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Distribution Management = Success in Online Business

June 09, 2015

Distribution Management = Success in Online Business

Distribution Management is an area of intense innovation, technical acumen, human resource skill, and diverse management experience. As a result it is the area that makes all the difference in an online business where the fluidity of a distribution site spells success or disaster for a company’s customer relationships.

E-commerce in the United States grew by an average of 15 percent in each quarter of 2013 and 2014, outpacing the total national retail spending growth by almost double, according to the US Census Bureau. Internet sales have become a central aspect of retailers’ success[1]. In response to this fact, faculty at UT’s Haslam College of Business have identified some best practices for modern distribution centers.

Early adapters of optimized tools such as advanced shipping notices and warehouse information systems that maximize accuracy and efficiency reap the benefits. For example, in 2013 Amazon posted larger sales than the next nine online retailers combined. A large factor in their success was product delivery efficiency that resulted from adaptation of the aforementioned tools.

“Logistics professionals who operate distribution centers are expected to improve customer responsiveness, decrease cost, and manage higher volumes every year... We found that the most efficient distribution centers found innovative ways to meet all three of these demands rather than sub optimizing one of the three”[2] said Paul Dittmann, executive director of UT’s Global Supply Chain Institute.

Adaptation of key innovations and adherence to the ideologies presented in studies available on UT Global Supply Chain Institute’s website provide a formidable outline for achieving distribution management success and isolating those factors necessary to take a leading edge and effectively communicate in the increasingly important online business sector.


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Appleā€™s Environmental Sustainability Platform in China

May 25, 2015

Through a recent press release[1], Apple announced an expansion of its renewable energy and environmental protection initiatives in China. These initiatives include a multi-year project with World Wildlife Fund in order to responsibly manage forests across China. This program aims to protect 1 million acres of responsibly managed working forests which provide fiber for pulp, paper, and wood products.

In addition Apple plans to follow through with plans on a major solar project with Tianjin Zhonghuan Semiconductor Co., Ltd. and Sunpower Corporation in order to generate up to 80 million kilowatt-hours per year of clean energy[2]. This effort will generate enough to power 61,000 Chinese homes. These solar efforts will help bring Apple closer to achieving its goal of having 100 percent of its global operations run on renewable resources, up from its current 87 percent.

Regarding Apple’s new environmental efforts, Tim Cook had the following to say:

“We’ve set an example by greening our data centers, retail stores, and corporate offices, and we’re ready to start leading the way toward reducing carbon emissions from manufacturing… This won’t happen overnight – in fact it will take years – but it’s important work that has to happen, and Apple is in a unique position to take the initiative toward this ambitious goal. It is a responsibility we accept. We are excited to work with leaders in our supply chain who want to be on the cutting edge of China’s green transformation[3].”

With this example of environmental sustainability and increased focus in Chinese markets, it can be expected that other companies will seek to follow suit. Apple continues to go to unprecedented extents to make its supply chain and operations as efficient and sustainable as possible paving the way for the business community.


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Rising Trucking Costs

May 19, 2015

Rising truck driver pay in recent years has stood in stark contrast to the slowing of other sectors of the U.S. economy. As a result, shipping prices have also rose significantly and continue to rise making trucking a less favorable option in supply chains. According to William Cassidy of the Journal of Commerce, “Another round of increases in driver pay is expected to drive truck pricing, especially in the truckload sector, higher for shippers as the year progresses”[1].

Pay increases on a scale of 8 to 12 percent are being discussed by many trucking companies, in addition to other incentives and bonuses. These increases lead to a direct and tangible impact for transportation divisions who rely heavily on truck shipments.  

According to Charles W. Clowdis, “Every trucking company you call, they all say they’re short drivers”[2]. It is a problem that has existed for decades but is making itself more readily apparent by the demanded higher wages and more favorable conditions that are being required to decrease driver turnover and sustain shipping fleets. Driver pay has been isolated as a variable more prominent than economic growth and increased demand in causing the rising truck rates that have been prominent throughout the latter half of 2014 and beginning of 2015. Yet pay may not be the solution required to attract drivers and retain them. Often the management of drivers is just as prominent a factor in their retention as pay and benefits.

According to David Schumann of Progressive Transportation, “It’s a misnomer to say there’s a driver shortage, we’re getting about 500 resumes a week”[3]. Yet he goes on to mention that only three out of seven applicants have the qualifications necessary to be hired. It is evident that the lack of drivers is a lack of qualified drivers, as there are few programs focused on training and investing in drivers. Drivers are an essential facet of a supply chain and their satisfaction is essential in winning the customers. Yet all too often their management and pay do not result in the job satisfaction necessary to continue on in such an exhausting occupation. Wise companies are adapting to this reality by addressing driver concerns, investing in their development, and regulating the extent of their hours to ensure greater overall health and employee satisfaction. Yet we can expect wages to continue to increase until such a time as the culture surrounding trucking undergoes serious change.




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