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Modern Cost Engineering Evolution: Rewiring the Human Element for Supply Chain Resilience
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4 mois agoon
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In my previous blog outlining the adoption of cost engineering, I explored the dynamics behind the market move away from sole reliance on traditional, backward-looking cost estimating to one that also incorporates modern “should-cost” methods. The reasons are many, of course, but it is clear that industrial organizations are keen to use AI-driven methods and other digital tools to build much stronger layers of resilience and competitive advantage necessary to compete in today’s hyperconnected economies.
Although digitally enabled results can sometimes be achieved in an operational vacuum, digital maturity cannot. The former can demonstrate benefits like efficiency, cost reduction, safety, etc., but it will rarely scale. The latter delivers market success via competitive excellence, providing a means for better organizing the business and orchestrating the ecosystem to anticipate and meet modern market signals.
Modernizing the supply chain is, at its core, a human-centered endeavor. The successful integration of cost engineering demands significant realignment and reskilling of people. As I began discussing almost a decade ago, the workforce transformation required to modernize is certainly the most difficult endeavor a business will face.
In this blog, I’ll dive into the human element of cost engineering. I’ll touch on how roles and attendant knowledge, skills, and abilities (KSAs) across the supply chain are evolving, discuss the cultural hurdles organizations must navigate, and outline how companies can transform traditional estimators into strategic consultants.
Tribal Knowledge: I Feel Like I’ve Been Here Before
Leadership must address the workforce crisis currently confronting industrial manufacturing. Look at any credible information resource and the numbers are basically the same. Whole industries are facing rapid workforce retirements, with approximately 25 percent of the total manufacturing workforce already over the age of 55. Within small and medium-sized enterprises, which form the bedrock of the industrial manufacturing supply base, particularly in North America, between 30 and 40 percent of business owners and skilled operational workers are nearing retirement age. Ouch.
And yet we’ve known this has been underway for quite some time, but here we are. Historically, the reaction to tribal knowledge was wariness. I recall many conversations with leadership and frontline workers as technologies such as machine learning were initially deployed. Tribal knowledge, expertise, and the workforce that owned it were often treated as a nut to be cracked and the insides taken. Initially, the shell was perceived to be obstinately hard, with workers guarding their critical expertise, including core intellectual property (IP), as a means of fending off obsolescence. It didn’t lend itself to, shall we say, everyone pulling in the same direction.
Supply chain was no exception to this pattern. Cost estimating relied heavily on the undocumented tribal knowledge and personal experience of veteran employees. As these experts exit the workforce, they take decades of specialized intuition with them, leaving organizations highly vulnerable.
As a result, a new discipline has taken hold, as tribal knowledge is likely to be unretrievable in many instances or, in situations where leaders show a lack of humility, downsized too quickly. Modern cost engineering takes aim squarely at the reliance on human memory with standardized, process-based cost models and empirical data. Yet, an overwhelming 90 percent of supply chain leaders report a severe lack of the digital talent required to operate these new systems. Here we are, again, back to the ever-important human element at the center of a technology endeavor.
Redefining Supply Chain Personas
Rather than taking the same, lose-lose historical approach to cracking tribal knowledge, leading organizations are pivoting workers away from the manual, unsafe, and repetitive. What they are doing differently, though, is concertedly moving subject matter experts toward higher-level orchestration and critical oversight. It won’t pan out with every worker, certainly, but it will ensure that the expertise is retained and applied to creating more strategic value. On the surface, that presents much more opportunity for a win-win scenario. Here is how some specific roles are evolving:
Estimator
Historically, manufacturing estimators spent most of their time immersed in manual, backward-looking work. They pored over static 2D PDFs, visually interpreted complex 3D CAD models, and stitched together cost assumptions from disconnected spreadsheets. Much of their value came from patience and pattern recognition rather than insight, and the process was slow, reactive, and highly dependent on individual experience. For leading companies that are aggressively implementing cost engineering processes, that is radically changing.
In the world of cost engineering, this role is now that of a strategic advisor. Leveraging AI to automate much of the data extraction that once consumed their time, this role develops models to identify cost drivers based on real manufacturing constraints and material behavior. As a result, this role now focuses more on guiding internal teams on design-for-manufacturability decisions and outlining strategic trade-offs that can include a mix of potential metrics, such as cost, lead time, and, increasingly, carbon impact.
