Forging the Future

June 1, 2001
This year's Warehousing Education and Research Council conference had a lot to report on inventory turns, sales increases and efficiency.

Forging the Future

This year's Warehousing Education & Research Council's conference brought together more than 1,000 managers from the various disciplines of logistics. While more than 70 educational sessions focused on how-to-do-it, one of the more talked-about gatherings was a panel of experts that reviewed results of Ohio State University's Supply Chain Management Research Group's ongoing study of logistics.

Arnold Maltz, assistant professor, Supply Chain Management, Arizona State University, said one of the more surprising findings, despite the rhetoric and efforts to reduce inventory, "In general, there seems to be no significant change in inventory turns in the warehouse industry." He added, these findings indicate a highly regular and systematic relationship between inventory and warehouse space within various industries.

Maltz noted that although inventory turns may be increasing in some industries, sales increases have been sufficient to more than compensate for that increase in efficiency. "In fact," he said, "we do see general increases in inventory levels."

Of particular interest during this panel discussion was a report from Robert V. Delaney, Cass Information Systems. Delaney's annual report on the state of logistics and warehousing serves as a bellwether for the industry. Giving the audience a preview of the annual Cass Report, Delaney said that last year, warehousing costs accounted for approximately eight percent of logistics costs. Also, warehousing expenditures were 23 percent of total inventory carrying costs. "Inventory investment has become the center of attention for logistics managers," said Delaney.

In 2000, according to the report, logistics expenses exceeded $1.6 trillion. Delaney compared this to a Gross Domestic Product (GDP) of $9.96 trillion. "Logistics expenses equaled about 10.1% of GDP," he said.

Within logistics expenses, $590 million was spent on transportation. Inventory carrying costs of $377 billion include $78 billion for warehousing expenditures. Inventory carrying costs in 2000 rose to 25.4 percent of logistics expenses over the previous year, primarily due to an increase in the cost of paper, said Delaney.

Conveyor Orders Down

According to the Conveyor Equipment Manufacturers Association, booked orders for February decreased 20 percent from January's bookings. This number (including bulk handling equipment and unit handling equipment) also reflects a drop of 20 percent from February of last year.

Packaging Equipment Sales Flat

The Packaging Machinery Manufacturers Institute (PMMI) says in its fourth annual U.S. Packaging Machinery Purchasing Plans study, spending for packaging machinery by U.S. domestic companies is expected to level during calendar year 2001 to approximately $4.9 billion in sales. Three segments of the economy, foods, pharmaceuticals and paper/non-durables (about 60 percent of machinery sales), will increase their rates of spending. Factors driving demand this year are the need to replace existing machinery and expanding production capacity. An executive summary of the PPMI study can be found at its Web site,

Hot Issues for Lift Truck Users

The Industrial Truck Association wrapped up its spring meeting in Washington, D.C., with several items on its to-do list. Among the priorities presented to the ITA's General Engineering Committee by members of the association's suppliers committees were the following issues:

• How long should a lift truck's horn last? Does a non-working lift truck horn constitute a warranty issue or a safety issue? The Society of Automotive Engineers (SAE) established a standard based on cycles, but lift truck operators must sound their horns much more frequently than an average car driver. What's reasonable for a lift truck: 250,000 cycles? 500,000 cycles? The GEC determined it needs to collect more scientific data on which to base any future standard for lift truck horns.

• The GEC also plans to contact the SAE regarding fast-charging, the method of more quickly charging batteries at more frequent - and more convenient - intervals. The SAE is expanding its standard recommended practices for ground support equipment to include fast-charging, and it was recommended that the GEC provide guidance to the SAE in developing this standard to avoid confusion between ground support vehicles and lift trucks.

• What effect does fuel quality have on meeting the Environmental Protection Agency's emission standards? Plenty, according to several ITA members, and the EPA needs to be convinced of this. The National Propane Gas Association (NPGA) shares this concern and made a presentation at the Spring meeting in an effort to rally the ITA troops to collect data demonstrating factors that skew lift truck readings, i.e., clogged injector tips, chemical composition of residues, etc. The goal is to present these data to the Petroleum Education and Research Council (PERC) in 2002. PERC would then forward these recommendations to the.EPA.

