IWLA and provides members and non-members with news and information on concepts and best practices in warehouse and logistics management. The lead articles for upcoming issues are set well in advance. We welcome reader input on themes and articles for future issues.

Lead article themes and deadlines:

• Spring 2015 – Post-Convention issue (April 3, 2015)

• Summer 2015 – Addressing the Worker Shortage (June 26, 2015)

• Fall 2015 – Best Practices in Facility Management (September 25, 2015)

• Winter 2016 – Pre-Convention issue (December 4, 2015)

Suggestions for authors, articles and themes can be submitted to [email protected].

3PL Americas

THE ALIBABA EFFECT

PANAMA CANAL, SUEZ CANAL & BIG SHIPS

www.IWLA.com

PM 42128520

T H E M A G A Z I N E O F I W L A I N N O R T H A M E R I C A • F A L L 2 0 1 4

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customers. We also have enough land currently permitted for construction on Colonel’s Island to double the size of the Brunswick operation.

While the annual capacity at Gar-den City Terminal now stands at 4.5 million TEUs per year, we are taking the steps necessary to increase that capacity to 6.5 million TEUs by 2024. These steps include infrastructure upgrades such as strengthening our fleet from 22 to 30 cranes over the next 10 years.

Further, we will increase our con-tainer-handling fleet to 169 RTGs over the next 10 years, and GPA is adding a new truck gate, which will serve as the third major interchange at Garden City.

Also aiding faster cargo movement is the Jimmy Deloach Parkway exten-sion, which will provide a direct link between Interstate 95 and the Port of Savannah. The Georgia Department

of Transportation has completed 40 percent of the 3.1-mile, $72.8-million connector, which is expected to open to traffic in May 2016.

The infrastructure upgrade with the greatest impact, however, is the Savannah Harbor Expansion Proj-ect. This project will increase har-bor depth from 42 feet to 47 feet. U.S. Army Corps of Engineers’ stud-ies show that post-Panamax vessels more efficiently served by a deeper harbor in Savannah will lower ship-ping costs for containerized trade by $213 million a year over the next 50 years, for a total economic benefit of $10.65 billion during that span. De-creased costs per container will lower the bottom line for the more than 21,000 U.S. businesses, and thou-sands of international businesses, shipping via the Port of Savannah.

4. You’ve touched on the topic of our next question: The fall

2014 issue of 3PL Americas included an article about the impact of the increasing use of ultra-large container ships. Au-thor Curtis Spencer said these ships are not currently able to call at all ports for several rea-sons: They cannot pass under bridges with inadequate height, and require both extra-deep water and the capacity to handle extra-large loads. Is the Port of Savannah able to service ships of 12,000 to 18,000 TEUs?

A port’s ability to serve a given ship depends on many variables, in-cluding the fact the draft for an indi-vidual vessel changes depending on its load.

The Port of Savannah’s depth at low tide is now 42 feet. However, the Savannah Harbor experiences a twice-daily tidal shift of 7 feet, yield-ing a depth of 49 feet at high tide.


Savannah currently serves vessels with capacity of up to 9,600 TEUs, and has the capability to handle 13,000-to-14,000-TEU vessels.

The U.S. Army Corps of Engin-eers has just entered the construction phase of the Savannah Harbor Ex-pansion Project (SHEP), which will deepen the river to 47 feet at low tide, 54 feet at high tide. The deepened harbor will reduce the number of ship movements requiring high tide for vessels in the 9,600-TEU range, and will allow these ships to load without tidal restrictions. In addition, SHEP will better accommodate 10,000-to-14,000-TEU vessels and will allow these vessels to load to capacity.

5. What argument would you use to promote the shipment of cargo from Asia to the eastern states via East Coast ports over those on the West Coast?

The Southeastern U.S. has the

fastest-growing population of any region in the nation. This expanding population, with its growing demand for retail goods, is an important mar-ket for the logistics industry.

Because vessels carrying thou-sands of containers at a time are the most economical way to move cargo, delivering containers to the East Coast provides the lowest-cost alternative to meet market demand.

Direct interstate access, overnight rail service to a five-state area, and a lack of on- and off-terminal conges-tion make the Port of Savannah the high-speed, low-drag option to reach 44 percent of U.S. consumers.

