Poor productivity and high staff turnover in the UK’s logistics industry are adding to costs in the supply chain and undermining the competitiveness of business, according to a government-funded training body.

Skills for Logistics, responsible for training and qualifications in the sector, says the industry has become a low-skilled, unattractive place to work and is often an employer of last resort.

“This is an industry where customer service depends on accuracy and efficiency,” said Mick Jackson, operations director. “Yet 15 per cent of the staff cannot read to acceptable standards and one in five lacks basic numeracy skills.

“If we don’t deliver on time and in full, costs are incurred in making extra deliveries and taking back orders wrongly supplied.”

The industry turns over £75bn a year and employs 2.3m people, but draws just 2 per cent of the budget for publicly funded training. Construction employs similar numbers and receives 13 per cent, while engineering draws 19 per cent for a slightly bigger workforce.

“We in logistics don’t take up our fair share,” said Mr Jackson. “But the money will still be spent in sectors such as construction, engineering and hairdressing where the worth of qualifications is recognised and appreciated.”

Businesses that trained their staff saw significant benefits, he added. DHL Aviation, part of Deutsche Post, saved £400,000 in recruiting and temporary staffing costs after improving the literacy and numeracy of its workforce. Staff turnover had fallen two-thirds, absenteeism had plunged and productivity had risen 12 per cent.

Winfield Transport of Cannock, with 32 employees, had reduced fuel consumption by more economical driving and was saving on insurance costs because of a reduced accident rate.

Skills for Logistics is launching a “Skills Pay” campaign to increase take-up of training grants.

“The industry is at the heart of the economy,” said Mr Jackson. “Yet almost half the workforce falls below level two in qualifications [the equivalent of five good GCSEs] ... For the fifth largest sector in the fifth largest economy in the world, this is not something to be proud of.”

By John Willman, Business Editor, Financial Times Limited
Source: http://www.ft.com/cms/s/0/2cce22b2-bb1e-11dc-9fbc-0000779fd2ac.html

An incentive of the German Chamber of Commerce in Hong Kong, the study group included a number of academics from Hong Kong Universities, representatives from Cathay Pacific and DHL Express, as well as Bruce Stinson, Executive Director Training and Development, and Anastasia Mak, Program Manager, from the Global Institute of Logistics.

Anne Thiesen, Executive Director, German Industry and Commerce Ltd, was the prime mover of the event and put together an impressive list of visits which saw the group highly motivated and interested throughout the week.

Transiting in Frankfurt after the flight from Hong Kong, the group flew on to Hamburg for the first stage of the tour.

MONDAY

AIRBUS

There was a welcome out at the Airbus entry gate the next morning and the visitors were given a brief presentation of the history of the company which has 16 European sites forming the supply chain for the production of the aircraft with a total of 56,200 employees. The Hamburg plant and associated plants nearby in Germany have the largest number of employees at over 21,000.

Moving through the huge expanse of factory hangars where much of the assembly of the A380 and other members of the Airbus fleet takes place, the study group was able to see huge parts of the outer shell coming together, wings and tail sections being added and each stage of the process to the painting of the final product.

Cameras were not allowed, but a glimpse of the finished A380 destined for Singapore Airlines fleet made up for that as the group prepared to leave.

After a pleasant lunch at the Tulip Hotel, the group moved on to the Container Terminal Altenwerder (CTA) where the tour was conducted in the bus as it moved through the terminal. 

The facility features advanced automation and a very fast throughput of boxes.  The study mission was treated to the sight of the largest ever constructed gantry cranes and a fleet of over 60 Automatic Guided Vehicles (AGVs) moving containers rapidly and with complete accuracy.  The AGVs transport containers from the quayside to the stacks and move about driven solely by software.  They have a positional tolerance of less than one centimeter and automatically pull in to refuel when low on diesel.

Although there is a control station, human involvement is only seen in the gantry crane unloading from the container vessels at the quayside and, on the other side of the terminal, when trucks pull in to a special area to have their containers loaded.

The Port of Hamburg is the nearest deep water port for the Baltic States and serves as Asia’s gateway to Europe.

