The first MODEX is history. If you were in Atlanta to walk this material handling and logistics show as I did, you probably feel like you completed a marathon. Your aches are a testament to how diverse the material handling industry is. There was a lot of ground to cover—floor-wise and technology-wise. Exhibits ranged from the smallest components that usually go unseen to the sexiest, most sophisticated automated systems that scream “look at me!”

But if you judge a show like this solely by what you see, you do it, and yourself, a disservice. It’s what people heard at this show during casual conversations with vendors and their partners that gave them a good look at the future of business. A conversation I had with material handling industry veteran John Hill, who is retiring from his role as vice president at TranSystems, put MODEX in just the right context:

“It’s time to look beyond the four walls to highways, waterways, bridges and rail. Material handling is part of every one of these.”

And that’s on a global scale. Here are some examples:

• At the TranSystems booth, Heather King, assistant vice president of this supply chain consulting firm, fielded a question from an international visitor asking about the best way to get products to the U.S. from Costa Rica.

• At the Hyster lift truck exhibit, Jonathan Dawley, president of Hyster Distribution, said warehousing opportunities for lift truck vendors will be popping up around ports as distribution facilities help maintain new flows of goods coming in from around the world. His company is pre-planning inventory to meet this demand. Even stacker cranes present a potential opportunity for Hyster, he told me.

• At the Yale Materials Handling exhibit, Bill Pfleger, president of Yale Distribution, said U.S. markets are seeing a bit of Western European influence filter into their products. Yale was showing its new ERP-040VF four-wheel sit-down electric truck which was designed in Europe based on much input from operators. The four-wheel design absorbs shocks from uneven floors better than three-wheel designs, he said, and has equal stability and maneuverability. These are safety as well as productivity features and Pfleger believes these aspects of lift truck design are getting more attention from safety professionals—who are also starting to influence lift truck purchasing decisions in the States, as they have been in Europe.

• Rotocaster, an Australian manufacturer of hand trucks incorporating multi-directional wheels for extra maneuverability, addressed safety on a smaller scale. He used MODEX to announce his product’s presence in American markets through Magnus Mobility Systems, a U.S. distributor. The demonstration stressed the amount of stress and resulting injuries this innovation relieves among material handlers on foot—who have to negotiate as many uneven surfaces as lift trucks.

• Intelligrated, a North American-owned automated material handling system provider, announced a partnership with SDI Group USA, a global provider of integrated material handling solutions, to serve growing industry markets in Sao Paulo, Brazil. And other exhibitors told me they spoke with several visitors from South America looking to grow their supply chain management capabilities.

• Hytrol Conveyor Co. and BEUMER Corp., subsidiary of Germany’s BEUMER Group, announced a strategic alliance to provide sortation solutions in North & South America.

• Peter Blair, director of marketing for Kiva, maker of mobile robotic fulfillment systems, told me his company is eyeing opportunities in Europe, but first the company needs to address that market’s warehouse verticality, possibly with the help of mezzanine and lift makers.

The point is, this first MODEX was an indicator of how international trends are shaping the art and science of material handling. In fact George Prest, the new CEO of the Material Handling Industry of America , summed it up for me:

“The world is flattening. John Nofsinger [Prest’s predecessor at MHIA] introduced me to a lot of international friends and we’re building on those relationships. A significant part of the growth of our shows has been international. We are committed to a strategic vision that will help us continue orchestrating that.”

Prest and MHIA still have a lot to accomplish to fulfill that vision, and his timeline is set for a 2020 target date. I wouldn’t be surprised if between now and then the “Material Handling Industry of America” brand exhibits some evolution of its own.

Over the last few years, when I heard the talking heads on TV blab about global warming, my eyes reflexively rolled upward. It’s just that this red meat has been chewed over by so many talking heads it has become mushy. Disgusting.

But lately I’ve been reading reports about sustainability that have made the topic easier on my eyes. That’s because sustainability is being tied to hard numbers that not only mean environmental benefits, but meet business needs as well.