Procurement
Procurement has primarily been about transactional efficiency and negotiation. Success was generally determined by price, often with significant visibility limitations into how the price was constructed. Framed within cost engineering, procurement is driven by collaboration and risk management. Using precise cost models, sourcing conversations begin with a clear understanding of cost, informed by specifics on materials, labor, processes, and capacity constraints. If a supplier’s quote exceeds cost expectations, conversations can then be had specifically about how to target specific constraints, such as inefficiencies in process or materials. The objective is to provide transparency that allows for a win-win relationship in terms of performance, profitability, and reliability.
Frontline
Despite the best of intentions to change the reactive nature of the role, frontline work has been dominated by manual execution and post-problem decision-making. Operators were tasked with keeping machines running, responding to breakdowns as they occurred, and relying heavily on tribal knowledge passed down informally and gained over time. Cost engineering shifts the dynamic for frontline workers. Upstream processes and systems provide precision that is communicated to these workers in terms of production expectations. Operators are tasked with supervising processes, identifying deviations, and capturing machine-level issues as they occur. As these workers become more connected and augmented via technology, faults and anomalies are logged digitally, with automated routing to maintenance or engineering as needed. With effective cost engineering, the frontline workforce ensures production aligns with cost and performance expectations.
Chief Supply Chain Officer (CSCO)
In the past, supply chain leadership was back-office oriented, using historical information to attempt to optimize logistics execution, inventory control, and cost. Their influence was significant but fairly tactical. That orientation shifts significantly with cost engineering as the CSCO becomes the central orchestrator of enterprise performance, based on the organization’s ability to align with market demand. Supply chain data increasingly impacts revenue and margin stability, based on market responsiveness. As a result, the CSCO sits at the intersection of strategy, technology, and execution, with an increased mandate that expands beyond moving goods to shaping how the organization makes decisions. In an organization using cost engineering, CSCOs are redesigning roles, workflows, and governance models, based on AI-driven insights that orchestrate decision-making across the enterprise and ecosystem.
Aversion to Change: You Can’t Take the Human Out of, Well, the Human
So, implementing cost engineering seems like an obvious win. Despite the obvious operational benefits, integrating cost engineering introduces complex modernization challenges. Of course, these challenges are mostly rooted in aversion to change. It’s a pretty understandable problem, with generations of workers having been trained on historically based methods and having spent entire careers honing a requisite expertise. To them, AI and automated decision-making are met with deep suspicion, rightfully grounded in the fear that technology will replace jobs and render their expertise irrelevant. They are not wrong. This challenge has been exacerbated by leadership deploying complex new software without context. In reaction to these poorly orchestrated, technology-centric changes, operators bypass the systems and revert to familiar methods and tools, neutralizing investment and anticipated benefits. Pilot purgatory, anyone?
To counter this within the organization, leadership must employ empathy, transparency of intent, continuous learning, and AI explainability that enables humans to trust machines and the logic behind their decisions. From an external perspective, organizations also need to understand that they are only as strong as their weakest supplier. Leading companies gain their status by subsidizing the digital and cybersecurity capabilities of their ecosystem. It becomes a case of a rising tide lifting all boats.
Return of Value
Deploying cost engineering cannot be about eliminating the human workforce through automation. It relies on a human-on-the-loop model, but it defers to technology to manage massive data complexity. The role of expert workers is to apply contextual judgment and engage in continual collaboration. The transition to this approach requires transparency and significant digital upskilling that will likely feel uncomfortable initially. Due to the step change required in this shift, organizations need to define and align with a return of value rather than shorter-term return on investment. By empowering the workforce and supply chain ecosystem to employ data-driven precision, the organization transitions from a guesswork culture to one of definable competitive differentiation.
In blog three of this series, I’ll explore the process component of the equation. I’ll focus on departmental silos, cross-functional teams, and supply chain orchestration. You can read the first blog in this four-part series here.
The post Modern Cost Engineering Evolution: Rewiring the Human Element for Supply Chain Resilience appeared first on Logistics Viewpoints.
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Logistics Viewpoints Is Refocusing on Logistics
Published
4 heures agoon
24 août 2026By
Logistics Viewpoints is getting back to its roots.