 HAMBURG CHAMBER OF COMMERCE

Dr David Ho, Chairman of the Transport Logistics Training Board of the Vocational Training Council spoke about developing the Manpower Infrastructure for the Transport Logistics Industry in Hong Kong.

In the evening an excellent fellowship dinner was held at Landhaus Flottbek.

TUESDAY

HAMBURG UNIVERSITY OF TECHNOLOGY (TUHH)

Professor Dr Blecker, who is head of the AKJ FutureLogisitcs, Logistics Initiative Hamburg, addressed the group on “RFID Activities in Hamburg”, where a special interest group has been formed to discuss technological innovations.  This group has, in turn, formed work groups, which are studying various pilot projects and aggregating outcomes.

Professor Dr Konty discussed the “Testing of RFID Systems” covering the financial criteria and non-financial criteria of RFID and pointed out that problems of efficiency still remained in cases where some liquids and various other substances were part of the subject on which RFID technology was to be used.

Dr Konty said that 99% accuracy could now be obtained regularly and research continues in the attempt to strive for the desired 100%.

Finally there was a presentation of an “RFID User’s Case” involving the company Reyher, a leading company trading in fasteners and “C parts” in Europe with 350 employees and annual turnover in excess of 95-Million Euro.

Reyher employs a “bin” system where the small parts the company supplies are placed in bins on the customers’ shelves.  These bins are identified by labels which can be read by a hand-held scanner.  Inventory control is vastly simplified in this way.

The study group left Hamburg University of Technology and were joined for lunch at an Italian restaurant momento di by some of the people from the university.

OLYMPUS

Host Bernd Jordan took the group through the whole process in a tour which lasted almost two hours, covering how the product passes through all stages to final distribution.

Of major interest were the fully automated storage bays, the various methods of “picking” orders, including the use of “sound” prompts, and the labeling and tagging processes employed at various stages of the chain.

 TOP 

Priding itself on its innovative approach, Top’s predecessor company was founded in 1930 by Friedrich H H Wendt, whose son now runs the company together with his daughter.  With a focus on service and back-up for IT, Point of Sale equipment, installation of LCD screens and related areas,  Top has developed its service chain to a fine art with both same-day and next-day service available backed up  by warehousing and 24-hour call-management systems which are second to none.

WEDNESDAY

DUSSELDORF CHAMBER OF COMMERCE

Wednesday morning the mission flew to Dusseldorf and checked in to their hotel before being taken by bus to the Dusseldorf Chamber of Commerce for a luncheon reception and presentations by the chamber and the Dusseldorf City Government.

Many of the study mission felt that Hong Kong’s planners could gain much from a visit to this remarkable city.

DHL INNOVATION CENTRE

DHL Innovation Centre provides a glimpse of the future – today.  As global trends shape the future of logistics, DHL has captured those trends, extrapolated them into the future and, using the work of specialists from around the world, built a futuristic display of what “might be” the way logistics is handled in fifteen or twenty years time.

Entering the display area, one member of the mission was moved to liken the initial impression to the movie “The Matrix”.  As the tour progressed, however, the general feeling was that tomorrow is not so far away, with a number of the innovations covered already being introduced by DHL in various places, usually on a trial basis, around the world.

Features such as automation, RFID, Last Mile options including “smart vans” which will know which packages they contain and the simple yet practical Packstation where customers will be able to pick up parcels, seem to be literally just around the corner.

Like all visitors to this inspirational venue, the group left in high spirits and headed into the former capital of Germany, Bonn, to visit another famous Deutche Post landmark, the “Post Tower”.

DEUTSCHE POST HEADQUARTERS (“POST TOWER”) BONN 

Over dinner, two presentations were made, the first by Dr Winfired Haeser, Director of Environmental Strategy, who spoke with enthusiasm about the company’s “GoGreen” policy whereby Deutche Post is playing its part in environmental sustainability.

Employing over 500,000 people in 250 countries, and with one division - DHL Express – carrying over one billion shipments each year via 420 aircraft and 72,000 vehicles, the challenge for Deutsche Post World Net to be a leader in the search for environmental sustainability is certainly a significant one.

Dr Haeser quoted Dr Klaus Zumwinkel, Chairman of the Board of Management, who said:

“Embracing sustainability in our core business strategies means embarking on a long journey”.