6. How does dealing with the Port benefit logistics and ware-housing companies, 3PL Amer-icas readers?

The Savannah market offers a wealth of opportunity. A report by real estate investment firm Colliers

International shows the Savannah market is ripe for expansion.

While the Savannah market cur-rently has 45.3 million square feet of developed industrial property, it also has enough fully entitled land to sup-port another 34.6 million square feet of growth. Savannah’s vacancy rate for industrial property is below the national average, at 7 percent.

Record cargo movement at the Port of Savannah (3.1 million TEUs in FY2014), a high-growth consum-er market, and property available within minutes of the terminal and Interstates 95 and 16 make Savannah a logical and growing hub for contain-erized trade in the Southeast.

Robert Morris can be reached at [email protected].

Photos courtesy of Georgia Ports Authority – photographer Stephen B. Morton.

Georgia Ports Authority has been able to provide a single terminal in one location that allows us to go in and out of one spot – regardless of the carrier, regardless of the chassis, regardless of the dray provider – to come out in one seamless move. That sort of forward thinking by the Georgia Ports Authority has really provided us the opportunity to have that seamless execution. I’d probably call it best in class, as it relates to turn times and our drivers being able to come in and out in a pretty rapid manner.

– Reade Kidd b Home Depot Director of International Logistics

Get the whole story at GAPORTS.COM/HOMEDEPOT > See why the fourth-largest retailer in America and fifth-largest in the world depends on the single-terminal advantage to import 20% of its U.S. freight through Savannah.

In their own words

14GA01776_Home Depot-3PL Americas.indd 1 12/22/14 1:13 PM


LAST SUMMER, I attended a conference on wearable computers in New York City. The audience was a familiar lot: mostly start-up entrepreneurs and

venture capitalists looking for opportunity. But there were a few other interesting attendees: a half dozen fashion designers and several engineers from Motorola.

The presence of the fashion designers – mostly from jewelry and accessory labels – was impressive because, across town, New York’s Fashion Week was in full swing, a major event that pulls fashionistas from all over the world. So these designers were missing a full day of champagne and glamorous models in order to hear speakers discuss topics like OLED vs. LCD current drain or the future of Bluetooth low-energy technology.

The reason for the fashion contingent is that some analysts expect wearable computers – particularly smart glasses, smart watches and fitness monitors – to be the next big thing in consumer electronics. They also predict that cool design will be key to success. Indeed, Diane von Furstenberg is working on Google Glass, Tori Burch is designing for FitBit, and Apple has recently hired executives from Yves St. Laurent, Burberry and Tag Heuer.

The Motorola work, by contrast, was decidedly not about fashion. They presented smart glasses bulked up for industrial use: ruggedized, no-nonsense working tools designed to deliver critical information to users who need to have their hands free. Initial markets for Motorola include public safety (firefighters, for example) or workers who repair high-value equipment like jet engines or oil-drilling rigs. Once prices come down a bit, warehouses and logistics could be next – again, for jobs where workers need detailed and up-to-date information, while keeping their hands free.

So the question is: Will fashion designers or factory workers be the first to popularize smart glasses?

My bet is on the factory workers. Current smart glasses, like Google’s Glass, just aren’t as functional or easy to use as they need to be for consumer adoption. Google Glass, in my experience, is rather awkward and not that comfortable. And that’s at a $1,000-plus price point. Those issues are not going to be fixed by trendy design. More-sophisticated technology is needed to make smart glasses really functional, and none of that is inexpensive. Some examples I’ve seen in various prototypes:

• Bone conduction for sound. Bone-conduction contacts on the ear-pieces of the glasses will transmit audio directly to the innermost part of the ear. Advantages: You can still hear ambient sound, and the bone-conduction microphone will pick up even very soft spoken commands.

• In-glass projection. Google Glass has a separate small screen… not opti-mal. Already several manufacturers are designing smart glasses with the video projectors in the frames, throwing the image into the glass itself, usually down in the bifocal area.