Going forward, we are putting more emphasis on logistics and less on trying to cover the entire supply chain.
That may sound like a small distinction. It isn’t.
Supply chain has become an enormous umbrella. It can include sourcing, procurement, manufacturing, planning, inventory, logistics, sustainability, risk, technology, and almost anything that happens between a supplier and a customer.
There is plenty to write about there. But trying to cover all of it can also make it harder for a publication to have a clear point of view.
Logistics gives us that focus.
What We Mean by Logistics
For Logistics Viewpoints, the center of gravity will be the movement and storage of goods and the systems required to make that happen.
That means transportation, warehousing, distribution, fulfillment, automation, robotics, visibility, global logistics, logistics technology, and execution.
It also means we will continue writing quite a bit about AI, data, digital twins, agents, and decision intelligence. But the question will be what those technologies actually mean for logistics.
How does AI change transportation planning or execution?
What happens when warehouse systems can coordinate robots, people, inventory, and material-handling equipment in real time?
Can better visibility actually change a decision before it is too late to do anything about it?
Where can software act on its own, and where should a person remain in the loop?
Those are logistics questions.
This Doesn’t Mean Supply Chain Disappears
There is obviously no clean wall between logistics and the rest of the supply chain.
Inventory decisions affect transportation. Manufacturing decisions affect warehouses and distribution networks. Sourcing changes freight flows. Planning determines what logistics eventually has to execute.
So we aren’t going to stop using the term “supply chain,” and we aren’t going back through years of Logistics Viewpoints articles changing old terminology.
The distinction is more practical.
If a broader supply chain development has a meaningful logistics consequence, we will cover it. If it doesn’t, we don’t necessarily need to.
That gives us a fairly simple editorial test: Where is the logistics story?
The Site Will Change With the Focus
We’re also going through Logistics Viewpoints itself to make sure the site reflects that direction.
Some of the language has gradually become broader over the years. The homepage, About page, Topics pages, newsletter language, navigation, and several other areas still describe LV largely in supply chain terms.
Those will change.
For example, “Independent Intelligence for Supply Chain Leaders” becomes “Independent Intelligence for Logistics Leaders.”
The topics we emphasize will also become more clearly organized around transportation, warehousing, fulfillment, automation, visibility and orchestration, global logistics and trade, logistics technology and AI, and logistics risk and resilience.
ARC Advisory Group will, of course, continue to conduct research across the broader supply chain and industrial technology markets. This change is about giving Logistics Viewpoints a sharper editorial identity, not narrowing ARC’s research coverage.
Two New Series Help Set the Direction
We are also launching two substantial series that reflect where we want to take the publication.
The first is Systems Engineering in Logistics, a 16-part series.
One of the problems with logistics transformation is that companies can approach transportation, warehousing, automation, software, data, and AI as separate projects. But they all eventually have to work together.
The series looks at logistics as a system.
It starts with requirements and operating models and works through process and data architecture, technology selection, AI, digital twins, automation, testing, resilience, and lifecycle management.
The basic idea is simple: before optimizing another piece of logistics, make sure we understand the system we are changing.
The second series is The New Architecture of Logistics, with 10 articles looking at what that system is becoming.
We’ll examine why logistics increasingly looks like an operating system, why the traditional boundary between transportation and warehousing is weakening, the emergence of a logistics control layer, increasingly orchestrated warehouses, computational transportation, the changing economics of visibility, AI agents, decision velocity, and eventually more autonomous logistics operations.
The two series approach the subject from different directions.
Systems Engineering in Logistics is about how we design the system.
The New Architecture of Logistics is about what the system is becoming.
Back to Logistics
Logistics itself is becoming a much bigger technology story.
Warehouses are becoming more automated. Transportation systems are becoming more dynamic. Physical assets are becoming easier for software to observe. AI is moving closer to execution. Decisions that once took hours can increasingly be made in minutes or seconds.
At the same time, none of the physical realities have disappeared. Trucks still have to arrive. Trailers still have to be loaded. Inventory still has to be in the right place. Orders still have to get out the door.
That intersection between the physical world and increasingly intelligent technology is where Logistics Viewpoints has a lot to say.
So the change is not about making LV smaller.
It is about making it clearer what we are here to cover.
Logistics.
The post Logistics Viewpoints Is Refocusing on Logistics appeared first on Logistics Viewpoints.
