by Pamela Wiseman, TFI Senior Operations / Supply Chain Consultant, and contributing expert for TFI’s study in progress, Electronics Design and Manufacturing in Eastern Europe
Electronics manufacturing in Central and Eastern European is a hot topic these days, especially with questions at the forefront about social responsibility and rapidly rising labor rates in China, as well as volcanic disruptions to global supply chains in our recent memories. Hungary, the Czech Republic, and Poland have developed strong capabilities over the last decade with Romania, Estonia, and Turkey also active areas for some electronics companies. Someday soon, North Africa will likely become the new frontier.
The main interest in Central and Eastern European capabilities is — as you would expect — to access a ”low cost” solution to fulfill manufacturing and service requirements for European markets. Although in some of the region’s countries the transportation infrastructure is not as developed as we would like, there are some tax benefits as well as time, inventory, and logistics savings to be had. The labor cost cannot match China, but if your market is in Europe, it is definitely worth sharpening the pencil to seriously consider your manufacturing-location options. With the rapid rise in wages paid to Chinese EMS workers, the cost differential may not last forever. In the end, low cost (measured as price paid by the OEM to the EMS) is paramount in the manufacturing location selection process. Other elements such as quality and social responsibility play a role, but for some research respondents these factors continue to take a back seat because they are harder to quantify as a “cost.” In the ultimate review of an accurate business case, total costs considered must also include inventory investment, logistics expense, transportation time and risks, OEM travel time, and the value of the complexities required to manage cost, quality, and delivery from afar.
Electronics companies are continuing to expand sales, service, and distribution into the region with Poland, Romania, Hungary, Czech, Ukraine, Russia, and Turkey being of greatest interest. In Central and Eastern Europe, as well as Europe as a whole, markets are fragmented and cultures, languages, customs, and regulations can vary widely adding to the complexity. It’s important not to approach business with Europe as one “entity,” due to the distinct differences between the countries. Despite some hurdles, ease of doing business and infrastructure are thought of positively and are rated by our research respondents as “fair-to-good.” For other respondents, however, the significant positives of building and servicing product in Europe for European customers are not enough to sway the decision away from Asia, where the companies have grown accustomed to manufacturing. In especially the developing Central and Eastern European countries, the lack of logistics capabilities is so far an insurmountable barrier for some.
The ultimate question is, are we really considering and weighing all of the key elements accurately enough?
I’ve learned, from serving as VP of Operations at electronics companies for many years, that it is critical to develop a sound business case that considers all of the costs and benefits in the decision to choose a manufacturing supplier and location. Further complicating these decisions is that relative costs, benefits, and risks change rapidly within constantly evolving global economies. The right choice today may well be the wrong choice on a time scale measured in only months! Risk assessment is critical, and the risks often grow exponentially with the distance between manufacturer and customer due to all the complicating factors to consider!
For anyone contemplating doing business in the European market, it’s a must to seriously consider the relatively lower risk and the great benefits of manufacturing in Central and Eastern Europe.
Weigh in on your views about electronics design and manufacturing in Central and Eastern Europe! Our report so far features country-by-country OEMs, EMS/ODMs, and suppliers; economic insights and relative ease of doing business; skill of workforce; sales channels; service/recycling; prevalent electronics industries; and strategies up and down the supply chain. Reply to the blog, take our survey, or join in with the study’s sponsors.
Last year we posted a TFI Friday Best of Blogs about what we had been reading that we suspected would interest and benefit TFI’s clients and network. Now, in time for your summer reading, we are updating the list. I invited our team to recommend books on the topics of supply chain, outsourcing, logistics, the tech industry, economics, environment / sustainability, or a combination of them – such as the book I am recommending this time.
A Taiwanese friend whom I met in Israel had me read Prosperity Without Growth: Economics for a Finite Planet, by Tim Jackson. Jackson is Economics Commissioner on the Sustainable Development Commission, the UK Government’s independent adviser on sustainable development. He lays out rational reasons why economic growth a la the past century cannot – alone – guarantee prosperity, and how flourishing within limits is a sounder formula for prosperity to come. TFI clients experiencing rebound growth from the recent economic contraction will find insights on strategies for assuring success even when growth is not assured.