• Why is OSHA in love with harnesses? Although there is no standard that requires their use where operators are elevated by powered industrial trucks, users have still been cited for not having them for certain applications. The ITA says body belts and tethers are easier to use -- therefore more likely to be used -- therefore safer than harnesses. If OSHA goes forward with plans to require fall protection systems using body harnesses, ITA will take advantage of the opportunity to make public comments.

For more information, contact ITA at 202-296-9884. Or visit its Web site at

Managers on the Move

ESKAY Corporation has promoted David K. Koch president, replacing James K. Allred, the company's founder and president since 1990. Koch was a founding member of the company's management team and has served in a variety of executive positions. Allred will remain on the company's board of directors.

Container and Pallet Services (CAPS), a third-party container renting and tracking company, has appointed James A. Paduano chairman of the board and CEO. Paduano replaces Spencer Hoopes.

J. Dennis Stevens has announced his retirement as president of SATO America Inc., the U.S. subsidiary of SATO Corporation of Tokyo, Japan. Mike Fowler will assume the office of president.

Accu-Sort Systems announced that founder, president and CEO Al Wurz is taking on the full-time role of chairman of the board. Ronald Wurz has been named CEO, and David Wurz, COO. Steven Luscinski will continue as CFO and oversee administrative and general management duties. Stan Sroka, senior vice president, will also remain a member of Accu-Sort's executive management staff.

Dale Bezzerd has been appointed president of Pennsylvania Scale Company, and director of manufacturing and operations for First-Weigh Manufacturing, a sister company. Peter Siegrist was named vice president sales and marketing.

Dynaco USA Inc. has appointed Bill Katschilo national sales manager.

EXE Technologies has selected Kenneth J. Powell to be president and COO.

Neopost Inc., a provider of mailing, document handling and logistics systems, announced the appointments of Jean Weber, vice president technical operations; Tony Kuchta, vice president sales; Steve Pietz, vice president marketing; and Barbara Wissler, vice president logistics systems.

Lockheed Martin Systems Integration announced that Judy F. Marks has been appointed president of the Distribution Technologies business unit, which develops integrated sortation and material handling systems and equipment for national postal agencies, commercial mail firms and retail order-fulfillment applications.

Marks succeeds Michael B. Schoultz, who was selected to lead the business development and strategic planning functions for the Systems Integration - Owego operations in the United States, United Kingdom and Canada.

Approval Granted for Kalmar's Acquisition of Nelcon BV

Kalmar Industries, a wholly owned subsidiary of the Partek Group of Parainen, Finland, has finalized its acquisition of Nelcon BV of Rotterdam, a manufacturer of container handling equipment. Groot-Hensen, a service company, was also included in the acquisition.

Kalmar is a multinational manufacturer and marketer of container handling trucks, rubber tired gantries, rail mounted gantries, straddle carriers and industrial lift trucks. Nelcon manufactures ship-to-shore cranes, mobile harbor cranes, rail mounted gantry cranes and straddle carriers.

New Facilities

Morgan Marshall Industries, a division of RHC Spacemaster Corporation, has opened a new manufacturing facility in San Bernardino, California. The 250,000-square-foot facility currently produces pallet rack.

Creform Logis-Tech, manufacturer of a broad range of hardware accessories for the material handling industry, has moved to a new facility in Wixom, Michigan. The new 50,400-square-foot building consolidates what had previously been three locations.

Letters to the Editor

Dear Tom,

As the owner of a forklift safety training company who sees the "surface approach" to training every day, I thought your article in Material Handling Management (April 2001) hit the nail on the head. Many (but not all) of the forklift dealers we compete against are so wrapped up in large training centers and profitability that they continue to push their generic off-site training and fail to disclose the full story to their customers about the real meaning of site- and equipment-specific training.

Thanks for having the guts to say it the way it is even though it is painful for some people to hear. Our company spends countless hours preparing to conduct training for our customers (which is usually done at our cost) to protect everyone's interests.

Through the use of digital pictures and custom video shot on location we can ensure site- and equipment-specific compliance, plus make it a much more fun and interesting experience even for seasoned operators. We can teach with authority, as we know what they do well, what they do not and the history behind the account.

— David K. Hoover,

president, Forklift Training

[email protected]