Most B2B webinars do not fail because they lack registrations. They fail because they do not create enough executive relevance.
A webinar can attract a respectable audience, generate leads, and still make little impression on the senior decision-makers a technology supplier actually wants to influence. The problem is often not promotion or production quality. It is the design of the conversation.
In the latest Logistics Viewpoints Podcast, we look at why issue-first webinar design, analyst-led moderation, and market-focused discussion often outperform traditional product-centric presentations—especially in complex logistics and enterprise technology markets.
Executives Do Not Attend Webinars for Product Tours
The conventional B2B webinar usually begins with the supplier.
Here is our company. Here is our platform. Here are the capabilities. Here is a customer example.
That format can work when prospects are already evaluating a specific solution. It is much less effective when the goal is executive engagement or thought leadership.
Senior executives are usually thinking about larger operating questions: cost, service, resilience, labor, customer expectations, technology risk, capital allocation, and how their operating model needs to change.
A better webinar starts there.
The most important opening question is not:
What does our product do?
It is:
What important problem is changing in the market, and what does an executive need to understand about it?
That shift changes the entire discussion.
Start With the Issue, Not the Solution
An issue-first webinar begins with a problem that matters even if the sponsor’s product is never mentioned.
In logistics, that could be warehouse automation, transportation volatility, decision latency, AI agents, visibility economics, labor constraints, or the convergence of transportation and warehouse execution.
The discussion can then explore what is changing, why it matters, where conventional approaches fall short, and what executives should be thinking about next.
Technology still belongs in the conversation. But it enters as part of the answer rather than as the premise.
That creates a different relationship with the audience.
Instead of asking an executive to spend 45 minutes learning about a vendor, you are offering 45 minutes of useful perspective on a problem that executive already has.
Analyst-Led Moderation Raises the Value
A strong moderator should do more than introduce speakers and move through prepared questions.
The moderator should represent the audience.
That means asking the questions an informed customer would ask, challenging broad claims, drawing distinctions between approaches, and pushing the discussion away from features and toward operating consequences.
An analyst can also provide market context.
If a supplier says customers are increasingly asking for a capability, the moderator can explore why. What changed? Is this isolated or part of a broader shift? What business problem is driving demand? What barriers remain?
The supplier still gets to demonstrate expertise. In many cases, it demonstrates more expertise than it would in a conventional presentation because the value comes through the quality of the thinking.
Credibility Is Part of Webinar ROI
Enterprise technology purchases are rarely driven by a single interaction.
Decision-makers form impressions over time.
Does this company understand my industry? Does it understand the problem beyond its own product? Are its executives credible? Does the company have something useful to say when it is not directly selling?
A strong webinar can influence those perceptions.
That means webinar ROI should not be measured only by registrations, attendance, marketing-qualified leads, or immediate meetings.
Those metrics matter. But executive webinars can also build market credibility.
In long, complex enterprise sales cycles, that credibility can be strategically important even when it is difficult to capture in a lead-generation dashboard.
Do Not Make One Webinar Do Everything
Another common mistake is trying to make a single webinar generate leads, demonstrate the product, educate the market, create thought leadership, produce sales meetings, and satisfy every stakeholder at once.
Those goals can conflict.
A webinar optimized aggressively for immediate lead conversion can become too promotional to attract or retain the senior audience that makes the program valuable.
A better objective is simpler:
Create a conversation worth an executive’s time.
Demand generation can follow.
Build a Content Asset, Not a One-Time Event
A substantive webinar can also become much more than the live event.
A strong discussion can support a podcast episode, article, video clips, social posts, newsletter content, sales enablement material, and follow-up conversations.
That improves the economics of the program.
But repurposing only works when the original discussion contains genuine ideas. There is little value in repackaging the same sales presentation six different ways.
From Webinar Marketing to Market Influence
The best B2B webinars do not begin by asking how quickly they can get to the product.
They begin by identifying an important market issue, framing it around the decisions executives are facing, and creating a discussion that offers useful perspective.
For companies selling complex logistics and enterprise technology, that is where webinars can become more than another demand-generation tactic.
They can build credibility, shape market perception, and establish the company as part of the conversation about where logistics is going.
That is a much higher bar than generating registrations.
It is also a much more valuable one.