According to research published recently by the Carbon Disclosure Project and Accenture, the proportion of the companies they surveyed that use incentives for suppliers has increased more than threefold since the CDP’s last report three years ago. Incentives can be anything from positive word-of-mouth to preferential treatment for suppliers who exhibit good carbon management. 62% of responding companies reported an incentives policy for those suppliers with effective emissions reduction strategies, a figure which stood at just 19% in 2009 and 28% in 2010.

On top of that, half of responding companies have, or are developing, contractual obligations for suppliers to include information on their greenhouse gas (GHG) emissions management in response to requests for proposals (RFPs). My eyes didn’t roll over for this because when I read it I had just interviewed Grant Opperman, president of D.W. Morgan, a supply chain and logistics services firm. He told me that he first started hearing clients ask questions about greenhouse gas emissions a couple years ago. These are customers in high-tech, bio-tech, healthcare, aerospace, and other industries where there’s a high value of goods and a responsive supply chain. Traditionally these companies haven’t worried too much about using their transportation assets efficiently. That’s why a quarter of the trucks on the road are empty.

Now that Opperman’s customers are getting more sensitive to the costs of such waste, his company is evolving toward a sustainability model to which businesses can relate.

“We do all of the North American drayage for one of our clients inbound and outbound from factories and DCs,” Opperman told me. “Prior to using us they had a situation where they had 20 different carriers who were all subcontracted to carry goods in and out of those facilities. Each one of those would have from one pallet to half a truckload. So now you have 20 trucks that are all running at very low utilization and not only does that end up being a waste of resources but also creates dock congestion and difficulty managing all those relationships, as well as the ability to see where all your goods are in transit.”

The model Opperman and others serving such high-tech customers is adopting is where they act as a single point of contact for consolidating their loads and running full truckloads. Now instead of having 20 trucks at their dock they can do the same job with three or five.

“We can get a good margin because we’re cleaning up a lot of inefficiency, our client is able to get better visibility and control over their goods, and we’re able to reduce use of resources and costs because I’m not paying to move a lot of air around the country.”

This may work for high-tech, high-value goods, but is it sustainable for low-margin businesses like food and grocery?

“It may be 10-20 years before we get to that level of synchronization in the banana business, but let’s start where there’s higher value,” Opperman says. “Then as we build these systems and this infrastructure we can begin to roll downhill to some of the more basic transportation areas.”

In MH&L’s February issue, which will be out soon, we’ll introduce you to someone who not only envisions this happening sooner for the lower-margined, but he’s working with allies in industry and academia to make it happen for everyone.

There aren’t many things more tenacious than an Asian longhorned beetle—except for the little piece of boilerplate copy newspaper writers have latched onto to explain how these beetles got into southern Ohio and are now feasting on suburban trees. This little line of type has taken on a life of its own since it started appearing in stories 12 years ago and carried some truth. Most recently it appeared in a story that ran in the Columbus Dispatch. Here it is:

“The beetles hitch rides to the U.S. inside wooden pallets and crates shipped from Asia.”

Bruce Scholnick hates this undying snippet of text almost as much as he hates the beetles chomping on Ohio trees. He’s president and CEO of the National Wooden Pallet and Container Association (NWPCA). He’s been using ISPM 15 to try to kill that little piece of copy, but it still manages to crawl into stories that cover beetle infestations.

ISPM 15 (International Standards for Phytosanitary Measures no. 15) is an international regulation that requires all wood packaging to be heat treated to 56 degrees centigrade at its core for a minimum duration of 30 minutes. Or it must be fumigated for 24 hours. Scholnick says that in the five years since ISPM 15 was adopted by more than 140 nations, it has proven to be 99.9% effective in keeping beetles from hitching rides in pallets. That’s a detail many newspaper reporters tend to miss, Scholnick told me.