• Improved input systems. Obviously, voice control will be very important, and bone-conduction microphones will make it more accurate. But at some point, smart glasses will also feature virtual keyboards, using their built-in video cam-

TECHNOLOGY

When Will You Get Smart Glasses?By Michael Rogers

KEYNOTE SPEAKER

Some analysts expect wearable computers

to be the next big thing in consumer electronics.

Motorola presented smart glasses bulked up for

industrial use.


eras to track finger taps. You could “project” a virtual keyboard against a wall or on a table, and then type away. In theory, you could even do “air typ-ing,” which might particularly appeal to the air guitarists in the workplace.

• Smartphone content on glasses. For both cost and battery-life reasons, I suspect that the most successful smart glasses, at least ini-tially, will not have full computers built in, but rather connect via Blue-tooth to the smartphone you already have in your pocket or purse. This will require considerable new devel-opment by mobile-operating-system and application vendors.

In short, usable smart glasses are going to need cutting-edge hardware technology and will initially be quite

expensive. And that’s why I think adoption of smart glasses will follow the pattern set in the last century, when business sales of technology came first, only after which the tech-nology migrated to consumers.

It may be hard for 20-somethings to comprehend, but a few decades ago, employees really looked forward to getting their company-issued com-puters, because they were almost always much better than what you could afford to buy yourself.

That pattern has, so far, been

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Synapse already provides many features other providers are only promising for the future: Versatile task management and

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turned on its head in this century: Employees tend to have better tablets and smartphones at home than the stodgy laptops they’re offered at work. Increasingly, employers have given up trying to compete with consumer electronics, and IT departments are now struggling with the Bring Your Own Device phenomenon.

With high-quality smart glasses, though, I suspect we’re going back to the old pattern. It’s likely to be busi-nesses that buy first – and, in another twist, not necessarily white-collar businesses.

The adoption-curve pattern for smart glasses may resemble that of tablet computers. Twenty years ago, Fujitsu was already making a good business out of selling tablet com-puters for specialized purposes like healthcare, inventory and sales.

Then in 2001, Microsoft tried to introduce the Tablet PC more broad-ly. It was too early: Key pieces of technology, primarily low-cost but accurate touchscreens, were not yet available. Pretty much only early adopters bought the first round of tablets. I was one of them and, frank-ly, the first consumer tablets were a bit of a pain to use. But they certainly got lots of attention from curious passengers on airplanes… not unlike today’s Google Glass.

Finally, in 2010, touch screens, plus better interfaces, came along, and the tablet, in the form of the iPad, was launched for consumers – nearly 20 years after Fujitsu started selling them to business.

Smart glasses are coming, and I think they’ll be part of the consumer world by the early 2020s. By then, the fashion designers will almost cer-tainly be an important part of the process. But if you want a really func-tional pair of smart glasses earlier, don’t look for a boutique. Think about going into oil-field maintenance or jet-engine repair.

Michael Rogers is a futurist who combines business experience, tech-nology skills and investigative jour-nalism. He will be a keynote speaker at the 2015 IWLA Convention & Expo.

Smart glasses [will] be part of the consumer world

by the early 2020s.


Robert Martichenko

Chris Luery

CREATING A LEAN WAREHOUSE (or distribution center) is not something you accomplish overnight. It takes vision, planning, strategy,

tools and tactics. Relative to people, you need to develop team members into problem-solvers and then provide a leadership infrastructure to support their efforts. Identifying and solving problems may seem basic, but experience sug-gests it can prove elusive in application. The results achieved through your lean efforts can be instrumental in your progress. Improved customer fill rates, decreased inventory levels, decreased inventory carrying costs, improved inven-tory accuracy, increased asset and team-member utilization are all benefits of lean warehousing.

When Toyota Motor Manufacturing shared its lean manufacturing strategy (known as the Toyota Production System), many realized it had implications as an overall business system and not just a manufacturing system. The principles of lean are now being widely applied, including inside the warehouse. Some of these principles include team-member training and development, standardiza-tion, visibility, quality at the source, continuous improvement, waste elimination, visual management, and problem-solving through the Plan, Do, Check, Act Cycle.