Watch the latest Logistics Viewpoints Podcast episode above to explore the full discussion on issue-first webinar design, executive engagement, analyst-led moderation, and improving B2B webinar ROI.
The post Why Most B2B Webinars Fail to Reach Executives appeared first on Logistics Viewpoints.
Logistics optimization has traditionally been built around a relatively stable operating network. Transportation managers optimize modes and routes, warehouse operators optimize labor and throughput, and distribution teams position inventory against expected demand. Conditions change, but the underlying logistics architecture has generally been stable enough to optimize around it.
That assumption is becoming harder to defend. Trade disruptions can redirect freight flows, infrastructure constraints can change viable transportation routes, warehouse demand can shift within hours, and automation is becoming capable of adapting to operating conditions in real time. The emerging logistics challenge is therefore not simply optimization. It is reconfigurability: the ability to change how goods move, where they flow, and how logistics resources are deployed while conditions are changing.
When Transportation Routes Change, the Rest of the Network Has to Follow
Recent uncertainty surrounding global shipping routes illustrates the problem. The Port of Los Angeles has been preparing for the possibility of additional cargo moving through the U.S. West Coast as shippers respond to continued Red Sea uncertainty and potential restrictions at the Panama Canal.
The port has discussed a planning scenario involving roughly 5 percent year-over-year cargo growth, while emphasizing that this is a preparedness assumption rather than a guaranteed forecast. More important than the number is the operational preparation behind it. The port has been coordinating with terminal operators, ocean carriers, trucking companies, and labor organizations to determine whether additional freight could be absorbed if global routing patterns shift.
This exposes an important weakness in the way logistics resilience is sometimes discussed. An alternate route on a network diagram is not necessarily a usable alternate route.
A port needs terminal capacity. Containers arriving at the port need chassis and drayage capacity. Inland freight requires available rail or truck capacity. Distribution centers need doors, labor, yard space, and storage capacity. Inventory arriving through a different gateway may also change lead times and downstream replenishment schedules.
The logistics network therefore cannot simply reroute the shipment. It has to understand and manage the consequences of the rerouting across the rest of the network.
That is logistics reconfigurability.
Warehouses Need to Reconfigure During the Shift
The same principle increasingly applies inside distribution centers. Warehouse operations have traditionally been planned around expected order volumes, available labor, established workflows, and known automation capacity. The problem is that those assumptions rarely remain constant throughout the operating day.
Orders arrive differently than expected. Labor availability changes. Automation throughput varies. Inbound trailers arrive early or late. Transportation schedules change. A labor plan that looked optimal at 8:00 a.m. may be badly mismatched with the operation by noon.
Warehouse technology has historically been good at measuring these differences. Labor management systems track productivity, WMS applications monitor work, and automation systems report equipment performance. The emerging opportunity is to use that information to change operations while there is still time to affect the outcome.
Warehouse labor-management and intelligence company Takt recently announced a $9.25 million Series A and says its platform supports more than 100 warehouses. Kenco has deployed the technology across 19 distribution centers, with additional expansion planned.
The performance figures associated with those deployments are company- and customer-reported, but the architectural direction is more significant. Takt says it is developing AI agents capable of rebalancing labor against live order conditions within supervisor-defined limits.
That changes the role of logistics intelligence. Instead of simply telling an operator what happened during yesterday’s shift, the system can increasingly help determine what should change during today’s shift.
The relevant metric becomes decision-to-action latency: the amount of time between detecting an operational change, determining the appropriate response, and actually changing the logistics operation.
Automation Is Becoming More Flexible
Warehouse robotics are moving in the same direction. Robot.com and Sodexo have signed a seven-year commercial agreement expanding autonomous delivery across North American campuses. The length of the agreement is notable because it suggests autonomous delivery is moving beyond short-term pilots toward longer-term logistics infrastructure.
Pudu Robotics has also introduced the MP2000 autonomous pallet-handling robot, which the company says can operate with less fixed infrastructure than earlier generations of automated forklifts. Those performance claims still need to be proven across diverse production environments, but the direction is important.
Traditional automation often required the warehouse to adapt to the automation. Facilities needed fixed infrastructure, tightly controlled workflows, dedicated operating areas, or substantial implementation work. More flexible autonomous systems potentially reverse that relationship by allowing automation to adapt more readily to the facility and changing workflows.