“When somebody writes an article, because everybody is clamouring for news stories and there isn’t a lot of fresh blood around, they start copying and before you know it the message sent gets distorted, like in the game of telephone.”

What he hates more than the poor reputation the pallet industry gets from this is the effect on that industry’s business. Many small pallet companies have been hurt by USDA-imposed quarantines of their products.

The Animal and Plant Health Inspection Service (APHIS) has published a risk assessment saying there is no demonstrative evidence that the movement of wood pallets is contributing to the further introduction of non-native invasive species in areas where they currently don’t already exist. However, the U.S. Dept. Of Agriculture (USDA) continues to impose quarantine areas on a city, county or state basis when infestations are reported.

“Our concern is how can you make a statement like there is no evidence we are contributing to the infestation and on the other hand implement these quarantine areas?,” Scholnick asks. “We are not getting a lot of satisfaction out of USDA on this issue.”

He is trying to get the USDA to drop the quarantines on wood packaging in 16 states. He says not only has APHIS stated there is no evidence linking wood packaging to the spread of the pests, but it has determined that firewood and nursery stock are the more likely culprits.

Nevertheless, companies that produce wooden pallets and containers are feeling the pain of beetle infestation, even if their products haven’t been proved to be housing them.

“These quarantines create an unlevel playing field,” Scholnick says. “When you have a quarantine in a county in southern Ohio and across the border there is none in Tennessee, the guy in Tennessee has a distinct advantage and that’s unfair.”

But who said life is fair?

Ultimately, beyond the power of ISPM 15 to keep hungry bugs out of our trees, the responsibility for keeping them out of supply chains must be shared by pallet suppliers and pallet users. On the shipper side, avoid cheap pallets from questionable sources. Six years ago, this magazine’s resident expert on pallet pests, Clyde Witt, did a great job explaining why pallets are such an easy target for regulators:

“Pallets, crates and tiedowns are often constructed from raw wood cut shortly before it is used,” Clyde wrote back in 2006. “This frequently includes bark on some surfaces. If you’ve ever watched a woodpecker searching for a meal, the bark is where it goes for insects. Another reason regulations have targeted transport packaging material is that such products are often constructed from lower grades of wood that has suffered insect damage.”

So the problem may no longer be critters from Asia. It may be the descendants of those critters who now migrate from state to state and tree to tree. And, unfortunately, supply chain to supply chain if logistics professionals aren’t vigilant.

The spinning of campaign propaganda is the ugliest part of politics. Unfortunately, this being a presidential election year, the webs of deception being spun are unavoidable. The candidates are busy trying to trap each other in lies and half-truths. They often succeed. But politicians don’t have a monopoly on such gamesmanship. It’s part of business too, especially in supply chain management.

Take supply chain mapping, for example. I’m reading a cool new book on this process, titled “Seeing the Whole Value Stream,” by Dan Jones and Steve Womack and published by the Lean Enterprise Institute. They define the mapping process as “directly observing the flows of information and materials as they now occur, summarizing them visually, and then envisioning a future state with much better performance.”

That’s what politicians should be doing, isn’t it? “Envisioning a future state with much better performance?” The difference on the business side is that the sausage-making process designed to get them there is more hidden—although just as ugly. The authors illustrate this in a section of their book that addresses the role of the product line manager (PLM). Just as our presidential candidates have to build campaign teams, PLMs need a good eye for the multidisciplinary talent responsible for producing and distributing their sausage—er, product. But here’s where business politics can get ugly.

The authors don’t like the idea of a “product team” structure, where engineering, operations, purchasing and marketing employees collaborate on a team. They write that “doing this causes a large amount of organizational disruption during the transition and this structure still does not address the behavior of upstream partner firms.” For them, it’s up to the PLM to take mapping responsibility by taking an “energetic approach” to the job.

The funny thing about this is an admission the authors make about such a PLM: “The very managers most able to benefit from [this book] don’t currently exist in many firms!”

