Economic Development and Life Science & Biotech and Manufacturing & Technology and Technology and Transportation, Distribution & Logistics

IU planning logistics center: University seeks funds for facility to provide services to TDL industry

May 2, 2005

Indiana University officials say they're shopping for a site near the airport or in Plainfield for a laboratory to help grow the state's transportation-distribution-logistics industry-known as TDL.

The IU Supply Chain Control Center would evaluate for companies the feasibility and cost benefits of new technologies that could be used to improve sourcing, production and product distribution. The service would be provided at no or little cost.

But the center faces a logistics challenge of its own-a delivery of cash. IU still needs to find $1.5 million to $2 million to launch it, said Roger W. Schmenner, associate dean of Indianapolis programs at IU's Kelley School of Business.

The university hopes to wrest a grant from the state's 21st Century Research and Technology Fund. Failing that, "then we'll think about getting funding in some other way."

Such a center likely would introduce some of the technology already being studied by IU's Kelley School of Business. For example, last year Kelley became the nation's first business school to build a working model of a Radio Frequency Identification system.

RFID is expected to replace the familiar bar code and consists of a tag imbedded with silicon chips that carry up to 96 bits of data-allowing for better tracking of goods during shipment.

Students at IU's Supply Chain Management Academy use a miniature train and truck system to experiment with RFID applications for a simulated business.

The technology is likely to beget further innovation, such as monitoring conditions of cargo. RFID tags on a box of pharmaceuticals, for example, could be tied to temperature sensors inside the box to detect spoilage during transport.

The IU center would apply new logistics technologies to a model of a client firm's existing supply chain to see what might result.

"We consider this as a kind of laboratory. We want to do the experimentation for [companies]," Schmenner added.

Putting the center near the airport or Plainfield makes sense given the dense population of warehousing and transportation firms in those areas, he said. So far, Schmenner has had discussions with seven firms and has received letters of support from FedEx and from Roche Diagnostics. Memphis-based FedEx operates its second-largest cargo hub at Indianapolis International Airport.

The IU center is among a handful of academic components in a broader effort to make Indiana a more powerful player in TDL.

Last year, Purdue University President Martin C. Jischke said he wanted Purdue to open a transportation, logistics and distribution research center.

Purdue was shot down for a grant but also continues to look for funding. For now, TDL studies will operate under the roof of Purdue's Center for Advanced Manufacturing while related work continues in various departments at Purdue, said John A. Schneider, assistant vice provost for industry research.

TDL is one of four economic pillars Indiana should pursue, according to a 2002 Battelle Institute study commissioned by the Central Indiana Corporate Partnership. The others are life sciences, advanced manufacturing and information technology.

The TDL effort could help ease the sting of lost Indiana manufacturing jobs, although pay currently is not as high: $37,000 vs. an average $42,000 a year in manufacturing. Still, TDL jobs pay nearly $9,000 a year more than the state's average annual wage of $28,000, according to a recent Purdue University study.

Previously, "everybody thought it was a $7-an-hour Bubba job," Schneider said.

But increased use of technology within the TDL sector will require employees to have higher skills, according to the Indianapolis Private Industry Council, a notfor-profit agency that helps businesses find skilled workers. Two months ago, it sought proposals from firms to survey the TDL sector in the nine-county metro area and to identify worker skills that will be essential.

Results, which are due by the end of September, will help institutions develop curriculum needed for training, said Joanne Joyce, president and CEO of IPIC. She said the outcome could mirror what resulted from surveys of the area's life sciences industry two years ago. IUPUI and Ivy Tech used the findings to develop and launch biotechnology associate degree programs.

The TDL industry is diverse, ranging from grunt jobs in warehouses to software engineers. Indianapolis-based logistics firm Langham developed its own freight management software to better serve big clients such as Eli Lilly and Co. and Microsoft Corp.

Even trucking firms are seeking IT experts. Indianapolis trucking firm Hoosier Tradewinds developed a software product it will sell to other trucking firms to better manage operations and crunch data in areas such as driver productivity.

More than 250,000 Hoosiers work for TDL companies while another 75,000 work in TDL functions within manufacturing and other companies, according to a recent Purdue University study.

There's much more potential, said Jody Peacock, spokesman for the Indiana Ports Commission, which operates the state's three maritime ports. He said the TDL industry in Indiana has thrived on its own for years even without a focused economic development initiative.

Two years ago, the Indiana Legislature gave the Ports of Indiana the green light to build what are known as "dry ports"- intermodal hubs where cargo is transferred between train and truck.

Among areas with potential for such ports is northwestern Indiana, which could take up slack from Chicago's congested rail yards. Some also say the Avon rail operations have potential to become an intermodal giant.

Indiana touts a number of advantages in TDL already, including a location that puts it within a day's drive of 75 percent of the population of the United States and Canada.
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