That matters because a highly automated warehouse is not necessarily a flexible warehouse. If changing the operation requires months of engineering and integration work, automation can actually create another form of rigidity.
The more important logistics capability is adaptable automation: technology that can be redeployed, re-tasked, or reorchestrated as volumes, products, labor requirements, and service expectations change.
Inventory Positioning Is Becoming More Dynamic
Reconfigurability also changes the role of inventory. Traditional logistics network design asks where inventory should be positioned to balance transportation costs, inventory carrying costs, and customer-service requirements. Increasingly, the answer may need to change more frequently.
A transportation disruption can make one distribution center less attractive. A demand spike can make inventory in another facility more valuable. A capacity constraint at one warehouse can shift fulfillment toward another node. Changes in delivery requirements can alter which inventory location provides the best combination of cost and service.
This creates a more dynamic fulfillment problem. The logistics system increasingly needs to determine not simply where inventory should reside in the network, but which available inventory should serve each order given current transportation capacity, warehouse conditions, service requirements, and cost.
That is where inventory visibility, transportation management, warehouse management, order management, and decision intelligence begin to converge.
From Logistics Optimization to Continuous Reoptimization
Traditional logistics optimization is essentially a constrained problem: define the orders, inventory, transportation capacity, warehouse capacity, service requirements, and costs, and determine the best way to move the freight.
The emerging problem is more difficult because the constraints themselves keep changing. A transportation lane becomes unavailable. A port becomes congested. A carrier loses capacity. Warehouse labor falls below plan. Orders shift geographically. Automation throughput changes.
The system therefore needs to find another answer and determine whether that answer can actually be executed.
That makes continuous reoptimization coupled with execution an increasingly important logistics capability. A mathematically optimal transportation plan has limited value if operations cannot implement it before conditions change again.
In many situations, the second-best logistics plan that can be executed immediately may be considerably more valuable than the theoretically optimal plan that takes days or weeks to implement.
Logistics Optionality Has Economic Value
This also changes how logistics organizations should think about redundancy. Alternate carriers, ports, warehouses, transportation modes, fulfillment nodes, labor pools, and automation capacity all cost money. Traditional efficiency programs can therefore make redundancy appear wasteful.
But those resources also create options.
An alternate carrier has value when the primary carrier lacks capacity. A second port has value when the preferred gateway becomes congested. Flexible warehouse labor has value when order volume changes. Adaptable automation has value when workflows shift.
The challenge is determining how much optionality is economically justified.
Future logistics optimization will therefore need to answer a more sophisticated question than, “What is the lowest-cost way to move this freight?”
It will increasingly need to determine: What is the lowest-cost logistics network that provides enough operational flexibility to maintain service when conditions change?
The Logistics KPI to Watch: Time to Reconfigure
Logistics organizations already measure transportation cost, warehouse productivity, inventory turns, on-time delivery, order cycle time, capacity utilization, and service performance. Another family of metrics is likely to become increasingly important: how quickly the operation can change.
How quickly can freight move to another carrier or mode? How long does it take to redirect volume through another port? How quickly can fulfillment shift between distribution centers? How rapidly can warehouse labor be rebalanced? How long does it take to redeploy automation or change a warehouse operating plan?
These measurements reveal something traditional efficiency metrics do not: the logistics network’s ability to respond while the disruption is still unfolding.
That may become particularly important as AI enters logistics execution. The value of AI will not ultimately be measured by how many recommendations a system generates. It will be measured by whether those recommendations can safely and economically change transportation, warehousing, fulfillment, inventory, and labor decisions in time to improve the outcome.
The Bottom Line
For decades, logistics excellence largely meant executing a well-designed plan as efficiently as possible. The emerging environment requires something more.
Transportation routes change. Capacity moves. Warehouse conditions change throughout the day. Inventory needs to be repositioned. Automation is becoming more adaptable, while decision systems are becoming capable of responding faster to operational changes.
The strongest logistics operations will therefore not simply execute the original plan better. They will recognize when the original plan is no longer the best one and reconfigure transportation, warehousing, inventory, labor, and automation faster than competitors.
The future of logistics is not simply optimized. It is reconfigurable.
The post Logistics Is Becoming Reconfigurable appeared first on Logistics Viewpoints.
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