The Importance of design to value

Having a good product or service just isn’t enough.  If you want to be chosen before a competitor, or command a premium, the whole package has to be right.

I am lucky enough to have a 2014 Mac Pro.  Lovely piece of kit.  When I got it the only Thunderbolt display on the market was from Apple, I was not prepared to move to a resolution lower than that of my iMac and I balked at the crazy price (three grand) for a 4K Sharp display.  Apple Thunderbolt display it was, then.

Fortunately the LG 34UM95 34″ 21:9 Ultrawide monitor has arrived and it’s great.  It has the same vertical resolution as the Apple display (1,440 pixels) but it’s much wider (3,440 v 2,560).  It’s a lovely piece of kit, with good connectivity (it’s the only Thunderbolt display other than the Apple and has HDMI) and display quality that is the match of the Apple’s.  And that width means the display can be used as two split screens.

So the LG is a new model, 34% bigger real estate and better connectivity, yet it sells for about the same price as what is now quite an old Apple model.  There are a number of reasons Apple kit commands a premium, but I’d like to look at something simple; packaging.

Apple’s Jobs-inspired design focus is legendary and that even extends to packaging.  Take a look at these two photos:

Apple Thunderbolt display box
Apple Thunderbolt display box
LG 34UM95 monitor box
LG 34UM95 monitor box

A greater contrast in styles is difficult to imagine.  The Apple box is practical (see the neat carrying handle) but relies on nothing more than a picture of the monitor.

The LG box by contrast is brash and packed full of features but just lacks class.  It does give Advanced Viewing Pleasure, but I’m not sure I need it shouted at me from the packaging.

It would be crazy for LG to try to out-Apple Apple, but that difference in design is an important element in the brands’ identities and that translates into pounds and pence.

4PL definitions

4PL box
What makes a good definition?  Take a look at a good dictionary and you’ll see plenty of examples.  Even complex ideas can be summarised succinctly.  This definition of relativity comes from the Oxford English Dictionary:

The dependence of various physical phenomena on relative motion of the observer and the observed objects, especially regarding the nature and behaviour of light, space, time, and gravity.

Now that’s not going to help you get a first in physics but it is a good general definition for the educated layman.  It is:

  • concise
  • simple
  • unambiguous
  • complete

So why does defining 4PL give so many such difficulty?  A quick trawl of the net produces the following examples (there are many more).

Accenture

Everybody seems to start with Accenture’s landmark 1996 version:

A 4PL is an Integrator that assembles the resources, capabilities and technology of its own organisation and other organisations to design, build and run comprehensive supply chain solutions.

As I have already said, I can’t find the original but this is the most often quoted version.  As far as it goes it’s fine, but I think the problem we logisticians have with it is the same as a physicist would have with the relativity definition above; it might be good enough for the layman but for the practitioner it just doesn’t go into enough detail.

I think there are a couple of problems with it, though.  First, it uses the word ‘integrator’.  Using the conventional definition of the term (a person or thing that combines things to make a whole – thanks again Oxford) that’s OK, but in logistics integrator has another connotation, the parcels carriers like UPS, Fedex and DHL.  It therefore potentially fails the ambiguity test.

Second, it doesn’t address what for me is a fundamental issue.  A 4PL doesn’t execute the physical storage or movement of product.  Were it to do so it would be a Lead Logistics Provider (‘LLP’) wouldn’t it?  This makes it difficult, but not impossible, for third-party logistics operators to run 4PLs and, I suspect, was in the minds of those at Accenture that came up with the concept.  They are not in the business of coming up with great ideas for which they don’t get paid.

Council of Supply Chain Management Professionals

This august body chooses not to define 4PL but to distinguish the concept from that of third-party logistics (3PL):

Differs from third party logistics in the following ways; 1) 4PL organization is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners; 2) 4PL organization acts as a single interface between the client and multiple logistics service providers; 3) All aspects (ideally) of the client’s supply chain are managed by the 4PL organization; and, 4) It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure.

Hmmm.  Let’s go through those one by one:

  1. .…often a separate entity … joint venture or long-term contract  it might be a JV and I’m not sure an entity can be a contract
  2. … single interface between the client and multiple logistics service providers.  Tick that one.
  3. All aspects (ideally) … of the client’s supply chain are managed … No, that doesn’t follow.  There are plenty of inbound 4PLs, or finished goods examples.
  4. … possible for a major 3PL to form a 4PL … Tick that one too, but it needs explanation.

Other contributions

The award for chutzpah goes to Concargo, who explain that they ‘conceptualised and envisioned this initiative as early as 1988’.  Shame they kept it to themselves.

And Logistics List only adds to the confusion with the statement: ‘That said a 4PL (also sometimes called a lead logistics provider) …’  Sorry guys but 4PL and LLP are very different things, as I hope to explore real soon.

Technical Distribution – with a helicopter

Mil-8 chopper on Technical Distribution duty in Prague
Mil-8 chopper on Technical Distribution duty in Prague

Technical Distribution often needs specialist equipment, but seldom a soviet-era helicopter.

I have been involved in some Technical Distribution activities over the years so I’m used to stair-crawlers, cranes and the like but a couple of weeks ago I saw something new.

Apologies for the poor quality of the picture above, but i was visiting a friend and didn’t have my camera with me.  I heard the sound of a chopper and when I looked up two odd thoughts occurred to me:

  1. ‘That’s an unusual helicopter flying over the rooftops’; and
  2. ‘What’s it doing with a large piece of equipment hanging underneath it?’