TFI Logistics Consultant Jon Gilbert dug into his bookshelf to recommend a logistics “cookbook” comprising well-written advice and “recipes” for managing outsourcing of logistics. Self published by Cliff Lynch, Logistics Outsourcing – A Management Guide, 2nd Edition is a good read and valuable tool that Jon uses frequently as he advises clients.
Kim Allen, TFI Environment Consultant, recommends Profit Beyond Measure, by H. Thomas Johnson and Anders Bröms. This gem of a book offers a simple but radical solution to operational waste that has been realized by two major manufacturers: Toyota and Scania (a Swedish truck maker). The waste reduction method elegantly eliminates the traditional structures that supposedly “manage” waste, such as complex forecasting techniques and theoretical models. Instead, intelligence is created throughout the entire system, and practical understanding by those “on the floor” is used to improve efficiency. This system mimics a natural ecosystem, and was the basis of Toyota’s market value rising above that of the “Big Three,” as well as Scania’s stability for more than 65 years.
We are lucky enough to have Ben Marshall as a summer intern; he is a mechanical engineering student at UCLA and is helping our clients with design-for-environment. The two books he recommends are Right Relationship, by Peter G. Brown and Geoffrey Garver, and Just Good Business, by Kellie McElhaney. Right Relationship is, as he describes it, about helping our economy fit into the earth’s structure, as opposed to the other way around. Just Good Business is a guide to branding a company’s corporate social responsibility efforts.
TFI Environment Consultant Nikki Pava recommends Thriving Beyond Sustainability by Andres R. Edwards (who also wrote The Sustainability Revolution). Edwards describes how we can go beyond “sustainability” and attain “thrivability.” This book features examples of people and organizations that are creating positive transformations in all areas of sustainability. The frameworks outline areas such as regenerative design, community activism, and going “glocal,” which encapsulates the “think globally, act locally” world view. Thriving Beyond Sustainability provides inspiration and optimism that we all need today.
Finally, my colleague Pam Wiseman (TFI Operations and Supply Chain Consultant) shares that she is immersed in Theory U, about transformational leadership — creating the future and pushing beyond the constraints of the past. It’s especially pertinent in a complex and fast changing world with serious problems that need new and innovative solutions. Sustainability, climate change, terrorism, and our dependence on fossil fuels are a few examples of the complex and difficult problems that we face. Leaders need new ways of thinking and impetus to drive change. This framework can help drive transformative thinking.
Many thanks to the TFI team for their recommendations — I’ll load the books I haven’t yet read on my electronic reader before vacation. What are you reading that you believe will foster the TFI community’s success in business and in the world?
By Jon Gilbert, TFI Logistics Consultant
As product lifecycles grow ever shorter, increasing velocity becomes more critical in managing the supply chain. Reducing new product development time, supplier lead-time, and speed of transport are all key in gaining competitive advantage.
Despite all the desire for speed, numerous factors are working against speeding up transportation. In the past few months, steamship lines have begun “slow steaming” programs, reducing capacity and adding as much as 50% to transit times in certain lanes. Airfreight costs are rising with demand as capacity remains constrained, and fuel costs are on their way up once again. This all adds up to higher and higher costs to go fast.
How do industry leaders cope with these issues? Many have been looking to near-sourcing alternatives, moving manufacturing, final assembly, and/or test closer to demand. This allows for fast cycles at low cost. A recent Stanford Business Journal article talks about the benefits of keeping production close and supply chains short. The result: much greater profits. Their story focuses on fashion, but the similarities to our industry are obvious.
Interestingly, we see commonalities evolving in regional supply markets. While component manufacturing has largely been driven to Asia, it has become popular to build subassemblies and finished goods in Eastern Europe and Mexico. This specialization is partly an effect of the tendency of similar businesses to locate near each other, but it also has much to do with the economics of shipping. As components are built into subassemblies, and finally combined into finished goods, density (kilograms divided by cubic meter) of the items generally decreases. Think of shipping capacitors versus assembled circuit boards, versus finished goods. Each is less dense than its precursor. Shorter shipping distances are optimal for the lower-density finished goods.
In an ideal world, perhaps the entire supply chain would be replicated close to demand in multiple places. Instead, the manufacturing economics work in favor of a split-manufacturing strategy with multiple regions participating in the supply chain (lengthening the chain). It makes great sense to create large capacity to build high volumes of uniform parts in a single location, and Asia has largely won this market. For final assembly, the scale is much smaller, and localizing production and adding opportunities for postponement make much more sense.
