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  • LeanATL 10:04 pm on October 10, 2019 Permalink | Reply  

    Success Tips for Passing the APICS CSCP Exam. An interview with Russell Sorrow 

    The APICS Coach sat down with Russell Sorrow, a professional in career transition, to learn more about his recent journey in pursuit of the APICS CSCP certification.

    In summary…

    1. Russell’s 4 step methodology
    2. Learn from others
    3. Take a class

    Listen to the full interview here

  • LeanATL 10:03 pm on July 1, 2019 Permalink | Reply  


    In a recent workshop a student challenged me on inventory being taxed. We were discussing carrying cost calculation when I slipped in ‘carrying cost calculations can include taxes.’ It was an interesting challenge given I have never analyzed or calculated carrying costs outside of the APICS Body of Knowledge (BOK). All three BOKs discuss the core components of:

    • Capital costs
    • Storage costs
    • and Risk costs

    Capital costs are the cost of financing and opportunity costs of using the money. In many organizations this can be as simple as the interest rate on a loan or a more advanced hurdle rate.

    Storage costs are generally the variable component of space, materials handling, utilities, maintenance and security based on the quantity of stored inventory.

    Risk costs are associated to inventory becoming unusable or salable due to damage, spoilage, obsolescence, theft, etc. Risk costs can vary significantly from industry to industry depending on inventory. For example, diamonds are highly prone to shrinkage, food can be highly perishable, and fashion items may go out of style quickly, all will have a high risk cost. Alternatively, daily use consumables including toilet paper and toothpaste will have a low risk cost.

    An astute CLTD BOK student will notice two additional carrying cost components called out, taxes and insurance.

    Insurance is just that, the cost of transferring the risk of the inventory asset. Note, CPIM and CSCP both reference insurance as a part of risk costs.

    Taxes are briefly discussed and tend to be on a US state by state basis. These inventory taxes (tangible personal property tax) tend to be assessed annually and are currently only found in 6 states.

    The APICS Dictionary, 15th edition states carrying cost as:

    ‘the cost of holding inventory, usually defined as a percentage of the dollar value of inventory per unit of time (generally one year). Carrying cost depends mainly on the cost of capital invested as well as costs of maintaining the inventory such as taxes and insurance, obsolescence, spoilage, and space occupied. Such costs vary from 10-35 percent annually based on industry.’

    A further comparison of the BOKs reveals carrying cost can range is 13-44% (CLTD) and 15-40% (CSCP).

    I encourage every APICS Coach student to understand what carrying cost is, the carrying cost fundamentals, and how to calculate either a total carrying cost percent or the total carrying cost dollars based on an average inventory.

    Example 1:

    Which inventory cost is figured as a percentage of the inventory value per unit of time?

    A. Acquisition cost
    B. Landed cost
    C. Carrying cost
    D. Ordering cost

    Answer: C. Carrying cost

    Example 2:
    A company carries an average annual inventory of $4,000,000. They estimate the cost of capital is 10%, storage costs are 7%, risk costs are 6%, and cost of goods sold is 5%. What is the annual carrying cost percent?

    A. 13%
    B. 17%
    C. 23%
    D. 28%

    Answer: C. 23%

    Example 3:

    A company carries an average annual inventory of $4,000,000. They estimate the cost of capital is 10%, storage costs are 7%, risk costs are 6%, and cost of goods sold is 5%. What is the annual carrying cost?

    A. $520,000
    B. $680,000
    C. $920,000
    D. $1,120,000

    Answer: C. $920,000

    Carry on…

  • LeanATL 8:12 pm on April 17, 2019 Permalink | Reply  

    Inventory Exists at Every Point in the Supply Chain 

    One premise of anything APICS is understanding inventory and inventory management fundamentals. Any student of CPIM, CSCP or CLTD should be familiar with inventory and inventory management concepts. For this I refer to the APICS essential ‘Introduction to Inventory Management’ by Arnold & Chapman.

