Sunday, 31 December 2017

Can robot usage be made ethical?

Automation in the warehouse has been on-going since the 1970s but only recently has the scope for robots that can work safely around people sharpened the focus and implications of full robotisation to reveal potentially huge social/ethical issues that could lead to even more inequality unless governments can find a solution.

In January 2015, on this blogsite, under the heading: "Will robots destabilize society?" I referred to the remarks of the Archbishop of Canterbury, Justin Welby, to a Wall Street audience that the rise of robots and gene therapy could allow a tiny elite of the super rich to amass more power while almost everyone else grows poorer. But has that not already largely happened over recent years, like in America where in real terms incomes for most are below 10 years ago while the top 10% saw a real rise, leaving a tiny minority controlling most of America's wealth, a shift helped by legal though morally repugnant tax avoidance schemes based on financial artifice rather than honest business models?

The latest warnings have come from the UK-based Institute for Public Policy Research (IPPR) which suggests that new technology could wipe out jobs generating earnings of £290 billion a year, a third of the British total. This would leave some parts of the country harder hit than the others, like the north-east and Northern Ireland, and certain industries to be hit by job-killing automation would include agriculture, transport, food processing and administration.

The report's authors called for a co-ordinated government response to the economic challenge, with the establishment of a regulator to oversee the "ethical use of robotics and artificial intelligence," while some ministers have spoken airily of creating "jobs of the future" to replace those lost to machines. While the historic pattern of economic development from the industrial revolution may give comfort to those hoping to find new jobs there is one factor in economic history that never existed until now which could dash such hopes, namely the unprecedented growth in job-destroying automation and growing global population.

The IPPR, however, seems sanguine enough to believe that increasing automation has the potential to deliver a boost to UK business to bring "economic plenty" but warned that the change must be properly managed so that the benefits do not remain concentrated in a few investors' hands. It also believed that most jobs would be re-allocated rather than eliminated, while still leaving some people getting a rise while others are trapped in low pay, low productivity sectors. To prevent this it says "the Government should look at ways to spread capital ownership and make sure that everyone benefits from increased automation." Well, don't hold your breath on that one.

There can be no argument that repetitive, unskilled jobs will be taken by robots as their price tags fall and they become smarter and more versatile and nowhere are such jobs so repetitive and low paid than in the warehousing sector. New recruits for this industry, therefore, might like to look elsewhere unless contemplating the more challenging, arcane aspects of logistics, like more efficient control of the global supply chains where, admittedly, this could be rewarding but not suited to the rank and file warehouse workforce.

Tuesday, 27 June 2017

Big retailers still hammering suppliers

For some years the consequences of intensifying competition among big retailers have been visited on their hapless, bullied suppliers but now the decline of the pound Sterling since the Brexit vote has been added to the retailers' bullying techniques and excuses, which number at least 60 odious ploys to squeeze the last drop from suppliers. The latest retail giant to be accused by an anonymous supplier letter is Boots, the retail chemist, now part of the American Wallgreens Boots Alliance, whose UK arm is struggling with faltering sales, leaving it under pressure to cut costs, including the culling of 500 HQ jobs.  

The supplier accused Boots of dictating "draconian" terms to small businesses, but in its defence Boots said it laid out all its terms clearly in agreements with suppliers. Among the exactions allegedly imposed by Boots the supplier claimed Boots levied a 2.5% "prompt payment" charge on all invoices it settled within 106 days. The company seems to have a curious notion of "prompt," given that the norm of invoice settlement should be 30 days. The Federation of Small Businesses said payment times of 75 days or more "cannot be described as prompt, while paying less than the invoice total cannot be described as fair." The supplier also said the chemist chain applied a £300 "non-compliance" charge for "the slightest error in paperwork" or "using the wrong type of pallet."

Going beyond the Boot's experience, it is clear that the major food supermarket retailers, in particular, have still not heeded the lessons from previous supplier bullying complaints, and the worsening extent of their practices will be unveiled by a new survey this year. Struggling Asda, Britain's third largest food retailer, has just been named as the worst of the UK's major supermarkets in its treatment of suppliers. About 12% of the suppliers said Asda rarely or never complied with the Grocery Supply Code of Practice. These chutzpa ploys, when applied across the board, even include implied blackmailing threats which have nothing to do with the small print terms framed by big retailers. One such example is demanding £25,000 for charity dinner tickets run by the retailers with the implied threat that no ticket purchase could mean de-listing of suppliers' products.

