Regular readers know that anything labeled “A Few Thoughts” is a nightmare of rambling tangents on a topic. You are warned!
A couple weeks ago, there were some twitter threads about The Bad Guys and Their Equipment Fails. That was pretty entertaining, but a couple of aspects of the situation really caught my eye. I had read _The Box_ a while back (and more recently, when the author was on TV during the canal thing, his follow on book), so I had a good sense of container development and increasingly broad integration into our entire economy. Because some years ago, I got pretty interested in intermodal and decided to do a bit of diversification into railroads as a result, I have a decent understanding of how the transportation components of the supply chain work. I also, much longer ago, knew someone who worked in freight forwarding, which helped as well.
I don’t know why it never occurred to me to wonder about the degree of integration of containers into The Bad Guys’ economy. But it really never did occur to me. Apparently they — like the rest of the planet — have containers that come into ports but they, unlike the rest of the planet, don’t seem to have those containers penetrating the rest of their economy. That’s pretty surprising!
Militaries are inherently conservative organizations; most innovation occurs within elements of the peacetime mercantile economic system. (<— this is _severely_ underappreciated). If your military never has to do anything, it kinda doesn’t … keep up at all. But if you have an underperforming economy, that’s actually even worse, because the military hasn’t got anything to learn from. Pictures posted on twitter and then contrasted with developments in the US military from the early-mid 1990s (the development and deployment throughout all branches of trucks that have cranes on them) were really illuminating. For one thing, if your infantry is spending a lot of its time and physical energy lifting heavy things in and out of trucks, there is less they can otherwise do, and also, you are very limited in terms of who you can recruit into your army. Like, I think this is why they still use conscription. They _need_ a bunch of people who it does not matter much if they know anything about warfighting. They just need to pick up ammo boxes and put them into trucks and then take them back out later. Also, dig trenches. Our military has equipment to do a lot of that work. This is important. You can fully professionalize armed services that don’t need noobs with muscles to lift heavy things repeatedly, and the great thing about a crane or a backhoe or whatever is that it doesn’t plot mutiny and so forth, and may tolerate the impact of things on it a little better than the muscled types.
The twitter threads took is a bit further tho, and it raised a lot of questions like, “Well, do Russians even use pallets?” “Do they have fork lifts?” Fork lift tech is pretty fucking old at this point; what are _we_ doing in terms of innovation in shifting shit from one place to another.
And at that point, blinding lightbulbs flashed all over my brain, as I realized a couple of really, painfully obvious things. The supply chain is make up of links. Each link is a movement of something from point A to point B. The boats / planes / trains / trucks links are blindingly apparent. But the loading and unloading, sorting, crating, palletizing, etc. are also all super important links in the chain.
At around this point, I completely lost interest in The Bad Guys (other than to start asking daily: is the Chief Bad Guy Still Alive after the thing happened in Belgorod), and got _very_ interested in what was going on in warehouses.
The New Warehouse podcast (
https://www.thenewwarehouse.com/) is really great. But listening to it was super confusing, because I have a pretty limited understanding of even old warehouses. So I also _tried_ listening to the Supply Chain Is Boring podcast (recommended at least once by Lawton over at TNW). However, a lot — maybe all? — of that podcast is interviews with luminaries in logistics, and I am now going to digress. I’m going to, in fact, go on a rant.
Listening to the Luminaries of Logistics over at Supply Chain is Boring is like … I mean, it’s hard. 1990s conservatives, all of them. Anti-union, pro made in America but also pro globalization. They think it costs too much to go to college and it isn’t really worth it anyway. They think the research done in colleges is irrelevant to anyone actually working in the field. You know, I was going to go on about this for a while, but it’s too painful. I stopped listening and went back to poking around at other stuff again.
I already posted about the pair of articles, one year apart, at Kane Logistics on warehouse turnover. Here are some other random things I tripped over, mostly from TNW, but some from other podcasts. All of these are from people in the field talking to each other, so I don’t have real sources for any of this and honestly, I don’t think they do either.
About half of all warehouses are single location operations.
About one third of all warehouses have no automation at all. The other two thirds have highly idiosyncratic software and automation, and the only shared component is … telnet. Yeah, I was surprised to. Apparently, all those handhelds run telnet. Sorta makes sense; also sorta makes me want to cry.
I found a great picture here:
https://www.logisticsmgmt.com/article/the_evolving_distribution_center_technology_stackI was specifically looking for what the software stack looks like in the warehouses that aren’t actually still stuck in the Paper Age. That’s from 2017. People in logistics knew at that point that they were probably going to need to … er, advance. But at that point, the cost/benefit tradeoff was terrible for basically all but the very largest (who had a spare warehouse that they could use as a testbed). They have to ship shit every day; they cannot take a week or a month off to retool with new processes and equipment. But TNW and everything else I’ve read and listened to strongly indicates that that tradeoff has changed. It’s no longer, If I Take a Risk, I could lose my job / fuck things up. Now, it’s, If We Don’t Advance, We’re Toast.