    Inventories are materials and supplies in a supply chain either for sale or to provide inputs/supplies to the product processes. All business and institutions require inventories unless customers are content with waiting days or weeks for deliveries. Often inventory values are a substantial part of total assets.

    Financially, on the balance sheet, inventories can represent form 20-60% of total assets. As inventories are used their value is converted into cash, improving cash flow and return on investments. There is also a cost of carrying inventories, which increases operating costs and decreases profits. If product is lost, expires or becomes unusable, overall company profitability suffers. Good inventory management is essential to an efficient and responsive supply chain.

    In a prior blog we discussed the functions of inventory


    The APICS CLTD 2019 CLTD learning system provides a good visual of inventory types:

    CLTD Ex 4-2

    The APICS Dictionary, 15th edition, defines the following:

    Raw Materials:

    ‘Purchased items or extracted materials that are converted via the manufacturing process into components and products.’

     Raw materials can be in the traditional sense something in ‘raw’ form for example, iron ore, grains, or crude oil. Raw materials can also be something converted into a semi-usable form by your suppliers but will be used in your production/kitting process to create a usable finished good you can provide to your customers.

    Work in process (WIP):

    ‘a good or goods in various stages of completion throughout the plant, including all (inventory) from raw material released for initial processing up to completely processed material awaiting final inspection and acceptance as finished goods inventory.’

    WIP inventory is typically unsalable and consumes valuable space in the operations. Minimizing WIP is a core objective of JIT management. See CLTD Learning System ‘Exhibit 4-3 Inventory and Time’ for a great example inventory value added to queue time in the pipeline.

    Pipeline Stock (aka in-transit or distribution):

    ‘Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points.’

    The function is rather null. The driver is getting product delivered from point A or point B. Think about this as the amount if inventory ‘in transit’. Until 3D printing is a cost effective and viable solution, product will need to be delivered and exist in the ‘pipeline’.

    Finished Goods:

    ‘Those items on which all manufacturing operations, including final test, have been completed. These products are available for shipment to the customer as either end items or repair parts.’

    Maintenance, Repair, and Operating (MRO):

    ‘Items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables…’

    While inventory types and functions are a must know for any CPIM, CSCP or CLTD student I found it interesting the topic is covered in 4, 4, and 12 pages respectively. CLTD put more emphasis on inventory than CPIM.


  • LeanATL 10:56 pm on March 31, 2019 Permalink | Reply  

    Advanced Planning and Scheduling is a Key Supply Chain Management Optimization Concept 

    APS Logos

    Advanced Planning and Scheduling (APS) is a key concept in both CSCP and CLTD addressing the techniques (and systems) supporting planning across the supply chain.

    The CLTD body of knowledge (BOK) provides a brief introduction (1 page) of APS through simply defining what APS is…

    APICS Dictionary, 15th edition:

    ‘Techniques dealing with analysis and planning of logistics and manufacturing during short, intermediate, and long-term periods. APS describes any computer program using advanced mathematical algorithms or logic to perform optimization or simulation of finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management and others.’

    Comparatively, the more strategic CSCP BOK goes into more detail (3.5 pages) around how APS work with ERP systems, the four primary modules (Demand Management, Resource Management, Requirements Optimization and Resource Allocation), introduces the sales/customer service decision support concepts of Available-to-Promise (also referenced in CLTD), Capable-to-Promise, and Profitable-to-Promise, and ends with a APS benefits summary.

    In summary, APS establishes a ‘single version of the truth’ by driving planning at the Strategic (Long-term), Tactical (Medium-term/Aggregate) and Operational (Short-term) levels in more complex supply chains (i.e. supply chains with multiple ERPS and/or multiple sourcing/production streams.

