Final Say
Your supply chain dynamics: 2010 crisis? Or opportunities?
By Jon DeCesare, president, World Class Logistics Consulting, Inc.
The ancient Chinese symbol for crisis is the same as for opportunity (ji). This symbol applies to today’s economic situation. At the same time that pressures on supply chain service providers have reached crisis levels there are some opportunities for firms to strengthen their competitive position.
Prior to the current economic recession many international corporations aggressively pursued various global supply chain initiatives focused on cost reductions, efficiency enhancements and reliability. These efforts came under added pressure as the recession became evident and are anticipated to continue through 2010. Let’s take a look at today’s supply chain dynamics and then the potential opportunities that are appear on the horizon.
Supply chain dynamics:
Outlined below are the major dynamics and case studies conducted by WCL Consulting case studies, which illustrate these observations and conclusions.
Supply chain strategies A competitive weapon
Senior global supply chain executives attribute Wal-Mart Stores for waking up the international shipping community to the strategic importance of a world-class supply chain strategy. Today we see corporations such as Toyota, Best Buy, Target Stores, Kohl’s, Nokia, Nike, Hewlett Packard, Unilever and others use their supply chain strategies as critical competitive weapons.
Case study: A multinational mass retailer examined a three-year old, 20,000-FEUs-per-year cross-dock operation’s entire processes - from vessel arrival to domestic trailer dispatch, which identified tactics to move freight faster and more reliably to retail stores.
—Reuben Stone, EVP supply chain, Office Max (May 2009)
Supply chain risk mitigation
In early 2000, the international trade community began experiencing sporadic cargo delays in the U.S. caused by goods movement infrastructure and carrier capacity constraints. The shipping industry experienced two serious goods movement disruptions in Southern California first with the 10-day ILWU lockout in 2002 and again in 2004, with marine terminal labor and several rail resource shortages. Today’s changes in supply chain strategies due to elevated importance of risk mitigation include alternate port-of-entry routings, more extensive warehouse location and outsourcing analysis using risk mitigation metrics.
Case study: A major beverage distributor as part of a warehouse network optimization study analyzed highway traffic congestion patterns, which identified goods movement congestion bottlenecks potentially delaying retail store delivery operations.
C-level executive involvement
Another example of the rising importance of supply chain decisions can be found in the Retail Industry Leaders Association’s 2009 State of the Retail Supply Chain survey, which revealed that 64 percent of the top supply chain management executives report to the CEO or president; up from approximately 26 percent in 1990.
Case Study: A major multinational automobile manufacturer conducted a parts regional warehouse optimization study to identify highest service levels and lowest cost warehouse network strategy. The CFO was interested and involved.
Limited resources and aggressive initiatives
Corporations have reduced headcount for more than twenty-years. This intensified as we entered the recession. Today supply chain executives must reach higher supply chain performance levels with limited internal resources.
Case study: A multinational footwear and apparel retailer analyzed retail store delivery operations, which identified cost-and-time savings opportunities, allowing the client to maintain lowest possible store headcount.
Crisis and opportunity
As shippers cry out for help from their service providers the opportunity for service providers to strengthen their customer relations and marketplace competitiveness is now. I recommend that supply chain service providers analyze their current customer service fundamentals to confirm that they deliver:
- Effective supply chain stakeholder collaboration
- Customer-responsiveness from front line staff and management
- Increase the frequency of bringing “solutions” (much like a consultant) to the customers
“Every supplier, every customer, is feeling the same pain, so the desire to work together at a higher level is unparalleled.”
— Reuben Stone, EVP supply chain, Office Max (May 2009)
In This Issue
News, Trends & Analysis
New Items
Transport Economics: Don’t be so gloomy
Capitol Watch: From cargo screening to
roadability equipment
Trade Tools: A different world of trade in 2010
Supply Chain
Chris Steele: The corner and what’s around it
Compliance Corner: Hot trade compliance issues for 2010
Tech Trends: Five trends for 2010
Commentary
David Bennett: Five predictions for 2010
Gateway Glance
Georgia
The Port Community
East Coast Ports 2010: Five things to watch for
West Coast Ports 2010: The future of West Coast port productitivy?
The Shipping Environment: Five sustainable trends for 2010
Final Say
Your supply chain dynamics: 2010 crisis? Or oppotrunities?
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