So where will today’s value stream mapping leaders come from? Let’s consider purchasing.

In my last blog I quoted Ralph Rupert, manager of unit load technology for Millwood, specialists in palletization and product unitization. He said procurement needs to be part of the shipping and fulfillment team, but that procurement is often structured as silos within a silo, with purchasing agents assigned to different pieces of a product—kind of like the committee responsible for inventing the camel. Well, the authors of this book give another reason to be careful about involving procurement, at least in a leadership role, and that’s what got me to thinking about the politics of supply chain management.

“Assigning a buyer from purchasing to be a mapping leader can lead to problems if upstream participants believe that the real purpose of mapping will be to uncover waste at suppliers, followed by demands for immediate price reductions.”

Any PLM hearing such a cynical accusation from a supplier might either get angry or be hurt. A politician might feel complimented for the recognition of his brilliant strategy.

If your company is developing a new product, I recommend reviewing books like this one to get a feel for selecting the best candidates to serve in your value stream. And remember, this isn’t politics. When vetting the candidates, ignore their spawning habits.

The interconnected nature of global supply chains makes companies vulnerable to thousands of weak links—also known as suppliers. A new report released by World Economic Forum in collaboration with Accenture, called “New Models for Addressing Supply Chain and Transport Risk,” notes that businesses “both affect and are affected by risks at various stages, from the sourcing of raw materials to the destinations of goods and services.”

Weak links don’t just affect your financial performance, but they can damage your company’s reputation as well. You might not have much direct control over those weak links outside your organization, but a major influencer works inside it and is often left out of supply chain decisions. It’s your procurement department.

One of the recommendations this report has for businesses is to explicitly assess supply chain and transport risks as part of procurement.

This caught my attention because I just interviewed Ralph Rupert, manager of unit load technology for Millwood, specialists in palletization and product unitization. We discussed how packaging and unitization can be a hidden cause of product quality problems. Rupert is also chair of the MH1 Pallet Standard Committee and was director of the Center for Unit Load Design at Virginia Tech. He says procurement needs to be part of a system when it comes to shipping and fulfillment. Problems arise when procurement is not only splintered from supply chain management, but splintered within its own structure.

Take bottled water for example. The plastic in these bottles is now so thin it no longer contributes to the packaging’s structural integrity. Some recent store-level unit load failures dramatized the problem.

“One purchasing agent may be in charge of buying the bottles or buying the corrugated,” Rupert told me. “Another is buying pallets and another is purchasing the multi-million dollar handling systems and those purchasing agents and the teams they represent don’t talk to each other.”

The contribution these disconnects make to supply chain failure is often overlooked, and this not only damages product, but company reputations, as well. It’s also damaging to a company’s sustainability strategy. But the reason this problem is perpetual is the procurement pros at work in their silos get rewarded for the low costs they pull down.

The resulting product damage is seldom traced to purchasing.

“You open the back of the trailer and find things damaged and the first instinct is to redesign the package,” Rupert says. “But maybe if they would have spent a little more money and gotten a better pallet it wouldn’t have transmitted the vibration into the package and caused the damage in the first place.”

There are plenty of scary supply chain risks out in the world today. The good thing is you can see them. Sometimes your supply chain’s worst enemy is invisible—and lives in your own little world.

Last week the captain of the Costa Concordia cruise ship managed to crash both the vessel and his career on the rocks off the coast of Italy. How could this happen? This vacation-on-water had all the latest electronic gizmos to keep itself and its passengers out of harm’s way.

As the Titanic taught us 100 years ago, nothing’s more dangerous than believing in the infallibility of man.

There was a good column in the Wall Street Journal this weekend titled “The Dangers of Safety.” The author’s contention is that advances in safety technology, like football helmets that protect from concussions and parachutes that protect from late deployment, give their wearers a false sense of security, therefore these people do stupid things from which the equipment won’t protect them. The author’s conclusion: “Sometimes the safest way to live is to be a little afraid.”