    Planning Level


    Strategic (Long-term) Logistics supply chain network design. Facility locations and capabilities, and ownership models.
    Tactical (Medium-term/Aggregate) Cross supply chain inventory levels and associated labor, equipment and materials resources.
    Operational (Short-term) Demand forecasts, demand plans, inventory plans, transportation plans and optimized daily production schedules. Guidance on transportation routing and schedule, labor shifts, etc. These plans serve as input into master scheduling solutions for detailed production and fulfillment execution.

    Example APS solutions from the Gartner Supply Chain Magic Quadrant include, Demand Solutions, Logility, OM Partners, JDA, Quintiq, Dynasys, and Adexa. Additionally, many ERP systems will have a built in APS module. For more information, check out the Gartner Supply Chain Planning Magic Quardrant here.


  • LeanATL 3:04 am on March 25, 2019 Permalink | Reply  

    If I had 6 hours to chop down a tree, I would spend the first 4 hours sharpening the ax. 

    For fans of APICS CLTD Coach, we re-branded to APICS.Coach to reflect our new focus on both the APICS CSCP and CLTD Body of Knowledge (BOK). Our goal is to help students better understand both the CSCP and CLTD BOK and prepare for sitting for the certifications. We hope this new format is informative and inspirational.

    Additionally, we finally focused on updating the Mind Maps to 2019 for both CSCP and CLTD. A mind map is a diagram used to visually organize information. A mind map is hierarchical and shows relationships among pieces of the whole. It is often created around a single concept, drawn as an image in the center of a blank page, to which associated representations of ideas such as images, words and parts of words are added. Major ideas are connected directly to the central concept, and other ideas branch out from those.

    Mind maps can serve as a quick reference to support your learning plan. More importantly, the process of developing the mind maps helps ingrain the core learning concepts.


    Click here to for more information developing a mind map and the free tool we used.

    A more traditional tool to help associate learning concepts is a traditional outline. An outline can be developed using Excel which should minimize the learning curve of adopting a new tool (like Mind Mapping).

    Here is an example of a CLTD outline showing the first few lines. The total outline has about 1,850 lines.

    CLTD Outline Snip

    Sure it takes time to develop these tools. Valuable time you could use reading or reviewing practice questions. But I tend to think of it like the Abe Lincoln adage. “If I had 6 hours to chop down a tree I would spend the first 4 hours sharpening the ax.”

  • LeanATL 10:59 pm on November 26, 2018 Permalink | Reply  

    The ‘Make-or-Buy Decision’ Tool for Supply Chain Managers 

    Kraljic Matrix

    APICS CLTD Version 1.1, 2018 Edition, page 2-92

    When designing your supply chain you will benefit by understanding the Make-or-Buy Decision concept.

    The APICS Dictionary, 15th edition, defines make-or-buy decision as:

    ‘The act of deciding whether to produce an item internally or buy it from an outside supplier.’

    Typically, a make-or-by decision involves a make-or-buy cost analysis defined in the APICS Dictionary, 15th edition as:

    ‘Comparison of all costs associated with making an item versus the cost of buying the item.’

    The make-or-buy concept is important to know for anyone pursuing CSCP and CLTD certification, although the specific definitions are not on the top terms list. CSCP approaches the concept from a strategic perspective; where does supply chain fit in the strategic plan, how should contracts be used, and what are the risks involved. CLTD takes a tactical view; contracting processes, break-even analysis, and sourcing materials.

    Fundamentally, make-or-buy considerations will factor in the possible consequences of giving the activity in question to another company, including:

    • Is the activity a core competency?
    • What are the consequences of losing related skills or knowledge?
    • What is the landed cost (total cost of ownership)?

    Given the potential large capital investment resulting from these decisions, CLTD goes one-step further to perform a break-even analysis.

    The APICS Dictionary, 15th edition, defines break-even analysis as:

    ‘A study of the number of units, or amounts of time, required to recoup an investment.’

    The APICS Dictionary, 15th edition, defines core competency(ies) as:

    ‘Bundles of skills or knowledge sets enabling a firm to provide the greatest level of value to its customers providing growth in a way it is difficult for competitors to emulate.’