So, what changed?
Oh, you know what changed. I’ll wait while you figure it out. If you’re still not sure, go check out the previous post and reread those two articles from Kane Logistics. Amazon happened.
Years — okay, let’s be honest here, decades — ago, the received wisdom went from Who Would Buy Stuff Online Anyway (which was always kinda stupid; I mean, people were buying over the phone and from paper catalogs — why _wouldn’t_ those people switch? I was those people; I switched fast) to It Is Better to Sell Online AND Run Physical Stores Because Returns Are Easier.
I’m just going to pause here, because typing that out actually _hurt_. And I don’t mean, hurt my wrist or my shoulder from playing _way_ too much Birzzle lately, so typing is kinda dodgy. I mean, just the whole _idea_ that a retailer would _benefit_ from making _returns easier_.
Ha ha ha ha ha
WTF
Anyway. There were some other ideas. Obviously, a whole lot of physical stores got run over (Getting Amazoned became the fear of every corner of the retail sector). I didn’t really give a ton of thought to the whole thing because I’m not a huge fan of shopping in person anyway; they rarely have what I want and I have to special order or go to five different places or whatever and it’s a gigantic waste of my time and energy plus people working in physical retail are not paid very well and they’re not generally in an awesome mood and a fair number of them are not that competent. There’s something lovely about chatting with the cashier as (usually) she rings up the sale, but it’s not actually lovely _enough_ to make up for the rest of the nightmare. Also, the fucking lighting.
The remaining in person retail operations which are attempting to also sell online (“omnichannel” is the term of art) are having to figure out how to track their inventory in the physical store, so that it can be available to the online customer. I had a little conversation with my daughter about this — she had questions about some of the nuggets I was sharing with R. — and she ran very quickly through all of the alternative solutions and I explained why they don’t work. I sort of wish I _had_ thought this through decades ago, because in retrospect, it’s very, very obvious what does NOT work. Multi-store retail chains have rarely tracked inventory _within_ the stores. If you went to a Nordstrom’s Back in the Day and they didn’t have the color and size you were looking for in that store, they could call other nearby stores and ask an associate there to check the floor and stockroom for it, and hold it for you to go pick up or, eventually, maybe send it over to the local store for you to pick up. But it was a time consuming exercise and not really possible if there was a helluva line. You could, obviously, go drive to downtown, Northgate, Alderwood, Bellevue, Southcenter and check yourself, but even back then, when traffic was nowhere near as bonkers as it is now, that was an actual nightmare.
Some chains would hold back inventory initially, to see which stores sold out rapidly so they could restock, but of course then you wind up with completely unsold stuff out of season, which is terrible for margins, so they really tried to not have any stock other than what was on the floor. When it was time to move a new round of merch in — seasonal changes, usually — whatever was left went through a series of clearance levels before being dumped (sometimes literally). But _it was not tracked_. And this is really pretty amazing! It means that the thing that was expensive and unprofitable to do, so they didn’t do it when it was all in person retail — tracking where everything was — they had to suddenly do in order to support online sales that were sourced from in store inventory.
But it’s worse than that! The in store inventory is subjected to randomization more or less continuously by in person customers.
Clayton Christensen, decades ago, described how hard it was for firms to survive a certain kind of innovation cycle. As long as the innovation produces something a little better, possibly for a bit more money, that’s fine. But when innovation produces something that is a little worse, for way less money, firms struggle to adopt the new innovation internally, largely because it’s a lower profit business. And firms that engage in multiple activities at multiple profit levels have to split executive attention. The temptation is always there to focus the most attention on the highest profit items, which leads to legacy firms with legacy customers chasing that dwindling high profit margin business right off of a cliff, and entirely missing the transition to a new, lower cost way of doing things. The cliff occurs when the worse-is-better thing stops being worse while continuing to be cheaper.
Really, really large firms and other organizations (you know, like the IRS or the VA) automated very early on in terms of adopting computers to replace people doing calculations on paper. Everyone who adopted big, expensive, mainframe solutions early on did so because _it was cheaper_ than hiring all those people to do all that calculation. A bit later, we got a round of, word processing is cheaper than a typing pool. (That was a solid worse-is-better. Everyone is a worse typist because of word processing and it does not matter one teeny tiny bit.) I’m not saying all large organizations _survived_ the transition, but the expensive _batch oriented_ processing was much cheaper than the expensive _human_ processing.
Of course, then a lot of those firms struggled to move from the expensive, batch oriented stuff to the more nimble and agile and off the shelf and wtf solutions of the PC era. Never mind the Web 2.0 or aaS era.
If you looked at that graphic I pointed to, and absorbed the percentages that people in the industry throw around, I think you can see where I’m going with this. Warehouses — the shorter, but super important links in the supply chain, and warehouses in this usage includes the physical retail stores — are in the process of moving from a batch orientation to a transaction orientation.
And wow. It hurts even more.
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