To start with team-member training and development, understand that it is people who can identify problems and create sustainable solutions. One of the lean tools that you can give your warehousing people is value-stream mapping. This allows the mapping out of current processes on the floor, to identify waste and see where you can take non-value-added activities out of the value stream. The value stream is simply defined as the flow of activities that add value to the customer. The premise is that you should be doing only those things that add value. All other activities are considered waste and should be eliminated.

The concept of standardization is also a key lean principle for the warehouse. Standardizing processes creates tasks that are easily repeatable with planned zero waste. The creation of standard work allows your team to understand pro-cesses from the point of view of inputs, procedures, timing and outputs. How-ever, creating standard work is not about turning people into robots! It is about creating a baseline from which you can improve.

Many warehouse operations are a series of manual processes. The unfor-tunate aspect to this is that people will do the same process in different ways. While this may lead to the same result, it is impossible to improve upon the process in the absence of a standard. Consequently, the lean thinker believes in standard work, as it produces the baseline from which to improve.

Visibility of material flow, inbound logistics, internal warehouse flow, and outbound logistics are critical to the lean warehouse. You need to understand the flow of material and be able to determine if you are supporting the “perfect order”: the right quantity, at the right place, at the right time in the right quality. The lean concept of “visual management” allows you to understand the score of the game (operation) so you can make decisions in real time that impact the overall flow of material to the customer. In facilities where work flow is deter-mined in response to what trucks (or orders) show up on any given day, this will

WAREHOUSE OPERATIONS

Creating the Lean Warehouse: Evolution not RevolutionBy Robert Martichenko and Chris Luery

Focusing on quality at the source in a warehouse

environment can be very enlightening.


require a change in approach.Because they rely on manual pro-

cesses, warehouses need to focus on “quality at the source.” To do so, you must identify and isolate key failure modes or areas of defects. Further, you need to create a quality dash-board to ensure that you can track your improvement in establishing quality at the source and continue to improve upon past results. Fo-cusing on quality at the source in a warehouse environment can be very enlightening. For example, one or-ganization realized they needed to do something about serious errors in picking performance. Once a root-cause analysis was completed in the picking area, the team was surprised at the actual root cause of its prob-lems. While they initially believed it was a training issue, they learned that the real issue was picker inter-ruptions. They learned that picking errors were being made because pick-ers were being interrupted by other members in the middle of their pick

wave. These interruptions made pick-ers lose track of where they were. The solution was that pickers would wear green-colored vests while picking, and others were not allowed to inter-rupt them while they wore the vests.

Material flow within a facility is often overlooked. Do you have waste of conveyance taking place because you have not correctly designed the floor layout? Experience has shown in lean warehousing that simply put-ting your perceived fast runners (“A” items) closest to hand will not neces-sarily provide the optimal warehouse layout. You need to consider material flow based on stability, as opposed to gross volume. In other words, what items do you pick frequently even though they may not be in large vol-umes? How have you designed the warehouse to facilitate this flow of stable material?

The lean warehouse is about con-tinuous improvement. Looking at the figure below will give you an

ADVERTISER INDEX

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Editorial and Advertising Disclaimers

The editorial contents of this publica-tion are educational and informational in nature, and not intended as minimum standards, or legal or other professional advice.

The International Warehouse Logistics Association has endeavored to include appropriate and accurate statements, but disclaims any and all warranties and/or responsibility for the statements or their application. Users should confer with their professional advisers for specific input and assistance concerning their respective projects.

Any expressions of opinion or perspec-tive by authors of articles included in this publication are not necessarily those of the IWLA.

The inclusion of commercial advertise-ments in this publication constitutes neither a recommendation nor an en-dorsement of the product or service advertised. Although the International Warehouse Logistics Association will not knowingly publish a false or misleading ad vertisement, no attempt has been made to verify the contents of advertisements included in this publication unless other than as set forth in writing by IWLA.



LEADERSHIP AND MANAGEMENT

Leading with Trust: Principles and PracticeBy Chip Scholz

“TRUST IS A CRITICAL INGREDIENT for leadership, since few people follow someone they do not trust…. You cannot even get out

of the starting gate as a leader if others do not believe your words.” ~ Cornell University Professor Tony Simons, The Integrity Dividend: Leading by the Power of Your Word (Jossey-Bass, 2008)

A 2002 WATSON WYATT WORLDWIDE STUDY of 12,750 U.S. workers in all major industries found that companies with high trust levels outperform their low-trust counterparts by 186 percent.