Reading the newspaper is a good way to live in fear. This weekend’s read taught me a new syndrome to avoid: the “risk compensation effect.” We all have anti-lock brakes on our cars, but studies have shown that knowing this has caused drivers to do things they wouldn’t have done without them—like drive faster and brake later.

There are corollaries in the material handling world—lift trucks, for example. Some have built-in stability systems to sense unsafe loads, others have speed governors, all have seat belts, etc., etc. Using the logic of the risk compensation effect, you’d think we’d see a gradual rise in lift truck accidents and deaths. But no.

OSHA data over the years have shown pretty consistent numbers. Injury and death rates are high, but they’ve stayed pretty flat. Stats indicate that the three most common forklift-related fatalities involve overturns, pedestrians being struck by forklifts, and workers falling from forklifts. The National Institute for Occupational Safety and Health (NIOSH) concludes that the consistent fatalities indicate that “many workers and employers are not using or may be unaware of safety procedures and the proper use of forklifts to reduce the risk of injury and death.”

The Bureau of Labor Statistics reports that each year in the United States, nearly 100 workers are killed and another 20,000 are seriously injured in forklift-related incidents. And according to the National Traumatic Occupational Fatalities (NTOF) Surveillance System, in the United States, 1,021 workers died from traumatic injuries suffered in forklift-related incidents between 1980 and 1994. Broken down by year, that’s an average of 85 fatalities—not to mention 34,902 serious injuries and 61,800 non-serious injuries—each year.

But could this be a glass-half-full kind of thing? Maybe the reason the numbers aren’t rising each year is that the safety technology keeps lift trucks fool-proof to a point. Of course one could argue that employers aren’t adequately training employees about the safety features and capabilities of these vehicles—therefore the operators don’t know enough to exhibit the risk-compensation effect by ratcheting up those numbers.

Maybe it’s both. According to OSHA the top five citations issued for 29CFR1910.178 are:

• Failure to ensure operator competency

• Failure to certify operator’s training and evaluation

• Failure to provide refresher training and evaluation

• Failure to examine forklifts before placing them in service

• Failure to take damaged forklifts out of service.

Risk compensation syndrome might be displacing attention deficit disorder as pop psychology’s favorite trend, but to have it, you have to know what you’re being protected from. That’s a trend more material handlers should risk following.

When prosecutors look for ways to build a solid case against a criminal, drugs and guns found at a crime scene usually grab their attention. But there’s another piece of evidence that often goes unnoticed at the outset of a case: pallets.

I’m talking about plastic pallets. As the value of plastics continues to rise, so does the theft of not only pallets, but reusable plastic containers, as well. Consider these numbers associated with theft of plastic assets:

• It costs businesses upwards of $500 million every year nationwide, according to the International Dairy Foods Association. Dairy companies alone lose nearly $80 million a year to plastic milk crate theft.

• Arizona businesses lose up to $3 million a year from the theft of pallets.

• In May 2011, Los Angeles authorities recovered more than 15,000 stolen plastic containers, worth nearly $1.3 million.

• In Maryland, four businesses combined lost nearly $6 million from plastic pallet theft in 2008.

• In San Bernardino County in 2010 one company claimed a $2.5 million loss from stolen plastic loading pallets.

• The U.S. Postal Service paid roughly $50 million last year to replace lost and stolen equipment, including plastic letter trays and tubs.

We’ve blogged about the USPS’s efforts to recover their pallets via amnesty programs, but they’ve been only marginally successful. Part of that is because stolen plastic pallets and containers often end up at recycler sites where they are ground up into resin that commands a nice market price. Success depends on better cooperation among supply chain partners further up that chain.

According to Al Farrell, there’s a large recycling complex of grinders in this country thanks to the growth of recycling programs. Farrell’s vice president of asset management for iGPS, a plastic-pallet pooling company. Like any population, the recycling community is made up of good and bad citizens. It’s the bad ones that cost iGPS and other asset owners lots of money. But it’s not only money that makes this issue worth your attention as a good citizen. Farrell says pallets are often the tip of a crime iceberg.