As I pointed out in my blog of March 12th, 2017, headed: "Retailers' odious supplier treatments risk disintermediation," if the big retailers fail to behave honourably with their suppliers they could find themselves being bypassed by supplier alliances building their own giant order picking warehouses to supply consumers directly, now that the disruptive technology of online shopping allows that and is growing like a weed. With Amazon now parking its tanks on food retailers lawns the latter should start showing some respect to its suppliers.

Sunday, 9 April 2017

 Diesel forklifts' days numbered?

Has the final call on dirty diesel in the warehouse been made? Warehouse operators have long known that they have a legal responsibility to protect their warehouse staff from the deleterious effects of diesel forklift fumes inside warehouses but only now has it been made clear to them that firms could be sued over cancer long after their staff have left them. IOSH and the Health & Safety Executive have issued recent warnings because diesel fumes have been reclassified as a grade 1 carcinogen, meaning they are a definite cause of cancer. This reclassification by a branch of the World Health Organization came after it found that people exposed to diesel fumes at work were up to 40% more likely to develop lung cancer. In Britain, over 650 people die of lung or bladder cancer following exposure to diesel fumes at work and about 800 new cases of cancer linked to diesel exhaust are registered each year.

The fears of warehouse operators, however, do not necessarily end there because it has been known that diesel exhaust fumes, in particular, are linked to pulmonary diseases like asthma, which costs Britain's national health service (NHS) huge sums in medical treatment every year and the problem is worsening. It is estimated that up to 60,000 British people die prematurely from air pollution, 80% of which is caused by road transport fuel exhausts and about half of all vehicles on the road today are diesel powered. There is no reason, in theory at least, why warehouse operators who have been insouciant over the diesel issue in their warehouses should not be sued for pulmonary diseases, too.

The only way for warehouse operators to ensure that they do not face prosecution from the authorities and have the ass sued off them by employee cancer and other disease victims is to ban all diesel trucks inside their warehouses, and make every reasonable effort to minimise diesel exhausts out in the yard. There are, of course, cleaner alternatives to diesel, especially electric forklifts, and the good news here is that one of the main reasons why diesel was preferred over electric, i.e. greater performance in all weathers, no longer applies thanks to big advances in battery and charger technologies which deliver a performance punch equal with diesel.

Sunday, 12 March 2017

Retailers' odious supplier treatments risk disintermediation

When just four UK food retailers control over 70% of an industry you have a problem in the supply chain --- unfair  bullying of suppliers. Other risks, of course, stem from monopoly practices, like price fixing cartels working against the public interest. The latter risk, however, has been diminished by the meteoric rise of the deep discounters like Lidl and Aldi who now control 12% of the UK grocery market. It is this intensifying competition which lies behind many of the recent supplier complaints about big retailers' bullying practices, sometimes tantamount to blackmail and fraud. There is a way for suppliers to fight back but it would take an enormous degree of cooperation among suppliers, but before coming to that let's examine some of the latest wheezes that big retailers are using and which could discommode them if they persist.

Supplier complaints against the dominant retailers are nothing new, they go back 20 years, but some of the wheezes used against them are. One is for supermarkets to demand suppliers pay up to £25,000 for charity dinner tickets, according to a Government watchdog. Another of the estimated 60 odious ploys is the claim that delivered goods never arrived and retailers refuse to pay for them. The sums involved are substantial.  A preliminary investigations of only 20 suppliers found that they lost £15 million a year to "drop and drive" deliveries, implying the total amount lost to the 8,000-9,000 supplier firms must be huge. "The supermarkets are genuinely not paying for goods that they are selling," says Christine Tacon, the groceries' code adjudicator. By any other name that is fraud.

Blackmail is not beneath the retailers either. To return to the charity dinner tickets caper, one supplier complained of being asked to pay £25,000 for a table at a charity ball who came under pressure, like being told: 'Well if you don't buy a table your name will be on a list of people to the chief executive that are not supporting our charity.' Yet another innovation involves supermarkets charging suppliers up to £55 if customers complain about anything, including not liking a ready meal, and the more bizarre, like finding a teabag inside an egg. All these and many other tactics, like the old favourites of extending payment periods from one month to three and charging for favourable shelf positions, are designed to boost profits unfairly. The worsening extent of this will be unveiled by a new survey of supply firms being launched this month to uncover abuses.