For these reasons, we are seeing many of our clients pursuing strategies to satisfy demand with more localized capabilities. The benefits are clear – reduced transportation costs, greater speed to market, and greater responsiveness.
What are you doing to shorten your lead-times?
How does your company plan to compete as transportation costs rise and cycle times grow ever shorter?
You won’t find the world’s lowest labor rates in Eastern Europe, and one has to follow European Union environmental and other regulations in much of the region. It’s not the world’s fastest growing economy, as is China. In Eastern Europe you will find some graft and less-than-ideal manufacturing/logistics infrastructure. But for electronics company executives and strategists it’s the region to focus on now for many reasons.
The market for manufacturing services and support is moving east in Europe. Leaders are already creating and implementing sound strategies for design and manufacturing in Eastern Europe. Last week Texas Instruments’ CEO Rich Templeton said that his eyes are on markets in Eastern Europe for semiconductor sales.
Contract electronics manufacturing in Europe is expanding and changing, which affects decisions about electronics manufacturing services (EMS) companies, design in the region, component and material supply, logistics, recycling, and after-market service. The world’s largest electronics contract manufacturer Foxconn (HonHai) is building HP computers in Russia (near St. Petersburg) and is the second-largest exporter in the Czech Republic.
The European Union economy (GDP) is ranked #1 and the manufacturing center has shifted to Eastern Europe; being “absent” from this region is not an option.
Eastern Europe is not one market — it is a dozen or so markets defined by varying levels of economic vitality, socioeconomic slices, languages, business customs, quality of infrastructure, and laws. To succeed in the region, it’s essential to gain insights about each market and choose the best ones for design, manufacturing, sales, and services.
Environmental regulations in Europe are on the forefront globally and in continual progression. One must take into account how current and future regulations will affect the way the industry designs, produces, ships, reuses, and recycles products.
Recent global current events (Icelandic volcano, tainted products from China, a well-spring of corporations publicly announcing carbon footprint and reduction plans) underscore the imperative of exploring close-to-customers manufacturing strategies. So many of our tech clients generate 25% to 50% or more of their revenue from Europe. We say it’s critical to understand how best to serve customers there.
For these reasons, TFI is launching a study called Electronics Design and Manufacturing in Eastern Europe. Huge thanks go to our Founding Clients for supporting this research. Let us know if you’d like to become a Founding Client for first access to the insights, or would like to be interviewed by the TFI research team for the study to receive a complimentary executive summary.
I invite you to reply at the bottom of the blog regarding your views on Eastern Europe as a strategic venue for electronics design and manufacturing.
It’s not glamorous, but it’s necessary: ensuring that your electronics recycler is giving you maximum business benefit and a fail-safe shield against irresponsible end-of-life treatment. Some of our clients have switched recyclers in recent years — with the looming threats of regulations and NGOs looking to expose examples — and others are issuing requests for proposals now.
What should you look for in your recycler? Most of TFI’s community members have global customers, so having global coverage is advantageous not only for ease of doing business but also to reduce the ridiculous expense and amounts of carbon emissions from shipping end-of-life or second-life product across oceans for “environmental benefit.” Plus, regulations in the wings will require responsible recycling in the region of the product’s use.
Also, find out the exact path of your specific products from when they leave yours or your customers’ premises through the time when they become raw materials available for another supply chain. Choose only those recyclers that accurately document product outcome and be wary of too many subcontracting relationships; with more than 2 degrees of separation it’s nearly impossible to ensure that the people actually treating your products are doing so responsibly. The defense, “But it wasn’t the recycler I hired who sent the products to the Ghana,” won’t count when photos capture brand-name products in tragic “digital dumps” there (where customers’ data are at risk as well.)
Finally, create additional revenue streams by designing your products and processes for responsible additional “lives.” Find a recycler excellent at triage — determining which of your once-used products are appropriate for refurbishment and data cleansing, warranty replacements, resale, or mining for workable sub-modules or valuable components. (This recommendation is sure to spark replies from people uncomfortable with selling second-hand electronics, though it is a common practice around the world and it should be done with full disclosure.)
If you want hundreds of times more insights on choosing and auditing electronics recyclers than space allows in this blog, come to the International Electronics Recycling Conference and Expo in San Francisco May 26-27 (at which I am keynote speaker, and several TFI clients are presenting).