Yet this is obviously a journey the company is prepared to take as it sees its Sustainability Program as an answer to shareholder expectations and embedded in the Corporate Values of the organization.

Dr Haeser outlined a number of initiatives being taken such as expanding the fleet of alternative fuel vehicles, developing the range of GoGreen products and services and supporting regional and local community-based initiatives.

It was an impressive presentation and no one could have been left in any doubt about Deutshce Post World Net’s commitment to being a leader in this most important area.

After an introduction by one of his colleagues, which linked the seven values embraced by the company, through is Code of Conduct, to its Strategies and Vision, and then to its Leadership Development policy, Mr Wandmaker took over and focused on Talent Management Strategy.

A policy of “Get, Keep and Grow” is the cornerstone of the DHL talent management strategy, whereby 85& of management roles are filled internally, strategies are in place to identify and retain top performers, and more development investments are provided to high performers.

As the group boarded the bus to head back to Dusseldorf, all expressed their gratitude to Bettina Biegert, Marketing Communications Project Manager for DHL in Hong Kong, who was responsible for organizing this exceptional part of the study mission.

THURSDAY

METRO Group RFID Innovation Centre

The visit to the Metro group’s Innovation Centre maintained the prime focus on RFID, with this huge supermarket and wholesale/retail operation having introduced RFID technology gradually along the entire supply chain since November 2004.

In a presentation reminiscent of the DHL Innovation Centre, Metro took the study group through a range of uses of RFID from clothing retailing to supermarket applications, including wine, fruit and vegetables, and refrigerator stock control.

Among the more interesting applications was ”picking by light”, where shipping cases fitted with transponders move along a conveyor belt fitted with an RFID reader. Light signals on the shelf show employees which items to pack and also identify for which store or warehouse the goods are destined in order to eliminate mistakes.

More speed and greater transparency are the goals of RFID and this was illustrated by the scanners which can immediately note the number and nature of goods on a pallet as it passes through..

Metro also showcase some of the more unusual potential uses of RFID such as in footballs to aid in game officials’ decisions and as a tracking device in alpacas.

GOTTWALD PORT TECHNOLOGY

A presentation by the CEO was followed by a tour of the factory where, similar to the Airbus study, the supply chain and processes of building these massive cranes were covered in detail.

In addition, the group was taken to an outside area where the latest AVG was being put through its paces on the testing ground.

After this visit, the group boarded the ICE train for Frankfurt where a networking evening with the Frankfurt Chamber of Commerce was held in the Linden Hotel and Residence.   A welcome was kindly offered by Winchell Cheung, Director of the Hong Kong Trade Development Council.

FRIDAY

FRANKFURT AIRPORT

After a presentation by the Director India & China, Michaela Zahn, where the importance of Franffurt as a hub, with 69 flights to China every week, was emphasized, another presentation was made by Stefan Kisro, Academy Director of the German Logistics Academy.

On the final evening the group relaxed in another traditional German restaurant before preparing to depart for Hong Kong the next day.

On the morning of departure Bruce Stinson of the Global Institute of Logistics presented a gift, on behalf of the group, to Anne Thiesen for her considerable effort in arranging the tour.

Imagine that one evening you are relaxing at home

Clearly you are a Motivated Buyer with an Immediate Need.

You show up at the local appliance super center and after some shopping, you find an amazing refrigerator with new features, at a great sale price. Lo and behold! The unit can be delivered tomorrow! You pay for the new refrigerator and return home feeling relieved that a catastrophe has been avoided. Man, you love that super center. How convenient to have them nearby. What a deal! What value!
You love Amerika! What a country!

Promises...Promises.

Mrs. Buyer takes half a day off to wait on the "morning" appointment to deliver her new Super Freezo Deluxe. 10...11...12...1pm. No delivery. Finally at 2 o'clock the delivery van shows up. The delivery men are rude and they smell. They suffer from undersized uniforms and oversized bellies. They don't attach the ice maker correctly and they leave the box in the middle of the kitchen. Mrs. Buyer is beyond livid. Boy, are you going to hear about this one. That great deal you got last night now doesn't look so great. You can plan on hearing about this fiasco for years to come. This delivery was a mess.

