@ Supply Chain Management

It was announced recently that Disney Parks and Resorts will be teaming up with Jaxport, the TracPac shipping terminal in Jacksonville, Florida. About 75% of Disney’s merchandise will now be going through this port as opposed to the one they were previously using in Savannah, Georgia.

When asked about the move, Senior VP and CFO of Disney Parks and Resorts, Anthony Connelly, had this to say:

“From a business decision for us, it’s about optimizing our supply chain and being able to minimize the cost associated with bringing freight here.  So to us, it was about saving money and we’re certainly excited to participate in growing Florida’s economy as well as Jacksonville’s economy.”

Although a quarter of Disney’s merchandise will still pass through the port in Savannah, the goal of the company is to eventually have Jaxport be the standalone terminal for all of Disney’s merchandise.

Jaxport – America’s New Logistics Center

Disney’s switch to Jaxport is a signal that this hub is becoming a major player in the import and export industry. What makes Jaxport so unique is its ability to serve as a terminal for both inbound and outbound cargo as well as the ease of distribution of goods to numerous parts of the United States.

Jaxport can also boast a new state-of-the-art container terminal, and the hub’s location in Jacksonville, Florida means it is the crossroads of global commerce, with multiple highway and rail options in and out of the city.

Disney is not the only company taking advantage of Jaxport’s superior capabilities. Brands like Coach, Michael’s, Bridgestone, PSS World Medical, Sears, Samsonite, Maxwell House and Unilever have all made the switch to Jaxport in an effort to better optimize their supply chains.

Rich Markovich, Director of International Logistics and Compliance for the Michael’s art supply chain, notes an advantage Jaxport has and why it is such an attractive choice:

“A real point of strength is the workforce in the Jacksonville area – on top of the dynamics that make Jacksonville a very attractive place when it comes to domestic transportation.”

The Decline in U.S. Manufacturing Leads to New Supply Chain Logistics Centers

Throughout the last decade, there has been a measurable decline in the manufacturing of goods on US soil as production has shifted to overseas markets where costs are much lower.

This shift has caused an increase in imported goods to this country and a need for new supply chain logistical centers that can handle the arrival and distribution of thousands of cargo containers.

Many ports throughout the country are trying to capitalize on this import trend, but it is the ports on the southeast coast in particular, such as Jaxport, that are in a position to reap the greatest benefits. This is in large part due to the fact that west coast ports are currently close to operating capacity and cargo moved from these hubs must absorb increasing expenses as fuel prices remain high.

From a First Coast Vision Report:

“Supply chain logistics centers are catalysts for further economic activity in the community. Clustering of these facilities is common because businesses feel more confident in their location decisions when they see companies with similar business needs thriving. As Jacksonville attracts more of these companies, others will seriously consider Jacksonville for their own relocations and expansions.”

As supply chain management executives continue to seek optimized and cost-effective logistical solutions, they must consider using ports of entry with established supply chain centers that have connections to major trade lanes, reliable containership services, and a qualified workforce. These considerations make Jaxport a natural supply chain logistics center choice despite intense competition.

Pete Kontakos is a contributor who writes about supply chain management certification online.

The Coming Tech-led Boom is a recent article published in the Wall Street Journal.

In January 2012, we sit again on the cusp of three grand technological transformations with the potential to rival that of the past century. All find their epicenters in America: big data, smart manufacturing and the wireless revolution.

Now, that’s what I call timing because I’ve been staking out the ground on two of those technological transformation – Smarter Manufacturing here on this blog and Big Data (at my new blog: Pachydata.com). Alas, as far as Smarter Manufacturing is concerned, I’m more concerned about effective manufacturing and elaborating on the fundamentals of manufacturing carried out in an intensely competitive environment.

The Smarter Manufacturing that the authors of the article had in mind is as follows:

While we see evidence already in automation and information systems applied to supply-chain management, we are just entering an era where the very fabrication of physical things is revolutionized by emerging materials science. Engineers will soon design and build from the molecular level, optimizing features and even creating new materials, radically improving quality and reducing waste.

Devices and products are already appearing based on computationally engineered materials that literally did not exist a few years ago: novel metal alloys, graphene instead of silicon transistors (graphene and carbon enable a radically new class of electronic and structural materials), and meta-materials that possess properties not possible in nature; e.g., rendering an object invisible—speculation about which received understandable recent publicity.