Conference Director Ismail Oyekan said it well: “A huge majority amongst businesses of all sizes do not realize the liability, environmental impacts, and financial costs associated with improper electronics waste management. Electronics waste is now the fastest growing waste stream and information-technology asset managers, manufacturers, and others in the electronics supply chain can learn about the process of selecting a qualified electronics recyclers for their end-of-life and surplus assets.”
OK, who wants to comment about electronics reuse?
If you are not a newcomer to the TFI Blog, then you may have seen our posts about reducing corporate travel, choosing and aligning manufacturing and customer locations, and providing customer-focused contract-manufacturing services and in-region support. Well, last week’s volcano eruption in Iceland and the subsequent shut down of air travel in the region reinforces the strategic importance of all shades of travel reduction.
One San Francisco Area-based client found out this morning that her flight this week to Europe has been canceled. One European-based EMS company reported its inability to meet product shipments. A European conference and expo scheduled for later this month and early next is sure to be lightly attended, because the exhibitors are supposed to ship their booth and demonstration equipment this week and attendees’ travel plans are in question while wondering if the event is still on.
Regional strategies for manufacturing, sales, and customer support — as well as using travel-alternatives such as web- and video-conferencing — are about reducing risk, expense, and environmental impact. No one would have asked for a volcano to further illustrate the strategic importance of reducing movement of product and people around the planet, but now that we have this one we can connect the dots.
What else do you think it will take for industry executives to markedly reduce travel of people and product around the world?
By Pamela Wiseman, TFI Senior Operations/Supply-Chain Consultant
Until now many tech companies approached the warranty and product service parts of their business as a functional necessity –- far less glamorous than new-product development or even supply-chain management. But today’s industry leaders are finding new business reasons to strategically approach global service depots:
- profit
- competitive differentiation
- cost-effective logistics
- shorter response times
- environmental compliance
- reduction of cost of goods sold through reuse
- lower inventory levels
Better service is a path to higher revenues
I had a first-hand view of the significant business value of a top-notch service business in 1998 when, as Director of Field Service Operations for a company supporting printed-circuit-board assembly equipment, I observed that whereas customers interact closely with the sales team in the beginning of the relationship, the lasting impressions and loyal relationships are formed after the sale. Customer service is tantamount to gaining repeat sales and generating customer satisfaction. Even when faced with a significant quality issue, customers will remember how responsive the service was and how the issue was handled –- that is what makes the lasting impression.
Just how strategic was the service business? During the bubble of the late 1990s, my company’s reputation as premier provider of service had tangible value prompting customers to choose our products, often regardless of price and without sacrificing margin on spare parts. Other equipment providers made significantly less investment in 7×24 2-hour parts availability and quick-turn repairs, and their sales suffered.
Cross-functional, life-cycle strategies
Servicing equipment is yet another area where operations, manufacturing, supply chain, logistics, and environmental strategies come together into one strategic whole. Companies that are truly optimizing value across products’ life cycle incorporate design for service (DfS) in their new-product-development processes, requiring an intense cross-functional team approach and consideration of the business and marketing drivers throughout the product life cycle. Strategies deployed across the life cycle can match parts availability and even encourage customers to purchase the newest technology!
How You Can Engage
Currently, we at TFI are analyzing tech companies’ service-depot strategies and measures of success. We are documenting how companies determine and establish KPIs (key performance indicators) for service depots and the effectiveness of these measurements. We are weighing the relative merits of using numerous customer-focused depots, 3PL (third-party logistics) services, profit-and-loss or cost-center business models, service offerings (same day, 4-hour, etc.), and geographical preferences. Some metrics are related to inventory, turn-around time, customer satisfaction, and repair success.
If you are involved at a mid-sized electronics company in the areas of Customer Service, Spare Parts/Aftermarket and/or Support, then please talk to us. We will interview you by telephone (ensuring that your comments are not linked to your company) and send you a complimentary summary of aggregate positions and trends. Contact us today to schedule an interview.
