Playing with Jenga to reinvent the supply chain

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In a reflection fast business article this spring, Shekar Natarajan, executive vice president and chief supply chain officer of AEO, the parent company of American Eagle Outfitters, made the following observation:

“If every retailer shared supply chain assets, we could cut 9 trillion miles of transportation a year, have 90,000 fewer trucks on the road, and massively reduce the industry’s carbon footprint.”

The perspective expressed by Natarajan – that the efficiency of the American supply chain can be greatly improved by a collaborative approach to resource management – ​​resonates strongly. Here’s how this insight was successfully applied to reinvent a key segment of the chain.

The status quo

Everyone has been impacted by the supply chain lockdown during the pandemic. The whole industry seemed paralyzed by a lack of resources. There was no place to store, no place to unload, and no driver to pull the containers full of products and supplies. And these problems persist as the pandemic subsides.

However, if you zoom in, you see that a big part of the problem is not the lack of resources, but rather their misuse causing massive bottlenecks. If you take another look at the images of severe congestion, you see huge lines of trucks and columns of ocean-going mega-ships anchored offshore. These images point to the same problem. Marine terminals that connect ships and trucks.

Therefore, adding more ships or pilots will not solve the current backlog. The industry lacks proper processes and infrastructure in ports across America, which stifles our economy and international trade. Action needs to be taken now and collaboratively or this problem will continue to get worse.

Zoom in on a specific bottleneck

US port and rail terminals are consistently ranked among the worst in the world with declining productivity year after year. The 2022 World Container Port Performance Index (CPPI) developed by the World Bank and S&P Global Market Intelligence, ranked two of the busiest US ports – Los Angeles and Long Beach – as the most inefficient in the ranking of 370 world ports.

This glaring inadequacy is the result of the sheer volume of imports that US ports must manage. As the gateway to the largest retail market in the world (representing 24% of the global total according to Statistical), terminals must manage thousands of trucks daily, each requesting incoming containers that are not in a manageable order and must travel to various locations. And with more cargo entering the same tight spaces, terminals are forced to stack containers higher and higher.

Drayage drivers – whose job it is to relay containers from ports to inland fulfillment centers – are tasked with picking up specific units from the endless stacks. Therefore, they are forced to wait for cranes to move many more containers to reach the correct one. Such unproductive and continuous reshuffling of containers leads to long wait times for trips which translates into increasing inefficiency, unnecessary costs, punitive burdens and environmental damage with trucks idling for hours. As a result, drivers leave the industry for different areas in which they feel more productive.

The solution – inspired by JENGA

Terminal cranes trying to navigate large stacks looking for specific containers are very similar to the mechanics of the JENGA game. Imagine trying to access a particular JENGA block while having to maneuver the other blocks out of the way, while making sure not to destabilize the stack. It’s basically terminal choreography. When seen in this light, a much better solution becomes obvious: instead of trying to access hard-to-reach containers buried deep in a pile, why not just grab the most accessible one, no matter where? he must go ?

This is the approach taken by IMC – America’s largest drayage company based in Memphis, TN. “Our SmartStacks™ is a rather simple concept. It combines the volume of multiple customers into one large pile from which our drayage drivers simply pick up the next available container..” – said Mason George, President of IMC Companies National Accounts, the $800 million start-up arm of IMC focused on breakthrough customer solutions.

Simplifying complexity is a powerful gateway to meaningful innovation, proven in its execution. So let’s take a look at how and why SmartStacks work, and why they’re much-needed good news for the supply chain.

What makes a SmartStacks smart?

SmartStacks are a refined version of a ‘peel stack’ or ‘flow stack’ that was first introduced in 2015 and used in a fairly limited capacity until the pressure of the crisis current freight costs to put it back into service. In a pile of peelings, terminal drivers stop at the indicated “pile” and pick up the next container that is “peeled” from the pile. The system is used by large shippers with large volumes going to the same distribution centers to streamline drayage operations.

SmartStacks, on the other hand, combines containers from multiple customers to achieve economies of scale. Similar to a peel stack, SmartStacks also allocates each driver the next available container. But, because the stack is shared by various shippers and therefore multiple final delivery destinations, each driver must have a way of knowing exactly where to pick up the container. IMC was able to add this essential functionality through an in-house developed dynamic driver dispatch application. Leveraging the company’s more than 40 years of expertise in drayage operations and automation, this wearable solution enables drivers to send real-time, container-by-container notifications to the unit they are driving. recover. Drivers are then instantly directed to where to pick up the containers with communication flowing between them and the IMC shipment at 5G speed.

It is this additional and essential layer of traceability that makes SmartStacks truly ‘smart’, enabling the collaborative pooling of resources and improved driver and terminal productivity.

Implementation results

With the off-the-shelf SmartStacks concept and application, IMC found a motivated endpoint interested in accelerating operational speed. To set things in motion, the IMC team began combining all of its volume between customers on a given inbound vessel to create a massive stack of 300 or more containers.

Currently, IMC is working on SmartStacks in Chicago, Memphis, Los Angeles, Houston and Newark, with plans to expand to all major ports with the goal of significantly increasing the throughput of inbound container traffic into the United States.

The results have been substantial. “Turnaround times for our drivers are up 3-4x, they are able to deliver significantly more cargo to our customers and we have seen a 66% reduction in idle time at ports, translating into million pounds of carbon emissions reduction. each month. Therefore, the environmental benefits are also important.” – according to George.

stronger together

In the 1950s, transportation pioneer Malcom McClean revolutionized international trade by developing the standardized intermodal shipping container, saving thousands of labor hours per ship. Before the container, ships were unloaded by hand into large crates and then reloaded onto drayage trucks whose drivers waited in ports for countless hours for their rigs to be unloaded and then reloaded. The standardized container has changed our world for the better, but unfortunately the growth of trade has forced drivers to face the same problem they faced in the 1950s: the inability to enter and exit ports efficiently.

Implementing SmartStacks is a way to continue Mr. McClean’s legacy of innovation and unlock current endpoint congestion. It is also a good illustration of a collaborative solution benefiting all stakeholders – customers, truckers, terminals, as well as the environment.


Written by Gabor George Burt.
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