This era of new materials will be economically explosive when combined with 3-D printing, also known as direct-digital manufacturing—literally "printing" parts and devices using computational power, lasers and basic powdered metals and plastics. Already emerging are printed parts for high-value applications like patient-specific implants for hip joints or teeth, or lighter and stronger aircraft parts. Then one day, the Holy Grail: "desktop" printing of entire final products from wheels to even washing machines.

Such a radical shift is definitely possible but that changes the very idea of manufacturing as it has existed over the last three centuries. It’s not Smarter Manufacturing as much as it is desktop manufacturing.

Ok, so one out of three – not bad at all.

In my earlier post, I had said that I was working on the idea/concept of a Living Wage. Some eyebrows might have popped at this – if not, this would be a good time to go a popping. After all, what is the connection between a Living Wage and the supply chain?

Take a look at this report for instance: Why is Wal-Mart blocking 35 cents an hour for Bangladeshi workers?

From that article,

Senior sewers are paid 1.7 cents for each pair of Wal-Mart jeans they sew. (Each worker must sew 10 pairs of jeans per hour, or one pair every six minutes—which is 10 percent of an hour. Ten percent of their 17-cent-an-hour wage amounts to 1.7 cents.)

That’s an hourly wage of US$ 0.17 for experienced sewers and the current demand is to raise the wage to US$0.35 (and up to US$ 0.51 by some accounts that I have researched).

The obvious question is : Is an hourly wage of US$0.17 a living wage? Is an hourly wage of US$0.35 or US$0.51 a living wage? If you think that US$0.17 is an absurdly small number, what do you make of US$0.35 or US$0.51? If you’re mortified by the idea that the designer jeans that you’re donning tonight was sewn together in misery, will you be gratified by the notion that they will be paid double that wage if you just bully the capitalist/retailer to forgo that marginal hit to his profits?

Now coming back to stateside, take a look at this site from Penn State that enables you to work out what constitutes a living wage in America, by state, by county – Living Wage Calculator. I live in Newburgh, NY and so I took a look at what constituted a living Wage for Newburgh, NY – A  living wage for Newburgh, NY.

A family with two adults and two children require a wage of $60,274 in order to “live” in Newburgh, NY which works out to a $28.98 hourly wage while the Minimum wage is $7.25 and Poverty Wage is $9.83.  Of course, this calculation does not include any governmental assistance which spans the spectrum of wages from ~ $20,000 to ~ $60,000 depending on family configuration.

The critical issue with the living wage is that is has nothing to do with living or working – it has to do with calculations in Ivory towers. There is no such thing as a living wage (just as there is no such thing as a minimum wage) – the effort to create a living wage is about replacing the antiquated notion of a minimum wage by something more substantial. What the residents and denizens of Ivory Towers and various social justice movements don’t understand is that a Living wage like the Minimum wage before it is a calculation that looks good on paper and might even absolve the bean counters and theoreticians from enjoying their privileged lives. It will do nothing to lift those Bangladeshi garment workers out of poverty and neither will it change the lives of those living stateside.

All that it will accomplish is that the annual wage of CEOs in the millions will then become in the billions, the annual wage of the consultant in the hundred thousands will be in the millions and so on. The poor will still be poor and probably poorer still because for the decade or so (and it will be much faster than that) that it would take to adjust, they will have adopted habits and lifestyles that will leave them worse off.

If you don’t believe what I say, take the hypothetical Bangladeshi worker who, through all the unrest in Bangladesh, doubles (from 17 cents to 35 cents an hour) or triples (from 17 cents to 51 cents an hour) his/her hourly wage. When that dramatic increase in wage happens, what I’d like you to do is tell me what happens to his/her life?

1. Wage – we know this already because it is a given, doubled or tripled.

2. Rent Cost – ?

3. Transportation Cost – ?

4. Food cost – ?

5. Medical cost –?

6. Taxes – ?

7. Entertainment costs – ?

8. Other costs – ?

Do you think items, 2 through 7, increase, decrease or remains the same?

I think that such misguided thinking betrays a mistaken notion of the concept of profit. I think that the most fundamental error that the calculators always make is to think that all that needs to be done is to carve out a portion of profit and return it to labor. And what always happens is that the profit margin remains unchanged or is impacted ever so slightly and everything else is adjusted accordingly.

Profit is notoriously difficult for the Ivory Tower to understand. And the reason is quite easy as well – they’ve never really worked in the real world. For some Profit is a subtraction of numbers and for others it is the recompense for overcoming fear – these two worlds will never meet.

A living wage is a confident calculation about the static nature of human enterprise and economy. And that calculation is wrong. Profit is a dynamic calculation of the nature of human enterprise and economy.