In a 2011 Maritz survey, only seven percent of more than 90,000 employees worldwide said they trust their senior leaders to look out for their best interests. It’s not just a problem for rank-and-file employees. Roughly half of all manag-ers distrust their leaders, according to a Golin Harris survey of 450 executives at 30 global companies. Despite the importance of trust, few leaders give it the focus it deserves. Misunderstood as a nebulous “feeling,” trust is earned through consistent, positive behaviors practiced over time, making it an indispensable leadership skill.

“Trust always affects two outcomes—speed and cost,” confirms leadership guru Stephen M. Covey in The Speed of Trust (Free Press, 2008). “When trust goes down, speed will also go down and costs will go up. When trust goes up, speed will also go up and costs will go down. It’s that simple, that real, that predictable.”

Your success as a leader depends on the degree to which stakeholders trust you. Whether you’re a business developer, salesperson, client relationship manager, C-level executive, consultant or manager, you need to master the prin-ciples of trust and put them into daily practice. You must train your thinking and change your habits to earn the trust necessary to be influential, successful and recognized as someone who makes a difference.

Two of the best books on this important topic are:1. The Trusted Advisor (Free Press, 2001), by leadership consultants David

Maister, Charles H. Green and Robert Galford2. The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading

with Trust (Wiley, 2011), by Charles H. Green and Andrea P. Howe.Their authors offer several key truths:

• Trust grows; it doesn’t just appear.• Trust is rational and fact-based, and emotional and intuitive.• Trust is a two-way street, experienced differently by each person in the rela-

tionship.• Trust is intrinsically about taking risks.• Trust is always personal; you place trust in people.

■ Feeling and Fact“When we are having a good conversation, even if it’s a difficult one, we feel

good. We feel connected to the other person in a deep way and we feel we can

Despite the importance of trust, few leaders give it the focus it deserves.


trust him. In good conversations, we know where we stand with others – we feel safe.” ~ Executive Coach Judith E. Glaser, Conversational In-telligence: How Great Leaders Build Trust & Get Extraordinary Results (Bibliomotion, 2013)

Trust evolves more slowly than other feelings. You may immedi-ately know if you like someone, but trust builds over time. You withhold it pending confirmatory evidence. Of course, much of this evidence is fact-based. When you follow through on a promise, you provide rational reasons to be trusted. When you ex-tend trust, you create a platform that encourages others to be trustworthy.

Emotional factors also influence trust. Leaders provide support, en-couragement and personal stories. You confide in others, express your true feelings and share your values – acts that promote reciprocity. Trust is never a solo operation. Another person must participate and respond. Unilateral efforts cannot force trust.

■ Five Trust-Building SkillsTrustworthy leaders practice and

master five key abilities:1. Listen WellMost leaders use their listening

skills to gather information. But lis-tening is a critical tool for connecting with others, building relationships and strengthening influence. You must pay attention, be empathic and let others know you understand them.

2. PartnerPartnership involves collaborat-

ing (not competing), committing to fairness, balancing assertiveness and cooperation, dealing with disagree-ments, and sharing responsibility for successes and failures.

3. ImproviseThings don’t always go as planned.

Glitches and challenges can be “mo-ments of truth” that require rational and emotional flexibility. Leaders are stretched at times, but your ability to handle moments of truth determines your trustworthiness.

4. Take Risks

Trust cannot exist without tak-ing risks and leaving your comfort zone. Every risk you take builds trust. Leaders must be courageous enough to overcome their fears and confront challenging situations with curiosity and authenticity. Work toward boost-ing your tolerance of ambiguity and exposure. Learn to take the right risks at the right time.

5. Know YourselfSelf-awareness is the foundation

of emotional intelligence and trust-worthiness. Knowing your strengths and weaknesses allows you to dele-gate and collaborate more effectively. Work with a trusted mentor or execu-tive coach to identify blind spots that impede self-knowledge.