    Core competencies are those activities/processes a company should (will) insource assuming all things being equal (i.e. available capacity and skill supply).

    The APICS Dictionary, 15th edition, defines insourcing as:

    ‘Using the firm’s internal resources to provide goods and services.’

    A key tool a supply chain manager has is ‘contracting’. If you are using a third-party logistics provider for your warehousing needs, a temp agency for seasonal labor or advanced telephony services for your call center, there are various forms these relationships can take, including outsourcing, and offshoring.

    The APICS Dictionary, 15th edition, defines outsourcing and offshoring respectively as:

    ‘The process of having suppliers provide goods and services previously provided internally.’

    Note; Subcontracting is a synonym for outsourcing and a top term to know for anyone pursuing CSCP certification.


    ‘Outsourcing to a company in a different country.’

    Note; While offshoring implies something done in a far-away country, across an ocean, the concept can apply to neighboring countries on the same continent (i.e. Mexico, USA and Canada). Often referred to as ‘near-sourcing’ (undefined by APICS).

    The CLTD Body of Knowledge further discusses leveraging make-or-buy decisions for raw materials and/or finished goods inventory. When considering materials sourcing options the supply chain manger can use the Kraljic or Purchasing Portfolio Matrix, a method developed by Peter Kraljic in 1983. The matrix is used to create a purchasing portfolio by segmenting items (products or services) into 4 dimensions. The result is supply chain managers can prioritize buying activities based on profit impact and level of risks involved.

  • LeanATL 6:41 pm on November 19, 2018 Permalink | Reply  

    Planning for Business Continuity 

    Business Continuity ManagementIn prior posts we discussed key concepts from the APICS Body of Knowledge, Supply Chain Risk

    and Supply Chain Risk Management.

    A related concept and important element of operational risk reduction is Business Continuity Planning.

    APICS Dictionary, 15th edition, defines Business Continuity Planning as:

    ‘Plans to ensure the organizational capability of continuing to deliver products or services at acceptable predefined levels of following a disruptive incident.’

    As risk management becomes a more important part of companies strategic plans they are leveraging Business Continuity Management System (BCMS).

    APICS Dictionary, 15th edition, defines Business Continuity Management System as:

    ‘Part of the overall management systems that establishes, implements, operates monitors, reviews, maintains and improves the organizational capability of delivering products or services at acceptable predefined levels following a disruptive incident.’

    From an APICS BOK perspective an astute student would also be familiar ISO 22301.

    APICS Dictionary, 15th edition, defines ISO 22301 as:

    ‘An international standard specifying requirements for setting up and managing an effective business continuity management system.’

    At a high level Business Continuity Planning is applying common sense and a bit of thought to potential risks facing the organization. For example:

    • Establishing emergency contacts and communication protocols,
    • Having contingency plans in place for getting operations back on line as soon as possible,
    • Insurance planning whether 3rd party or self insured.

    In a global supply chain world, supply chain managers are faced with more risks to their supply chains including regional labor unrest, natural disasters and terrorism. Things like tsunamis, hurricanes and wild fires seem to be occurring with more frequency potentially resulting in supply chain disruptions. But there are other, more probable disruptors. For example, episode 26 of Supply Chain Now Radio included a discussion on Business Continuity Planning, specifically, supplier risk. For example, one of the guests stated: “68% of all supply chain disruption is attributable to supplier insolvency”. A big statement, but if accurate, should be included in any planning process.

    If you are studying for CLTD, these terms are NOT on the top terms list, but it is helpful to understand the concepts around Business Continuity Planning. From a CSCP perspective, Business Continuity Management System and ISO 22301 are suggest top terms, along with Supply Chain Continuity defined in the APICS Dictionary, 15th edition as:

    ‘The strategic and tactical capability of an organization to plan for and respond to conditions, situations, and events as necessary in order to continue supply chain operations at an acceptable predefined level.’