If you work for an electronics product company, contract manufacturer, or component supplier, then you may ponder over which places in the world you should have your products made, or where you should establish manufacturing facilities or sales offices. Since I started tracking the electronics-manufacturing industry in 1985, I’ve witnessed mad dashes from one region to another: race from the USA to Mexico and to Scotland and Ireland. Afterward, flee from Mexico to China, grab lower-labor rates in Eastern Europe, then establish manufacturing in Vietnam. Later, it’s back to Mexico, build in India, then back to China, back to the USA, still in China. It’s quite the soap opera.
Here are some examples of electronics-manufacturing moves in recent history, by region:
Europe: Elcoteq opens a plant in Estonia, Nokia Siemens lays off 450 employees in Finland.
India: Jabil opens a plant in Chennai 2007; closes it in 2009.
North America: Celestica closes a plant in USA (Nashville); Foxconn expands in Mexico for Dell
China: CEC Telecom lays off a quarter of its China employees; Flextronics develops new facility in Suzhou (Wuzhong)
–Confused about which regions are hot and which are not? Let’s look at this strategically: in general, the hottest regions in which to manufacture are those where end customers reside. Regional manufacturing strategies can be best for bottom-line performance by allowing greater efficiencies in logistics, reducing costs and carbon emissions, decreasing supply-chain risk (through reduced lead times and improved responsiveness), and reducing total cost of ownership (when distance and risk overshadow lower labor rates).
Close-to-the-customer thinking also applies when the customers are product designers. It’s wise for electronics contract manufacturers to set up prototype facilities and for component companies to establish sales centers near electronic-product companies’ designers. (Our clients in sales and marketing have been trying to convince their management of this for years.)
In the mid-1990s when writing one of TFI’s Contract Manufacturing from a Global Perspective reports, my team and I debated whether Greenland would be the next hot region for electronics manufacturing. It was mostly in jest to underscore how far-flung manufacturing locations were becoming. Of course, with regional-manufacturing thinking, we don’t recommend setting up manufacturing in areas for only 55,000 potential customers (which is the population there).
What are your thoughts about regional manufacturing? Are you willing to eschew manufacturing where few if any customers reside?
by Kimberly Allen and Pamela J. Gordon
Many companies have begun working on environmental initiatives within their own four walls by increasing energy efficiency and reducing waste. It seems that everyone’s favorite these days is to remove single-use cups with forever-use ones. This internal focus is natural because it is where managers exert the most control, and it is where clear metrics can be established. (Let us know if you’d like to receive our new data supporting that ceramic cups are best for reducing costs and environmental impact.)
Going much deeper into the supply chain
But companies are interactive entities, part of a larger system. Sustainability managers quickly discover that fulfilling environmental objectives – especially in the areas of product design, distribution, or procurement – means working with suppliers and customers. A seemingly simple task such as reducing the packaging on a component can involve lengthy communications and negotiations with a surprising number of people both inside and outside the company. (We recently helped a client create an efficient packaging solution when the prior method used four times the packaging necessary!)
Sustainability in the supply chain is increasingly important because of regulations also. For instance, the REACH Directive requires companies to know (and register) the chemical contents of their products in far greater detail than ever before. They are reaching back into their supply chains for basic information, which can lead to collaborative product redesigns to avoid harmful chemicals.
Insights from the CDP
The folks at the Carbon Disclosure Project have been working to ease the transition to sustainable supply-chain operations by creating a network of member companies called the CDP Supply Chain. As stated in the flagship 2010 Supply Chain Report, “The CDP Supply Chain is a collaboration of global corporations who have extended their climate change and carbon management strategies beyond their direct corporate boundaries to engage with their suppliers via CDP’s annual Information Request. …This year, 44 member companies reached out to 1,402 of their suppliers, and 710 (51%) responded to the request.”
The report summarizes the findings. Members of the CDP Supply Chain are intent on reducing the carbon emissions from their supply chains, and are working on the challenges that currently hinder progress. Some challenges involve education of suppliers, who are generally at an earlier stage of sustainability planning than members; 56% intend to deselect suppliers who fail to meet carbon management criteria in the future. Some challenges will improve with clearer communication. Collaboration and sharing of best practices is a key priority at this time.
Although the CDP work involves manufacturing supply chains, there are other efforts afoot in the world of sustainable supply chains also. The first-ever Forest Footprint Disclosure report looked carefully at forest practices among companies in that industry. Ceres issued a report on corporate water-risk management based on disclosure data from 100 large companies. And other groups (ForestEthics, Earthworks, and OxFam America) are beginning to ask questions about “dirty resources” – raw materials like metals and minerals that are often acquired at considerable environmental and human expense.