Meanwhile, what can suppliers do to fight back and what risks are there for the big retailers if they do not change their bullying ways?  Already, some retailers are suffering from disintermediation by people setting up impressive websites which channel orders directly to manufacturers for delivery directly to buyers' homes, thus cutting out the bricks and mortar retailers. Moreover, one can source products from home, comparing prices in different countries for the same product to get the best deal.

The potentially greatest threat to retailers, however, lies with the capability of major and medium-sized food suppliers banding together to finance giant order picking fulfilment centres that would act like a shared user facility which some third party logistics (3PLs) suppliers already offer for their clients and who, like the food suppliers, are suffering from tough contract deals with big retailers. The foundation for that scenario is already being laid by Amazon, who are going into the food selling business to supply customers directly from their distribution centres. If enough of the major food suppliers can be signed up for such ventures it would be difficult to see how the grocery retailers could fight back, since delisting all the suppliers' items would leave them with nothing on their shelves to sell.

Now is the time for retailing's bully boys to wake up and smell the coffee before it could be too late and the 3.6 million people employed in the UK food supply chains see their ranks much diminished.

Thursday, 19 January 2017

London faces urban logistics crisis?

A major report commissioned by the United Kingdom Warehouse Association (UKWA) and delivered by the research consultancy, Global 78, entitled Feeding London 2030, warns that an urban logistics crisis is looming which if not addressed now could even lead to a shortage of essential food supplies on shelves both for grocery retailers and other food outlets. "Things are becoming stretched across London's food and drinks supply chains and current logistics thinking is no longer fit for purpose," says the report's lead author, Andrew Morgan. He continues: "New trends in the way food and drinks are bought and consumed, added to the capital's changing population profile and a transport infrastructure that is already creaking, are bringing significant challenges to food and drinks manufacturers, wholesalers, retailers, caterers, transport and logistics companies. Supply in food and drink that is both safe and delivered on time to London's retail and food service outlets at an appropriate cost will become increasingly difficult unless steps are taken to address issues highlighted in the report," he warns.

Some of the issues examined in detail include:

  1. The impact of the increasingly congested urban environment
  2. New consumer demand profiles for food and drink
  3. Current trends in delivery frequencies, times and volumes
  4. Changes in the grocery retail sector that impact supply chains
  5. Significance of the hospitality and food sector
  6. Maintenance of hygiene and food safety through the supply chain
  7. The logistical pressures associated with food waste and other waste systems

The report's researchers engaged about 100 stakeholders and to give an idea of the logistics complexities in London it looked at Greenwich as a microcosm reflecting the challenges right across London. It focussed on Greenwich's 125 food outlets, where one restaurant could have 13 deliveries a day. But like any other report's predictive value, especially one covering 13 years, they are only as good as the assumptions on which their analyses are based.

One of the report's key assumptions is that London's population will grow from its present record 8.4 million by another million come 2030. Much of London's population growth in recent years has been driven by immigration but post Brexit such inflows may be sharply curtailed as Britain takes back control of its borders. Other population growth dampeners could include pressures and irritants from living in London, where housing costs, whether to buy or rent, are forcing many people to consider moving out, an easier option today thanks to IT developments that allow many more people to work from home.

Among the major irritants is the much-vexed issue of air pollution levels, 80% of which derives from road transport, routinely exceeded daily by a wide margin and leading to an estimated annual 9,000 premature London deaths and many thousands more with serious pulmonary diseases which is putting the NHS under intolerable strain. Many major cities in Europe and elsewhere are now proposing to ban diesel vehicles entirely by 2025 but Britain's logistics transport companies, at least half of whose vehicles are diesel, seem unprepared for the obvious emission controls that must come into force and which could seriously impact the report's pointers to help stakeholders "get on the right foot," to quote the report's authors. '

With those caveats in mind, the 100-page report should "provide essential intelligence for all stakeholders for successful forward planning," says UKWA's chief executive officer.
Available from UKWA at £790 or £395 for UKWA members.


UKWA's CEO, Peter Ward