■ Three Common Blind Spots“When employees are given hon-

est feedback, even if the feedback suggests they have room to improve or change, the conversation can have a powerful impact, energizing them and motivating them to access

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new skills and talents. When han-dled well, honest feedback triggers growth, and employees will trust this feedback in the future.” ~ Glaser

Well-meaning leaders often over-look barriers to trustworthiness. The traits that make you a strong lead-er may inadvertently interfere with building self-awareness and trusting relationships. Consider these com-mon blind spots:

1. You don’t realize the extent of your need to be liked. How often do you avoid saying or doing something because it might be unpop-ular? While this may sometimes be wise, it lowers your credibility, effec-tiveness and overall trustworthiness.

2. You’ve underestimated the intensity of your internal drive to achieve. Results-oriented lead-ers habitually move too quickly from fully listening to pushing for commit-ments.

3. You overlook your discom-fort with feeling unprepared. Leaders aren’t clairvoyant and don’t have all the answers. This uneasi-ness may prevent you from engaging in collaboration and depending on others.

These three traits are fairly com-mon among high-achieving leaders. You must take off your blinders and identify barriers to trust. Without self-knowledge, you risk damaging relationships.

■ Four Components of Trust“It’s not enough to keep your

word; others have to be aware that you are doing it. And here is where it gets sticky. Like beauty, behavioral integrity is in the eye of the beholder. Consistently keeping promises and living by your stated principles are difficult tasks. Being seen as consis-tently doing these things is harder still.” ~ Simons

As a leader, you know how fragile trust can be. Four key components contribute to your overall trustwor-thiness.

1. Credibility (the realm of words): Our level of expertise and how we present our knowledge de-termine our credibility. When we

study facts and complete analytical research, we build up our credibility. We boost credibility in our business conversations by:• Developing formidable expertise in

our industry• Staying current with industry

trends and business news• Offering our point of view (when

we have one)• Being willing to say “I don’t know”

when this is an honest answer• Expressing passion for our areas of

expertise• Communicating with self-assur-

ance (a firm handshake, direct eye contact, a confident air)2. Reliability (the realm of ac-

tions): Do you fulfill the promises you make? Do you deliver on your com-mitments? Reliability is built over time, but it can be destroyed in a sec-ond. Boost your reliability with con-sistency, predictability and certainty:• State expectations up front. Regu-

larly reinforce them.• Make lots of small promises, and

consistently follow through on them.

• Be prompt.• Communicate if you fall behind.

Take responsibility for delays.• Respect organizational norms and

culture.3. Intimacy (the realm of emo-

tions): While credibility and reli-ability are predictable, workplace intimacy can be tricky. It’s easy to keep a professional distance in our interactions, but the “all-business” leader rarely gets ahead. We need and should seek trusted relationships at work. Without openness and trans-parency, the real issues will never surface. The problem with intimacy is that the word carries a connotation of closeness that isn’t appropriate at work. In reality, intimacy refers to your willingness to share appropri-ate information about the things that truly matter. In short, can you speak with candor? Boost intimacy by shar-ing personal experiences and values. Learn to:• Listen beyond the words. Pick up

on tone, emotion and mood. Ac-knowledge these elements aloud.

• Tell people what you really appre-ciate about them. Don’t keep it to yourself!

• Use people’s names in conversa-tions.

• Share something personal about yourself. This makes you more hu-man and interesting.4. Self-Orientation (the realm

of motives): Without doubt, we are all self-motivated to a degree. But we also want what’s best for others, the company or the team. How often do

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you speak about yourself: your wants, needs, goals and pri-orities? Are you oriented toward finding win-win solutions that take others’ needs into account? When trust breaks down, excess self-orientation is usually to blame. You can lower your level of self-orientation in relationships by:• Taking time to find the best solution• Sharing time, resources and ideas• Asking lots of questions from a place of curiosity and

figuring out your partner’s definition of success• Negotiating for a true win-win• Listening even when it’s uncomfortable to be silent• Speaking hard truths, even when it’s awkward• Giving your partner the credit for ideas and achieve-

ments

■ Measuring TrustConsultants Maister, Green and Galford use the four

components of trust to provide a concrete measurement tool they call the “Trust Equation.”