Focus Questions for VP Operations & Supply Chain
TFI recommends that VP Operations / Supply Chain as well as Sustainability Executives ask themselves these five questions, toward creating supply-chain sustainability strategies:
o Where are the potential hot spots in our supply chain for illegal or unethical labor practices, or for irresponsible treatment of electronic waste (e-waste) and emissions to air, soil, or water?
o Which of my contract manufacturers (electronics manufacturing services (EMS) and original design manufacturers (ODM)) have made visible to us as much information about their suppliers’ labor and environmental practices as we need to reduce risk of being complicit in violations and bad publicity?
o Have we reduced the mass (weight, bill of materials, unnecessary components) of our products and packaging sufficiently for economic and environmental advantage, and which of our suppliers have been most proactive in this continuous Design-for-Environment (DfE) improvement?
o How are our internal supply-chain managers and buyers rewarded – through cost savings alone or also for reducing the company’s risk from associating ourselves with suppliers violating law or engaged in unethical labor and environmental practices?
o How many times do our products circle the globe from raw materials through product usage through end of life? Have we measured the wasted time, expense, CO2 emissions, and risk in transport, compared to a using a regional-manufacturing, logistics-efficient strategy?
How prepared are you to discuss these deeper levels of your supply chain? And what do you still need to understand in order to make it more sustainable?
By Jonathan Gilbert, TFI Logistics Consultant
2009 is finally over
It’s hard to imagine that we have been in the downturn long enough now that year-on-year measures are actually starting to look good in the transport sector. While demand shrank, deep capacity cuts in nearly all modes helped to prop up pricing as we closed out 2009 and moved into 2010. Despite these cuts, carrier profits remain dismally low, and in some sectors, non-existent. Ocean freight has been a particularly difficult market.
Quoted in Logistics Management, Edward Zaninelli, VP Transpacific westbound trade for ocean carrier Orient Overseas Container Line, says that “Revenue is below cost in all trade lanes, and the recovery is just beginning.” Another recent article in the Journal of Commerce stated that “The world’s top 22 ocean container carriers lost some $11 billion in the first nine months of [2009].”
Service and reliability implications
TFI’s forecast is for slowly improving market conditions; we see shippers being generally more optimistic about 2010 volumes. We expect that the gradual strengthening of economic fundamentals will continue through 2010. Unfortunately, these modest gains may not be enough to prop up all service providers. Similar situations exist in the domestic truckload and less-than-truckload markets, as well as in international airfreight. Some of the weaker players may not survive through this year.
Faced with these difficult market conditions, ocean carriers are using “slow steaming” operations as a way to constrain capacity and reduce operating costs. Rather than idling ships outright, carriers are opting to run certain lanes at reduced speeds to save on fuel and reduce costs. Others are avoiding expensive transits of the Panama Canal by steaming around Cape Horn.
Slow steaming can reduce operating costs by as much as 5% to 7%, but the increased transit time, as much as 33% longer, may be problematic for time-sensitive shippers.
Bottlenecks forecast
Improving economic conditions could lead to bottlenecks in transportation as constrained capacity and carrier bankruptcies collide with growing demand. Spot market container rates are rising quickly in some lanes, reflecting this shift in supply and demand balance. In fact, small shortages in ocean liner capacity occurred in late 2009 just before the holidays, and we expect this to recur in January/early February 2010, driven by preparations for Chinese New Year factory shutdowns.
What to do next
Proactive shippers are carefully watching their carriers and aligning with strong, well-financed partners in all transport modes. Savvy buyers are making the best of bad market conditions and getting good pricing where possible, while still managing risk.
To avoid supply-chain interruptions, supply-chain managers should proactively review ocean transit times and communicate changes inside their organizations. Slower ocean transit times also call for reassessing the cost of capital for in-transit inventories and reviewing the total cost differential between airfreight and ocean shipping options.
Finally, supply-chain managers should actively analyze transportation-related risks and develop contingency plans to deal with service interruptions due to ongoing carrier financial stress and/or upticks in demand.
What are you doing to manage risk, control costs, and drive transportation innovation at your company? Let us know if you are curious how TFI’s experts help clients improve supply chains and better manage transportation.