The store sold the perfect product to the perfect buyer. However, in failing to deliver the product as promised, the expected value and goodwill created by the purchase was destroyed. Mrs. Buyer will absolutely tell her friends. Mr. Buyer will also tell his friends at work. He will talk about Mrs. Buyer's unhappiness as much as the delivery issue. Add a multiplier of negativity if they email anybody or post to an on-line forum. Both buyers will be seriously angry with the merchant and will be effusive in sharing that opinion with anybody who will listen for a time approaching the half-life of uranium 235.

Oh, the Irony.

Guess what? The retailer that sold the product had contracted the delivery out to the manufacturer! But then it gets even richer. The delivery itself was contracted out by the manufacturer to a 3PL! The knuckleheads who blew the delivery were not only not from the selling merchant, they weren't even from the manufacturer! Whose reputation got destroyed in this? Certainly it wasn't the manufacturer or the 3PL. Your receipt only says the name of the super center!

Delivery Failure will destroy all Value ever created by a Sale.

Sales and marketing are mainly about making a promise that your product can satisfy a customer's need. If the customer believes your promise and thinks you have priced your goods relative to his ability to pay, he buys your product. Delivery of the product on time, as promised, fulfills the customer's expectation and creates value. It is value for money that will entice a customer to purchase from you again. It is also what creates brand loyalty. Service above all will create a return customer. In an age where almost all products can be commoditized, it is service delivery that will break through the clutter to create brand equity. That's a supply chain thing as much as a product or pricing issue.

The Best Sales Companies are really Supply Chain Companies.

Companies like Nordstrom, Ritz-Carlton Hotels, and others have created substantial high value brands because not only do they make the promise, they deliver on it. The key is delivery. They have measured the promise they are willing to make, invested in the ability to perform, and then allowed talented employees to execute the fulfillment.

Nordstrom is famous for allowing customers to return products regardless of whether the product was bought on-line, at a local store, or at a store in another state. Sales personnel are enabled to find products anywhere in the network and ship them to customers or to their store as needed. It's all about satisfying the buying experience. What enables that experience is having the supply chain systems and product visibility to execute. If you are more convenient to buy from...you will get the business.

Decision empowered employees, with visibility to inventory available to sell, and the supply chain tactics to get the product to a customer will find themselves competing on the basis of customer satisfaction rather than price alone. In the mind of the customer, when the promise becomes an expectation, you have created brand equity.

Here is the Real Secret: It's not really about selling. It's about delivering service, goods, and experience to create value. If you can't deliver, you can't convert concepts to cash.

Four First Steps to controlling Branded Delivery

• Make a Promise you can Keep - Many new companies underestimate the delivery requirements of their customers and find themselves with an inability to quickly get product to market. Businesses with perishable goods like the floral industry understand this only too well. Nothing is as perishable as money. If you promise next-day or 2nd day delivery, select carriers who can get it there on time and work with 3PL's and warehouse operations that can execute same day outbound order turns. 
• Take Control of Transportation - New companies will often allow more experienced vendors to control delivery of products on either a drop ship basis or through a third party agent. You will find you can negotiate better terms with carriers and find more flexible delivery scenarios by controlling the freight yourself. Vendors often mark up transportation as an additional hidden revenue stream. Put that money in your own pocket.

Outsourcing remains a completely valid option, but hold service providers and carriers to the same standards you would hold your own employees. Use quarterly business reviews as a way to impart lessons learned to the 3PL at the same time you teach your own team. The 3PL is in fact an extension of your company in the eyes of the customer. The biggest reasons 3PL relationships fail is a failure to define and measure specific goals. If metrics aren't defined early, scope creep can enter into the relationship and soon, what the 3PL is asked to deliver isn't the same as what the contract called for. That's never a recipe for a happy family.

• Choose your vendors and carriers wisely - Insist that they provide you with on-line visibility to where your goods are in transit, whether inbound to your distribution center or outbound to your customer. Most carriers can provide online tracking for free. Also ask your carriers about hybrid delivery schemes that may combine long haul transportation with parcel distribution for the final mile. Make measurable standards, and the tools to do the measuring, part of your contract!
• Empower your Employees - Allow your customer facing employees to make decisions to satisfy customers. Whether that means replacement of a product, providing credits for returns, or helping them choose alternatives when goods are not available, make your sales and customer service people "powerful" in satisfying customer needs. Allow them to fulfill the promise your marketing has put forward. You'll find this creates great company morale as well as satisfies your customer.