“The crime of plastic grinding and theft is often accompanied by other crimes,” he told me. “It may be drug related, it may be commerce of other stolen goods.”

Why haven’t we heard more about pallet busts?

“Prosecutors take on cases because they believe they’re winnable,” he answers. “Law enforcement can understand large amounts of stereo equipment, but when talking plastic pallets, there’s not the full recognition that this is a crime that should be prosecuted. Many jurisdictions are underfunded right now and this gets pushed down into the no-interest category.”

That is starting to change as asset owners and technology companies in industrial supply chains build a strong case for traceability.

“We need to get prosecutors to understand these are cases they can actually win,” Farrell says. “We do a lot of education that these are uniquely serialized assets and we can prove each has a unique identity and that we own it. We never sell it or part company with it, except to go into the supply chain under a rental agreement. RFID plays a key role in our being able to demonstrate this is our property.”

That message is gaining traction. The L.A. County Sheriff’s Task Force has already busted a grinding group that on the lower floor was grinding plastic and other materials from stolen goods while on the upper floor was a grow-house for marijuana. Farrell says this task force has also busted up grinding operations that had meth labs connected to gangs and organized crime.

Fifty years ago, who in the material handling industry could have imagined that pallets would one day provide a solid base upon which law enforcement agencies could build a case against thugs and gangsters?

It’s time to start imagining it happening inside your own supply chain. If you rent plastic pallets and containers, make sure they return to their owner. If you own them, protect them with serialization. If you find some strays with another owner’s name on them, let that owner know. And if you learn that your supply chain has been using lost or stolen material handling assets for quite some time, report it to your local authorities. You may be instrumental in solving a bigger problem than you realize.

High-tech giant Apple has long had a love/hate relationship with its customers and suppliers. The company loves to publicize how popular its products are with its customers, who are nothing if not rabidly passionate about everything-Apple. However, the company also hates to publicize exactly who makes it products, since that information tends to raise uncomfortable questions, such as: Why does the classic American success story offshore its manufacturing to Chinese factories where suicides, slave labor and environmental abuses have been documented?

Yes, Apple frequently shows up on lists of the most popular, most trusted or most valuable companies, largely because its best-known products have a perceived cachet to them that competitive products simply do not have. Most recently, Interbrands positioned Apple as number 8 in its list of the Best Global Brands of 2011, a jump of 9 spots from its position a year ago, one of the biggest upward moves among the top 100 brands; Amazon climbed 10 spots, but that put it no higher than number 26. (For the record, by the way, the top 7 spots remain unchanged from 2010, with Coke still on top. For Apple to move into the top 10, obviously somebody had to drop out, and that company is Nokia, which has its own problems, as noted here.)

Despite the numerous accolades, Apple has seen its image tarnished through nobody’s fault but its own, namely, the way it manages (or mismanages) its overseas suppliers. Apple released its 2012 Supplier Responsibility progress report just before the long holiday weekend (a time when companies typically announce unflattering news, hoping it’ll get buried), which among other things paints a not-so-rosy picture of labor conditions throughout the Chinese plants that manufacture iPhones, iPads and other high-tech devices for Apple. The company also released a list of its major offshore suppliers.

There’s some thought that Apple, as well as other California-based electronics companies, has been more-or-less dragged kicking and screaming into revealing the practices of its suppliers. For instance, on New Year’s Day, the California Transparency in Supply Chains Act went into effect, which requires all companies with sales of $100 million or more and that do business in the state to publicly disclose what they’re doing to ensure their global supply chains do not in any way support or enable slave labor or human trafficking. Among other things, companies must now comply with various audits of their vendors and suppliers, and publicize their efforts on their websites. Which is what Apple has done, warts and all.