  • LeanATL 4:39 pm on September 16, 2018 Permalink | Reply  

    Packaging and Waste in the Supply Chain 

    APICS Logistics

    From 2018 APICS CLTD Learning System

    In the 2018 APICS CLTD Learning System, Packaging is considered a core activity of Logistics. Packaging serves many purposes but can also turn into another important CLTD concept, Waste.

    The APICS Dictionary, 15th edition, defines Packaging as:

    ‘Materials surrounding an item to protect it from damage during transport. The type of packaging influences the danger of such damage.’

    and defines Waste as:

     ‘1) Any activity not adding value to the good or service in the eyes of the consumer. 2) A by product of a process or task with unique characteristics requiring special management control.’

    While many companies and government initiatives are leading efforts to minimize packaging as waste through forms or biodegradable dunnage and reusable packaging, I can personally see the downside of packaging by counting the number of empty Amazon boxes in my basement.

    The APICS Dictionary, 15th edition, defines Dunnage as:

    ‘The packing material used to protect a product from damage during transport.’

    By putting on your lean thinking cap you may be able to reduce both packaging waste and other forms of non-value added waste in your supply chain.

    Packaging 1As an example, I recently visited a warehouse who repackaged and distributed travel sized consumer packaged goods. Their value-add in the supply chain was converting bulk materials into small kits consumers would purchase at hotels or convenience stores. One of their products was a shaving kit where they would pair up a 10 ounce can of shaving cream with a disposable razor and a small packet of after shave.

    The assembly process involved removing the component parts from their shipping cases, putting the components into separate piles, putting one of each component into a bag and sealing the bag.

    Packaging 2As I observed the initial breakdown process it was easy to identify waste. Focusing on one component, the shaving cream was being shipped into the warehouse in cases with 24 each in pallet quantities. The operator would grab a case, move it to the table, open the case and remove all 24 cans from the case. Then stack the empty card board case on a recycle pile. A similar process was being done for all kit components.

    Using one of my favorite concepts picked up from Stephen Covey’s ‘7 habits of highly effective people’ “begin with the end in mind’, we can start to identify ways to eliminate waste.

    The kitting process needs components in individual counts. Could the company work with their suppliers to get the product shipped in large bulk containers? Doing this would potentially eliminate waste by:

    • The product would arrive in the state needed for kitting (individual counts) and allow operators to focus on the value added kitting process rather than the non-value added case breakdown step.
    • The excess case packaging would not need to be managed (stored, moved, recycled).
    • The overall product cost might go down with the elimination of case packaging.
    • The supplier may reduce costs in packaging labor and/or time.
    • If the new shipping containers were reusable we could potentially eliminate the cost of pallets (purchase and handling costs).

    Sure it may not be as easy as I present, but it never hurts to ask. While some costs may go up, if you take a total cost perspective I expect this would result in a system wide net benefit.

  • LeanATL 9:34 pm on May 21, 2018 Permalink | Reply  

    Broker vs. Freight Forwarder 



    In June 2017 we discussed the blurry line between and 4PL and LLP. Similar confusion can occur when discussing differences between a broker and freight forwarder.

    The APICS Dictionary, 15th edition, defines the following key terms:


    ‘An organization that helps match carriers to freight, adding value by helping the shipper and carrier obtain better rates and more fully utilize their capacity and equipment.’

    Freight Forwarder

    ‘The “middle man” between the carrier and the organization shipping the product. Often combines smaller shipments to take advantage of lower bulk costs.’

    Reading further in the CLTD learning system I prefer associating the term “middle man” to a broker than to a freight forwarder. A broker is primarily serving as matchmaker between a shipper and a carrier. Trying to find available carrier space to satisfy a specific shipment then connect the two. A freight forwarder provides additional value by potentially consolidating multiple shipments (from multiple companies) into larger loads to gain better truckload rates (assuming the original shipment was an LTL volume). This includes taking possession of the shipment and providing short-term storage prior to final shipment. Additionally, a freight forwarder can bring shipping expertise to find the best shipping routes, determining shipping costs, and coordinating the necessary documentation for customs requirements. Generally, a freight forwarder WILL also provide a BOL for the shipment while a broker WILL NOT.