Trust = Credibility + Reliability + Intimacy Self-Orientation

Let’s measure one of your work relationships. Choose a subordinate or team member, someone you deal with on a regular basis.

1. Give each factor at the top of the equation – cred-ibility, reliability and intimacy – a rating from 1 (low) to 10 (high). Ask yourself:• How much credibility do you have with this person?• How much reliability is there between you?• How close, open and honest are you with each other?• Add up the three numbers.

2. Next, rate your degree of self-orientation (how much of yourself you insert into your conversations) from 1 to 10. Factor in the following criteria:• Are you basically self-oriented, focused on what you

think and want from the relationship?• If you’re a direct supervisor, do you focus primarily on

your expectations and results? If so, consider yourself highly self-oriented.

• If your leadership style is coaching-oriented, your self-involvement is lower, as you encourage others to come up with solutions.3. Determine your total score by dividing the first (top)

number by the second (bottom) number. According to the authors, a score of about “5” equates to a trustworthy rela-tionship, while a score of about “1.25” would demonstrate low trust. You can lower your level of self-orientation by increasing self-awareness. The more you understand your quirks and weaknesses, the better you can rein in your ego and focus on others.

Leaders who fail to gain subordinates’ trust will always struggle to be influential and inspirational. Focus on the four key components of trust, and measure your overall trustworthiness. Your score will clarify the action steps you must take to increase trust.

Chip Scholz is head coach of Scholz and Associates, Inc. and serves on the IWLA board of directors.

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PRESIDENT BARACK OBAMA signed the Drug Quality and Security Act (DQSA) into law on Nov. 27,

2013. Title II of the law is the Drug Supply Chain Security Act (DSCSA). The act creates a new framework for securely tracking prescription drugs from the manufacturer to a patient’s pharmacy.

Since that day, the U.S. Food and Drug Administration (FDA) issued an implementation plan and produced guidance documents, and has begun the rulemaking process. The International Warehouse Logistics Association was an active participant as Congress developed the new law. The association is now working closely with FDA during implementation.

In late 2014, the FDA issued several important guidance documents:

1. Guidance for Industry on the Ef-fect of Uniform National Policy on Drug Product Tracing and Wholesale Drug Distributor and Third-Party Logistics Provider Standards: Questions and Answers;

2. Standards for the Interoperable Exchange of Infor-mation for Tracing of Certain Human, Finished, and Pre-scription Drugs; and

3. DSCSA Implementation: Annual Reporting by Pre-scription Drug Wholesale Distributors and Third-Party Logistics Providers.

IWLA is in full support of DSCSA, specifically the intent to develop a uniform national policy to ensure security in the drug supply chain, including a federal licensing pro-gram for 3PLs. However, the FDA guidance is not complete and the industry continues to struggle with unknowns and conflicting information that jeopardize compliance.

The Basics. The DSCSA establishes a national system for tracing pharmaceutical products – prescription drugs in finished dosage form for human use – through the supply chain. It also sets national licensing standards for wholesale distributors and third-party-logistics providers (3PLs). Title II’s traceability provisions generally apply to each product “transaction,” meaning each transfer of ownership.

More specifically, manufacturers, repackagers, whole-

IWLA COUNCIL UPDATE

The Good, the Bad and the Ugly: Pharmaceuticals in a 3PL WorldBy Morgan Zenner

sale distributors and dispensers are required to trace drugs through interoperable exchange of product-tracing infor-mation (transaction history, transaction statement and transaction information) in paper or electronic format. The product-tracing requirements went into effect Jan. 1, 2015, for manufacturers, repackagers and wholesale dis-tributors, and will be effective July 1, 2015, for dispensers.

The Good. There is a lot of good in DSCSA.

“Title II provides the pharmaceutical industry a uniform method for tracing drugs on an individual-package level, as they move from manufacturers to pharmacy,” says IWLA Washington Representative Pat O’Connor of Kent & O’Connor. Before this law, counterfeit drugs and compromised drug products were difficult to trace because of the lack of national standards for tracing prod-uct through the supply chain. Product recalls under the new system will be

more efficient with a uniform tracing system in place.O’Connor says the law includes an accurate, progres-

sive definition of 3PLs. “This represents the first instance where a third-party-logistics provider is represented as its own entity, and is provided a formal definition written into law. Before DSCSA, 3PLs were misunderstood and considered by the states to be wholesalers. This burdened 3PLs by subjecting them to much more stringent require-ments even though a 3PL does not own, sell or control the disposition of the product,” he says.