According to Apple’s progress report, almost two-thirds (62%) of the suppliers that it uses do not comply with Apple’s limit of 60 hours per week in the factory, with at least one day of rest per seven days. “Working hours is a complex issue,” Apple CEO Tim Cook told the Wall Street Journal, adding that he is confident that by monitoring its suppliers’ plants at a “very, very micro level,” Apple will be able to improve the situation.

More than a third (35%) of the suppliers do not meet Apple’s standards for workplace safety, the report notes, and nearly a third (32%) are not in compliance with Apple’s hazmat management practices.

The WSJ also notes that “the supplier report could pique Chinese authorities, who have long sought to stem criticism and limit disclosures about business practices there.” And indeed, Foxconn, one of the most notorious Chinese suppliers, is cited several times in Apple’s reports for various infractions, such as a combustible dust explosion that killed four people and injured 18.

To diminish any suggestion that Apple’s global standards are somewhat, well, sub-standard, the company has joined the Fair Labor Association as an associate member, the first high-tech company to do so. In a press release, it was announced that “the FLA will independently assess facilities in Apple’s supply chain and report detailed findings on the FLA website.” However, the FLA has been criticized in the past for receiving funding from companies it monitors, which of course would be a conflict of interest. So Apple would do well to increase its transparency to its stakeholders beyond the disclosures it has no choice but to release.

If there were a company listed on the New York Stock Exchange called “Your Supply Chain,” your broker would probably urge you to stay away from it. Too risky. And many corporate executives across the country agree—their supply chains are risky. According to a survey by McKinsey & Co. of more than 600 C-level executives across a range of industries worldwide, more than two thirds of respondents said that supply-chain risk had increased over the last three years, and they expected it to continue increasing over the next five years—especially in the following areas:

• Global competition

• Complex patterns of customer demand

• Financial volatility

• Global markets for labor and talent

• Exposure to differing regulatory requirements

• Environmental concerns

A quarter of the respondents to the McKinsey study said they aren’t prepared for more pressure from global competition and more complex customer demand patterns. And 37 percent are unprepared for the other four areas. More recently, Dr. Jeff Karrenbauer, president of INSIGHT, a supply chain analytics and consulting service firm, commented on the effects of rising tensions between the U.S. and Iran.

“Open conflict in the Strait of Hormuz would be a nightmare for supply chains throughout the world, raising the cost of raw materials, manufacturing, transportation, warehousing, inventory…essentially every component of a supply chain,” he said. “We still find that the majority of companies have spent little or no time planning for such contingencies. That is astounding, troubling and frankly, a significant management failure.”

So it’s in that light I wanted to share a little more from my conversation from last week with Jim Malvaso, retiring president and CEO of Toyota Material Handling North America. We talked about a meeting President Obama had with a group of executives who want to bring jobs back to the U.S. The President promised them he would include a tax break in next year’s budget if they would bring the jobs they’ve been outsourcing to other countries back to the U.S. That would make U.S. supply chains more secure, wouldn’t it?

“I’ve brought jobs back to the U.S. and never asked for anything nor do I expect anything,” Malvaso told me. “It’s the right thing to do for the country. There’s a lot more to it than Obama taking other people’s money and throwing it at companies to bring jobs back here. We have tax policies where we have the second highest corporate tax rate in the world. Individual tax rates are out of sight. Look at the restrictions we have on expansions. Look what they did with Boeing. It was creating thousands of jobs in South Carolina and he made it tremendously difficult.”

He’s referring to the government’s efforts to keep Boeing from locating a new production facility in South Carolina. Many point to the influence of the National Labor Relations Board for that action. But where unions are concerned, those same critics cite them as the reason companies have outsourced labor to other countries in the first place. And where China is concerned, it is connected to several of the supply chain risks listed in the McKinsey study. Malvaso says The U.S. and its corporate citizens need to take responsibility for securing its supply chains from such threats.

