Think Outside the Box

CSCMP ANNUAL STATE OF LOGISTICS REPORT

The Council of Supply Chain Management Professionals (CSCMP) recently published their 22^nd Annual State of Logistics Report last month.  Although a little lengthy, it does contain some very interesting data and forecasts as well as some sobering news. This post is intended to serve as a “Cliff Notes” version of their report.

When given the opportunity to receive bad news or good news first, I almost always choose the bad.  Personally I like to end on a good note.

So here it is, “bad” news first.  2010 was an improvement from 2009, but when you’re close to rock bottom, there’s only one way to go, up. According to the report, at the beginning of 2010 volumes were up, but slowly trickled off during the second half of the year.  Demand and available capacity began to equalize, but rates were still tight. Although the recovery started strong, it began to run out of steam by the time the second half of 2010 rolled around.

Trucking, the largest component of the transportation sector, was the hardest hit mode. Constant increases in fuel costs were the largest contributing factor (which we have previously discussed). Additionally, trucking took a 13.4% cut in workforce over the past four years.  The CSCMP reported that over 3,000 trucking firms have declared bankruptcy over the last three years.

Forward looking to 2011, the report indicates that the US economy appears to be plateauing. With capacity issues becoming more prevalent, it sets carriers up for the ‘perfect storm’.  Retaining drivers is becoming a more daunting task, operating costs are continuing to rise, new regulations are in the process of being implemented, as well as the truck order backlog is growing.  Add all these factors into the mix with rising freight volumes and it puts the trucking sector in a tough bind, ultimately leaving it unable to meet the market’s demand.

Now for the “good” news.  Rosalyn Wilson, who initially presented this report in June, stated, “my money is on the innovators in the logistics industry who are navigating through the recovery.”  I could not agree more.  When times get tough, it’s time to start expanding the boundaries, getting creative, and “thinking outside the box.”

Contact us to learn of ways we can help your company “think outside the box.”

Paying too much at the pump?

What are Best-in-Class companies in your industry doing to share these increases with their customers?

The increase of fuel prices and the economic instability continue to create pressure for businesses in every industry. Fuel surcharges typically make up 40% of a company’s supply chain and logistics spend.   Therefore it is critical for organizations to know how fuel surcharges are calculated and how the diesel fuel market can impact their freight spend.

With this knowledge, companies can create metrics to determine when they need to pass some of this cost on to their customers.  Most companies don’t have access to all of this information or don’t know how to analyze their data to create a solution suitable for not only themselves, but their customers as well.

This is where we come in.  At M33, we have had several requests from our clients, in various industries, to create customizable solutions to help them pass along these increases. There isn’t one generic answer for all.  With our experience and expertise we are sure to find the right solution for your business. Let’s explore your options….

Inbound Logistics

Manufacturers spend a tremendous amount of time, resources, and energy on the outbound distribution of their products. Strategic initiatives to drive process improvement, risk avoidance, carbon abatement, and cost reduction are all designed to create a more efficient, cost effective, and quality delivery. That makes a lot of sense, after all delivery is the final step in supplying your customer.

Unfortunately, there are often very few resources invested in the inbound transportation of raw materials creating a large gap in the supply chain. Managing inbound logistics may take a back seat to outbound distribution, but with the right technology and co-management support there can be enormous gains. With the right systems in place, a company can drive vendor compliance of carrier resources and measure results through high-level metrics.

Utilizing a technology-enabled solution removes the ‘guess work’ and guides your vendors to make the best routing decision for your business. The financial impact can be significant. Additionally, gaining real-time visibility of the inbound flow of raw materials will be a critical component for planning and operations for any manufacturer.