Chain of Thought

Supply Chain Visibility is a Gift—and Deductible.

We recently voiced concern that the retail industry might be focusing on information technology at the expense of the last mile of the supply chain. “Could they unwittingly be implementing a chink in their supply chains if they don’t invest as much of their time and talent in upgrading their material handling infrastructure, i.e., conveyors, smart forklifts, robotics, etc.? ,” we asked.

Peter Milne has the same concern. He’s a retired independent international trade consultant for small businesses in Toronto. His experience is rooted in warehousing, retailing and cross-docking in support of mail and telephone orders. He commented on our blog via the LinkedIn CSCMP discussion group.

“Without proper planning for the last-mile nothing moves,” he wrote. “I hope these decision makers have visited a warehouse or distribution center before investing in IT to become an Amazon.”

In fact they won’t become another Amazon if they don’t look at how Amazon and others invest in their last mile. Recently we reported how Amazon’s Coffeyville, Kansas, fulfillment center invested in its 33 miles of conveyor belts.  Before installing timers to shut the conveyors down when not in use, every last mile of them kept running. This control retrofit enabled Amazon to use 30% fewer kilowatt-hours of power at this site. Managers at non-Amazon sites are doing the same thing. In fact many of them told MH&L through a recent survey we conducted on conveyor buying plans that the cost savings achievable through energy efficiency was a high priority for them when implementing a new system.

The efficiency of lighting the space those conveyors will occupy is another important consideration, especially this year. According to the Section 179D tax provision, part of the Energy Policy Act of 2005, businesses can take special tax deductions for the cost of installing energy-efficient LED lighting systems. A report from Balboa Capital recommends you purchase and install LED lights before December 31st of this year to take advantage of this credit. These lights need to reduce overall energy used in a warehouse by 50%. The report states that a business can deduct up to $1.80 per square foot for a new LED lighting system.  There is an alternate deduction of $0.60 per square foot for a 25-40% reduction in energy and power costs.

The cost of efficient lighting is good information for anyone investing in efficient systems, whether those systems handle data or the stuff that data’s about. After all, IT’s priority is supply chain visibility.

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