With a better understanding of the 3PL’s distinct role, Congress specified national licensing standards for 3PLs in the DSCSA. Trading partners are required to provide the subsequent purchaser with the product-tracing infor-mation. Trading partners are also required to capture and maintain the product-tracing information for six years. The FDA notes that although third-party-logistics pro-viders are also considered trading partners, the product-tracing requirements are not applicable.

A 3PL can choose to track and trace at a client’s request. In fact, many 3PLs are using track and trace as an op-portunity to deliver more value to clients. “Several IWLA

IWLA is in full support of DSCSA…. However, the FDA

guidance is not complete and the industry continues to

struggle with unknowns and conflicting information that

jeopardize compliance.


members have started investigating the possibility of building out a ware-house-management system to track this information,” O’Connor says.

In many cases, the FDA will imple-ment the law with guidance rather than regulations. This approach ben-efits all parties, industry stakehold-ers and government regulators alike, provided the guidance is clear and provides flexibility to everyone in the supply chain.

The Bad. O’Connor reports that there is a lot of confusion circulating in the supply chain industry. “State li-censing standards for 3PLs have been

preempted by the DQSA since it was enacted into law last year. All 3PLs are deemed licensed, as the FDA has yet to issue its federal licensing standards,” he says. The FDA is required to issue these standards by Nov. 27, 2015.

Preempting state licensing stan-dards is easier said than done. For example, the DSCSA prohibits states from licensing 3PLs as wholesalers. “I receive calls every week from IWLA members who are bombarded by in-accurate information coming from their customers and partners ask-ing if they are properly licensed,” O’Connor says.

The transition period before states can catch up to the federal laws is creating a lot of confusion. State laws must be repealed, not simply elimi-nated. However, because DSCSA is a preemptive federal law that overrides any state law, many are unsure how to proceed.

The Ugly. Two states have a pharmaceutical licensing program for 3PLs: Florida and California. The Florida law was passed several years ago at IWLA’s request. California’s law was passed in September 2014 and will go into effect in 2015. O’Connor says California’s new law causes great distress, as the DSCSA statutory text itself also clearly contemplates that states will not establish 3PL licensure requirements until federal standards are developed and released.

In California, any 3PL that is locat-

The 3PL To-do List

• Talk to your clients about the new trace requirements and ask them how they will be providing this information to you.

• Establish internal process/system to collect product information and save it for at least six years.

• Report to FDA all facilities that warehouse prescription drugs. Create an account in the CDER Di-rect Web Portal system and enter your facility information. You do not need to include licensing in-formation for the first year, except for Florida and possibly California. You must report your facility in-formation by March 31, 2015.

• Determine whether you are sub-ject to either California or Flori-da’s 3PL licensing requirements.

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ed out of state but ships product into California must be licensed. This sim-ply extends wholesaler requirements to 3PLs. “California’s decision is a step back from the federal approach, by once again grouping 3PLs in with wholesalers with no regard to the unique role of a 3PL,” O’Connor says.

IWLA will continue to advocate on 3PLs’ behalf and provide members with the good, the bad and the ugly truths of the DSCSA.

Morgan Zenner is the IWLA se-nior coordinator of marketing and public relations. She can be reached at [email protected].

idea of the key components of a lean warehouse. Tools such as the PDCA (Plan, Do, Check, Act) cycle help us to identify and eliminate waste. What is the plan today? At the end of the day, how do you measure your actual performance to plan? What do you need to adjust to be better tomorrow? Answering these questions is the es-sence of the lean warehouse. The goal is to create a warehouse where prob-lems are visible and where you fix problems at the root cause every day. Accomplishing this will in fact create the lean warehouse and drive quan-tum business results.

Robert Martichenko is CEO of LeanCor LLC. Chris Luery is Execu-tive, Lean Deployment at LeanCor Canada Inc.

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