    In essence, a freight forwarder is a 3PL providing shipping expertise. Working with a freight forwarder may be more cost effective than employing a team with this skill. An insource vs. outsource decision.

    When brokers work to match shipments to carriers they are serving as a freight broker.

    The APICS Dictionary, 15th edition, defines a Freight Broker as…

    ‘An individual or organization who finds appropriate carriers for shippers needing transportation. The broker helps negotiate terms and administers most of the documentation.’

    When brokers provide import customs advise and services, they are serving as a customs broker.

    The APICS Dictionary, 15th edition, defines a Customs Broker as…

    ‘A person who manages the paperwork required for international shipping and tracks and moves the shipments through the proper channels.’

    While freight forwarders can provide input and services on customs documentation, their focus is on getting product moved from point A to point B and processing freight through customs, rather than only coordinating the necessary documentation. In general a freight forwarder will work on behalf of the shipper (exporting product) while the customs broker works on behalf of the buyer (importing product).

    For more information on freight forwarders and customs brokers check out the Operations : Supply Chain Management blogs at

    Here is a good blog to start with…

  • LeanATL 10:35 pm on February 27, 2018 Permalink | Reply  

    Two Wrongs Don’t Make a Right, But Three Rights Make a Left: Containers, Interstates and a Few Book Reviews 

    Two Wrongs Dont Make a Right

    Over the years I have espoused one of the things making the USA economically successful was the ease of transportation of goods. Driving around Atlanta I frequently see containers on trucks being shuttled either from a train yard or from the Port of Savannah to a near-by distribution center. Any student pursuing APICS CLTD certification will appreciate the need to understand transportation concepts and some finer details around container shipping. For example,

    Land Bridges:

    ‘An intermodal strategy ‘optimizes sea, road, and rail transport modes to provide alternatives for long distance shippers. Land bridges also minimize issues of immense ships too large for canals or straits. A mini land bridge combines ocean and rail carriers for reaching destinations across a country. A micro land bridge involves a combination of ocean and rail carriers for reaching an inland destination’

    [CLTD Version 1.0, 2017 Edition, Pg5-140]

    Panamax / Suezmax

    ‘Ocean ships are measured by their ability to move through the locks of Panama and Suez canals. Ships that can move through the Panama Canal (Panamax ships) must have a deadweight of 75,000 long tons; those that can move through the Suez Canal (Suezmax ships) must have a maximum deadweight of 200,000 metric tons.’ Ships larger are too long to too wide to move through these canals (Post-Panamax/Post-Suezmax)

    [CLTD Version 1.0, 2017 Edition, Pg5-106]


    Roll On, Roll Off (RORO)

    ‘Basically large ferries. The carrier drives automobiles and other motor vehicles directly onto the ship using built-in ramps and then drives or tows the vehicles off the ship at the cargo’s destination’

    [CLTD Version 1.0, 2017 Edition, Pg5-106]

    The APICS Dictionary, 15th edition, defines the following key terms

    Twenty Foot Equivalent Unit (TEU)

    ‘a measurement used to describe the carrying capacity of a cargo ship or terminal’s handling capacity. One TEU equals a standard 20 foot x 8 foot x 8 foot (length x width x height) shipping container’

    Intermodal Transport

    ‘1) Shipments moved by different types of equipment combining the best features of each mode. 2) The use of two or more different carrier modes in the through movement of a shipment’

    As I reviewed these and other APICS CLTD content I became more curious on the history of containerization, the US interstate system and the evolution of our e-commerce society. Following is insight into what I uncovered and a couple short book reviews.