“We need a total environment change and that means not just spending our way out of poor policies and poor decisions,” he said. “The World Trade Organization needs to get involved and if China wants to have a world market they need to value their currency properly.”

And industry must value its products properly, as well. Referring to the U.S. industrial truck market in particular, Malvaso said it’s in a position to set a good example for the value of its products and services.

“We bring value to the entire supply chain throughout the world,” he said. “Nothing moves without us. It pains me to see how little value [the industrial truck industry] puts on our own products and services. I hope we come to our senses regardless of how competitive it is and keep the value in this industry up where it belongs. [Where Toyota is concerned] I’m confident Brett Wood and the management team I’m leaving behind will do a great job for our company and I’ll sleep well at night.”

I hope you’ll be able to say the same thing about your successors and your sleep, dear readers.

When I was a kid I believed that only Superman could fly faster than a speeding bullet. Now that I’m halfway into my 50s and any remaining innocence and idealism is quickly oozing out of me, I’ve come to realize that the only thing that can fly faster than a speeding bullet is a promise during a presidential election year.

I read in this morning’s paper that President Obama spoke before a group of American executives in charge of companies that are starting to bring jobs back to the U.S. The President promised these execs he would include tax breaks for such “in-sourcing” in the fiscal 2013 budget plan to be sent to Congress next month.

“I want us to be known for making and selling products all over the world stamped with three proud words: ‘Made in America,’” he said.

That’s a great sound bite, but we’ll see if it turns out to be the President’s legacy or just another broken campaign promise. In the meantime, American manufacturers like those who heard the President’s promise can always take comfort that although their made-in-America products are more expensive, they’re also better quality—right?

That consolation is as viable as a political promise these days.

Product quality isn’t that hard to accomplish. There are software providers who can make it possible for companies anywhere in the world to monitor manufacturing quality in plants anywhere in the world.

I saw a press release from a company called InfinityQS International, Inc., providers of quality control software, and they’re expanding their international presence too. In fact like President Obama, this company’s president & CEO, Michael Lyle, is taking on speaking engagements around the world, extolling the value of statistical process control (SPC) software for manufacturers. His company presented in China recently, telling manufacturers there how they could enhance their level of quality control.

The press release quotes him as saying “When considering that Chinese manufacturers account for nearly 20 percent of all manufactured goods—the most in the world—it is imperative for quality best practices to take precedence on the plant floor, throughout the enterprise and across the supply chain.”

I followed up with him to ask if American companies establishing a presence in China are raising the quality bar for manufacturers in China.

“We have clients that are tracking, via internet connection from their headquarters in the United States, real-time process data originating from manufacturing facilities in China,” he answered. “When quality issues occur, key personnel in both countries are immediately notified so the adverse events can be resolved rapidly, mitigating their effect and cost on production.”

Shortly after I had this conversation, I saw another press release announcing the retirement of Jim Malvaso from his post as president and CEO of Toyota Material Handling North America (TMHNA). I’ve had the pleasure of interviewing Jim several times in the past few years, and he’s always had strong opinions about the challenges of competing with Chinese manufacturers on our soil and theirs.

I called him to ask what his plans were for retirement, knowing that he’d maintain a consulting role at Toyota as they grow their global markets. I’ll share with you my full conversation with Jim in my next blog post, but I wanted to conclude this post with his take on the role of manufacturing in the economy. He says manufacturers in many industries, including lift trucks, often stress product quality but fail to emphasize the value of strong service and support.

“There is a significant tendency for customers to take advantage of the economy where supply exceeds demand and manufacturers often respond by undervaluing not only their product but the services and expertise that come along with it,” he told me. “I think our industry is acting way too much as commodity sellers. Our material handling products go far beyond a commodity. We need to recapture the value proposition that made this industry valuable to our customer base.”

I hope the manufacturing executives who heard President Obama’s promise to reward manufacturers for bringing jobs back to the U.S. will capitalize on that promise by rewarding their own organizations for making top-level service and support equal partners with manufacturing quality.