By Eric J. Joiner, Jr.

Source: www.freightdawg.com

GBP 1 billion/Euro 1.4 billion savings targeted to the NHS over 10 years

Around 1,000 new jobs to be created

Under the agreement, DHL will run a division called NHS Supply Chain, on behalf of NHS Business Services Authority, and be responsible for delivering all procurement and logistics services across an initial 500,000 products to support 600 hospitals and other health providers in England. The business will ensure that public health (NHS) authorities can dedicate more resources to patient care and continue to manage their cost base. It will help protect existing jobs and lead to the creation of over 1,000 additional positions.

John Pattullo, Chief Operating Officer for DHL Exel Supply Chain, Europe, Middle East and Africa, adds, "By applying commercial experience and procedures to core logistics and procurement functions, and working very closely with the supplier community, we now have a unique opportunity to deliver innovative, high quality products to support public health in England. This is exactly the kind of strategic sourcing deal where we think we can generate major value for our customers, in this case - the NHS."

The range of products NHS Supply Chain will manage encompasses a wide range of goods including key supplier and maintenance contracts, food, bed linen, office equipment, stationery, cleaning products, patient clothing, medical and surgical equipment (such as operating theatre equipment and machinery) dressings and provisions. NHS Supply Chain will have its own management team and be governed by a Board dedicated to managing the performance of the operations. In addition, it will be overseen by the NHS Business Services Authority, a government body responsible for managing core public sector support services.

In 2008, DHL will open a new 250,000 sq ft UK-based DHL distribution centre (DC) to act as a stockholding hub for food and other products. It is expected that around 1,000 extra employees will be recruited to manage this distribution centre and an additional DC in 2012.

With extensive experience in the healthcare sector, including over five years experience with the former NHS Logistics, DHL will build upon existing knowledge, relationships and capabilities to pass savings back to the Department of Health. In addition, DHL will have freedom to invest and develop the business along commercial best practice, work even more closely alongside industry professionals and suppliers, and introduce more employees to the benefits of working alongside DHL.

Source: http://www.shippingline.biz/Logistics/

Cargo Connection Logistics Holding, Inc. (OTCBB: CRGO) (BERLIN: CD6) (FRANKFURT: CD6) (FRANKFURT: 217026) today provided an update on several areas of great interest relating to the Company, its operations and its anticipated future growth.

Jesse Dobrinsky, the Chairman and CEO of the Company, stated that:

"In our continuing efforts to increase the value of the Company to our stockholders, we have taken several recent steps that have improved the Company's financial condition, operations and prospects, including:

About Cargo Connection Logistics Holding, Inc.

The Company, through its subsidiaries Cargo Connection Logistics Corp. and Cargo Connection Logistics - International, Inc., is a leader in world trade logistics. The Company headquarters is in Inwood, NY, and it also has offices in Atlanta, GA; Charlotte, NC; Chicago, IL; Columbus, OH; Miami, FL; New York, NY; Pittsburgh, PA; and San Jose, CA. Headquartered adjacent to JFK International Airport, the Company is a transportation logistics provider for shipments imported into and exported out of the United States, with service areas throughout the United States and North America. The Company currently provides a comprehensive variety of transportation and warehouse capacity services to shippers throughout the nation. It also operates a bonded General Order warehouse in New York and Container Freight Station operations, which are specifically designed to handle internationally arriving freight for major retail suppliers through its facilities in Florida, Georgia, Illinois, New York and Ohio.

Cargo Connection Logistics' website is www.cargocon.com.