It flew into the middle of town, hovered for a while, lowered its load, then rose and flew back whence it came.  My local aerospace expert identified the aircraft as a Mil Mi-8.  That’s one hell of a specialist piece of kit.

iTec USB 3.0 Card Reader review

iTec USB 3.0 card reader
iTec USB 3.0 card reader

Memory cards are now so cheap and their capacity so high that they offer a viable and flexible backup option.  This card reader is a cheap and simple way to give a computer additional storage and data exchange options.

My new Mac Pro is a fantastic piece of kit and has more input and output ports than you can shake a stick at, but one option that I sadly miss from my iMac is an SD-card slot.  I do a lot of photography and for me the easiest way of getting images onto the Mac is simply to take the card out of the camera, bung it in the computer and copy the files across.

On top of that the cost of memory cards is now so low, and their capacity so high, that they provide a super way to back data up and get it off site (how many people keep their backup with their main computer. so that in the event of theft or fire the backup is lost with the original?).

A quick trawl of the web showed a number of options and I plumped for the i-Tec USB 3.0 Card Reader.  It does exactly what it says on the tin, as they say.  It supports the following formats:

MS, MS PRO, MS PRO Duo, SD, SDHC, SDXC, Mini SD *, Mini SDHC *, Micro SD/T-Flash, Micro SDHC, MMC, MMC Plus, RS-MMC *, MMC Mobile *, CF typ I

*with appropriate adapter (not included)

Other characteristics:SDHC and SDXC compatible

  • Data transfer rate up to 5 Gbps
  • No installation needed
  • LED indicator
  • Low power consumption
  • Draw Power directly from USB port

Operating systems:

  • Windows ME, XP, Vista, 7 32/64bit, 8 32/64bit
  • Mac OS X and higher

I wanted USB 3.0 for speed and for value for money (it cost me just the equivalent of £10.50) this is difficult to beat.  One thing to remember when you see the adverts though.  They will show the reader unencumbered by cable or cards as shown above.  The reality is a little more cumbersome:

iTec USB 3.0 card reader with USB cable and SD card
iTec USB 3.0 card reader with USB cable and SD card

It’s not a big deal, but so often nice pieces of kit are shown in elegant isolation, ignoring the spaghetti-like mess of wires behind the facade of elegant simplicity.

Product mix of quoted logistics businesses

Journalists tend to lump logistics businesses together but these show a wide range of product mixes.  This note analyses the service offering mix of selected players by revenue from their latest interim statements.

We talk and write about logistics businesses in general but of course when we generalise we run the risk of obscuring details that distinguish between competitors.  One important trend over the last fifteen years or so has been consolidation of the industry (although it is still very fragmented) and the combination of what were separate contract logistics and freight forwarding businesses into conglomerates aiming to become soup-to-nuts supply chain service providers.  The structural models of the big players probably doesn’t help to bring these services together, but let’s look at that some other time.

In the chart below I compare the proportions of our chosen sample of companies’ turnover which are reported in certain segments.  A clear problem is that although international and national accounting standards require segmental information, interpretation is often up to the boards of the companies and they are inconsistent.  For example:

  • Kuehne + Nagel shows Air-freight, Sea-freight, Overland and Contract Logistics.
  • DP-DHL naturally enough shows Mail (or as it is now called Post-eCommerce-Parcel) and Express, with Global Forwarding, Freight as a division plus Supply Chain.  They are good enough to disclose Freight (European road transportation) separately.  Similarly Williams-Lea is in Supply Chain but disclosed.
  • Expeditors shows customs brokerage, which no other of our sample does.  I have included that revenue in forwarding.
  • Panalpina discloses Air-freight, Sea-freight and Logistics.
  • Wincanton distinguishes between contract logistics and specialist businesses.

So ensuring comparability isn’t straightforward but I have done my best.  The major adjustment I have made is to exclude Mail and Express from the DP-DHL numbers.  These constituted 50% of the group’s turnover and masked the story in which I am most interested: the balance between contract logistics and freight forwarding.

For all companies other than Wincanton I have used the first-half 2014 published results.  For Wincanton the full year results to 31st March 2014 were the latest available.  I have also, where possible, excluded non-margin earning revenue such as duties.

Turnover analysis by product or service for major logistics companies that disclose such information
Turnover analysis by product or service for major logistics companies that disclose such information

You can draw your own conclusions from this, but what it tells me is:

  • Expeditors is still essentially a pure forwarder; Panalpina isn’t far behind.
  • K+N’s contract logistics business is still quite small, although combine it with Overland and they represent some 39% of revenue.
  • Ceva and DP-DHL have a close to 50:50 split (for the latter, excluding Mail and Express and grouping Freight (road transportation) with forwarding).
  • Norbert Dentressangle has come from a transportation background but has built up its contract logistics business so that it is now of equivalent size; the forwarding business is minimal.
  • Wincanton is 85% contract logistics, 15% specialist business.

None of that will come as much of a surprise, but it does confirm that really only Ceva and DHL have built businesses of comparable size in forwarding and contract logistics.  The others all have a particular strength (forwarding or contract logistics) which dominates.

 

Women in Logistics

Oh dear.  My praise for DHL’s appointment of women to senior positions is rather diminished by the following comment in their interim results for the six months ended 30th June 2014:

On 2 July 2014, Angela Titzrath, Board Member and Labour Director of Deutsche Post DHL, resigned from the Board of Management. Pending the appointment of a new Board Member for Human Resources, Dr Frank Appel, CEO of Deutsche Post DHL, will take on the corresponding responsibilities in a dual role.

Angela Titzrath, ex-member of DP-DHL's management board
Angela Titzrath, ex-member of DP-DHL’s management board

I must have missed the original announcement, but strike one from the women’s total.