    On April 26, 1956 the first converted ship tanker set sail from Port Newark-Elizabeth Marine Terminal, New Jersey headed from the Port of Houston, Texas with fifty-eight 35-foot Trailer Vans. This was the first commercial use of using containers to mass ship break-bulk product overseas. Already a successful transportation business magnet, Malcolm McLean went on to change the face of global trade.

    On June 29, 1956 the (US) Federal-Aid Highway Act of 1956 was signed by President Dwight D. Eisenhower paving the way (pun intended) for what is now officially known as the Dwight D. Eisenhower National System of Interstate and Defense Highways. While many groups and municipalities across the country were working locally to improve road conditions, with the signing of the Federal-Aid Highway Act, a strategy and funds were in place to drive a coordinated effort of standardization across the states.

    While it took decades for containerization and interstates to evolve to mass success (the first standard TEU container ship started sailing in 1968; officially 1992 is the completion of the original Interstate plan) my thesis is both events formally occurring around the same time is a key factor in the integral success of both systems. As an example, container ships were in more demand as trucks could more easily get to and access ports, and more trucks and associated highways grew in demand to get containers from ports to inland distribution points.

    Following is a brief summary of a few books you can reference for additional context:

    The Big Roads: The Untold Story of the Engineers, Visionaries, and Trailblazers Who Created the American Superhighways. Earl Swift

    Big Roads starts in the late 1800’s with Carl Fisher and his role in driving change by going from selling bicycles to starting and building the Indianapolis 500. Along the way the author discusses the history of major roadway projects such as the Lincoln Highway and the Dixie Highway, the many inputs into the inter-connected roads concepts leading up to the 1956 signing of the Federal-Aid Highway Act, and the consistency of Thomas Macdonald leading the design and implementation of the interstate plan for 34 years under 7 different US Presidents.

    Biggest lesson learned, while the name is officially ‘Dwight D. Eisenhower National System of Interstate and Defense Highways’ as with most things political, Dwight Eisenhower was in the right place at the right time and was responsible for formally signing the 1956 Act kicking off formal federal leadership of the project. There were several other visionaries and leaders more responsible for the interstate system than President Eisenhower.

    The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Marc Levinson

    My key take away from reading The Box was the significant disruption the introduction of container shipping had on the entire shipping industry. Today we frequently talk about technology disruption, for example the taxi industry (Uber/Lyft) or smart phones disrupting multiple industries (music, photography, land phone lines).

    “In 1963-64, Manhattan (NY) employers used 1.4 million days of longshore labor. [as container shipping grew] Hirings slid below a million in 1967-68, breached 350,000 in 1970-71, and dropped to 127,041 in 1975-76 – a 91 percent decline in longshore employment in twelve years. Brooklyn’s (NY) followed, dropping from 2.3 million hirings in 1965-66 to 1.6 million in 1970-71 and to just 930,000 in 1975-76. Employment had fallen 78 percent in a decade. Brooklyn’s once mighty cargo-handling industry was just a shadow of its former self.”

    In 1957 it was estimated container shipping cost 39-74 percent less per ton than conventional shipping.  Additionally, loading standard containers significantly increased ship turn-around from weeks to days, typically single digit days. Both of these factored into making long distance out-sourcing of production economically viable.

    Overall this is a good quick read with a detailed history or Malcolm McLean, the evolution of container standards and a brief look into the current state of container ports around the world.

    Door to Door: The Magnificent, Maddening, Mysterious World of Transportation. Edward Humes

    Door to Door briefly discussed both the container and interstate evolution, but put more emphasis on the impact of containerization on domestic companies unable (or unwilling) to adapt to an off-shoring model and the future states of transportation in global trade with a strong hint toward the ageing (and in some places failing) US transportation infrastructure. For my interest, the book started and ended strong allowing me to quickly skim the middle information. Key points I picked up:

    • “’Your kids will never go hungry if they have degrees in global,’ says he head of UPS for the American West. ‘But we have to leave them a transportation system that works.’” [pg16] As an employee in the supply chain technology space, and the father of a near term college student, I found this point exceptionally interesting.
    • “But then came the big breakthrough, a world-changing invention that would be both boom and disaster, making most of our modern and common products, not the least smartphone, possible. It was not some new ship design or propulsion system that launched the revolution, nor the advent of some new exciting high technology or manufacturing process. The breakthrough was a low-tech as could be: a steel box or, as American longshoreman call it ‘the can.’ It’s best known away from the docks as the shipping container.” [pg29]
    • “Manufacturing jobs come and go, but the logistics field just keeps growing – 32 percent growth even during the Great Recession, while all other fields grew by a collective average of 1 percent. Some say logistics is the new manufacturing.” [pg39]
    • Aluminum (or more specifically bauxite) is an awesome reusable material and something we should all be recycling. For example, an aluminum beverage can has become the global poster child for recycling, the one “single-use” product that gets recycled more than it gets landfilled. Much of the aluminum extracted from the earth since the 1880’s is still in play, some of it recycled dozens or even hundreds of times. Aluminum is a shining example in the “cradle-to-cradle” reuse economy. American beverage cans on average are 70 percent recycled metal, 30 percent primary aluminum.
    • One of my life philosophies “two wrongs don’t make a right, but three rights make a left” has been validated by UPS. UPS implemented a no-left-turn policy in 2004 driven by their new route optimization tool, ORION. Through detailed analysis, engineers realized turning against traffic resulted in long waits in left-hand turn lanes wasting both time and fuel, and left turns also lead to a disproportionate number of accidents. Since implementing the tool UPS estimates the following benefits:
      • Reduce 100 million miles driven annually
      • Save $300-400 million annually
      • Cut greenhouse emissions by 100,000 metric tons annually. The equivalent of removing 21,000 cars from the road

    Click here to learn more about UPS ORION.

    • “The single most common product type shipped by UPS is – perhaps unsurprisingly in this age of e-commerce – the consumer retail product category. The next most common in order are car parts, medical supplies and drugs, professional services (mostly legal and real estate documents) and industrial supplies and products.” [pg247]
    • The US transportation infrastructure is showing its age and in many ways has outgrown its use. However, there are five important trends that may bring change and relief to our crumbling roads and bridges.
    1. China is transforming from a low-wage factory sweatshop economy into a true economic powerhouse where workers are getting better wages, benefits and work conditions.
    2. Higher wages in China make off-shoring of jobs and manufacturing less attractive to companies. Re-shoring – a resurgence of manufacturing jobs back to the US is happening.
    3. The emergence of 3-D printing as a viable solution is one of the major disruptive technologies on the horizon. The “factory-in-a-box” technology provides the ability to manufacturer products locally at a competitive cost, and in small quantities.
    4. The ridesharing world of traffic apps are driving cultural changes in car ownership
    5. The driverless car will disrupt transportation as much if not more than the invention of the car.

    Which brings me to the end of the book where I found a compelling view into the future of car ownership:

    “Open an app on your smartphone and summon a driverless car to your house. The app consults the latest crowdsourced traffic data and informs you the car will pick you up forty-five minutes before your meeting starts to ensure you arrive on time. At the appointed time, your phone buzzes: the car is outside your house. It takes you to your meeting, its route selected based on current traffic data; it drops you off at the curb and then takes off to pick up another passenger. During the ride you were free to do other work. Drive time has become productive time. Neither you nor the autonomous car has to worry about parking at the end of the trip – a process that, in once congested metro areas, used to be both time-consuming and expensive. Space once set aside for parking cars is now used more productively, in the forms of protected bike lanes, outdoor cafes, open space and mini-parks. At the end of your meeting you use your app to schedule a pick up to return you for the day.”

    While the above scenario is in practice today, the next evolution is removing the human driver from the equation. Driverless cars are projected to not only be more efficient but much safer by removing human error and human ego. This will significantly reduce and possibly eliminate the 35,000 deaths, and 2.5 million trips to the Emergency Room associated to the 5 million auto collisions a year.

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