Future-Looking Statements Safe Harbor

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain of the statements contained herein, which are not historical facts, are forward-looking statements with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the Company is detailed from time to time in the Company's reports filed with the Securities and Exchange Commission, including, without limitation:

• the Company's ability to increase its revenues, including by obtaining contacts with foreign shippers and by acquisition of competing businesses such as Fleet Global Services, Inc.;
• the Company's financial condition, including its ability to continue as a going concern;
• the Company's ability to operate in compliance with the terms of its financing facilities (particularly the financial covenants);
• the Company's ability to maintain adequate liquidity and produce sufficient cash flow to meet the Company's capital expenditure plans;
• the number and magnitude of customers;
• changes in, or the failure to comply with, government and regulatory policies;
• the Company's ability to obtain regulatory approvals and to maintain approvals previously granted;
• uncertainty relating to economic conditions generally and particularly affecting the markets in which the Company operates;
• the effect of the Company being in default on its indebtedness;
• the Company's ability to raise additional capital, including to the extent necessary to consummate its acquisition of Fleet Global Services, Inc.;
• the Company's reliance on key personnel and independent agents;
• the Company's vulnerability to economic and industry conditions;
• changes in the Company's business strategy, development plans or cost savings plans;
• the Company's ability to complete acquisitions or divestitures and to integrate any business or operation acquired;
• the Company's ability to enter into strategic alliances or other business relationships;
• the Company's ability to overcome significant operating losses;
• the frequency and severity of accidents, particularly involving the Company's trucking operations;
• the Company's ability to reduce costs;
• technological developments and changes in the industry;
• the Company's ability to develop products and services and to penetrate existing and new markets, and
• changes in the competitive environment in which the Company operates.

Contact:
Peter Nasca
Peter Nasca Associates, Inc.
954-473-0677 Ft. Lauderdale
312-527-1044 Chicago

Kieran Ring, CEO of the Institute, speaking at the announcement, said:

"The first workshop intakes will take place in Hong Kong. The construction of a corporate culture which reflects the collaborative dynamic has been the focus of the Institute for some time, following the seminal work in this area done by academics such as Sin et al and Panayides and So."

Also present were GIL Council Members Paul Goldsbrough and Wilmer Aguilar.

Mr. Goldsbrough said:

"I am particularly delighted by this development. In fact, the main reason I accepted the role as Chairman of the China Chapter of the Global Maritime Council was that I wanted to see these skills - so important to the industry - passed on."

"I am sure that is why virtually all of the training available in the industry is based on the skills which support that logical and sequential thinking."

"Until now, that situation has left a glaring gap. The industry is also about people - millions of them - and when relationships between companies break down, as they do very regularly resulting in huge loss of revenue streams, it is invariably because of a relationship breakdown between people somewhere in the supply chain. All of the Left Mind training in the world won't fix that or stop it happening."

"The GIL Certificate Program follows the academic work which has proved the importance of Relationship Management and has its focus on Right Mind skills which are vital to maintaining healthy relationships."

"Working with a strong Board of Advisors, we have developed a three month program which takes participants right through the range of Relationship Skills identified by the academic work as the cornerstones: Communication, Bonding, Shared Values, Trust, Reciprocity and Empathy."

"We also underpin the program with vital work on Creativity and Emotional Intelligence. Without these it is difficult to make progress on the six elements."

All involved believe this incentive will change the culture of the industry and see far better Relationship Management emerging as best practice.

Kieran Ring, CEO of the Global Institute of Logistics, moderated a round-table discussion at the dinner which focused on the development of both Relationship Orientation within the industry and the establishment of industry standards for ports.

Mr. Stinson was asked to speak at the dinner and chose to use the example of his first job - as a young pharmacist - to illustrate the role Relationship Orientation can play in any industry.  He told of the co-operation between the pharmacist, local doctors and representatives of pharmacy wholesalers and drug companies - all working together with the benefit of the customer as the ultimate goal.

"Although I was only in my mid-twenties, I was witnessing a supply chain of sorts, and seeing first-hand the benefits which can accrue when the participants in that supply chain collaborate for the benefit of the end-user," Mr Stinson told the group.

"I also saw a number of important personal skills being employed creatively by various people - especially the owner of the pharmacy who was an industry leader. There is little difference, in basic terms, between those skills and the essentials required to support Joined-Up Thinking in logistics."

Among the guests was Dr Lee Chung-Yee, Head and Chair Professor of the Industrial Engineering and Logistics Management Department of the Hong Kong University of Science and Technology (HKUST).