May 2008 | Commentary | Supply Chain Perspectives

Seattle's Second-Best?

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When people think of Seattle, they are reminded of its coffee, salmon, and fir trees. It's also the hometown of American titans such as UPS, Boeing, and Starbucks.

But as these companies grow, and take their operations elsewhere to compete globally, cities such as Seattle are losing a vital part of their economic identity. The rain falls a little harder, and the coffee tastes a little more expensive.

A Seattle UPStart.

In 1906 Jim Casey started UPS with an idea and a bicycle, eventually graduating to a Model T. Brown became the company's color of choice because it didn't show the dirt so badly.After UPS evolved into the model for ground package and freight pickup and delivery, it left Seattle. It moved first to New York City, then to Atlanta, where it now stands large and strong.

But the company says its future growth lies not in the United States and cities such as Seattle, but overseas.UPS embraces a global strategy it calls "one to one"—one company connected to another worldwide by ground and air. This connection, however, greatly depends on air freight, which is currently at the mercy of rising fuel costs and difficult infrastructure challenges across the globe.

Oh well, it did leave Seattle.

Boeing Gets Going.

In 1916 William E. Boeing started the Boeing Airplane Company in Seattle and his vision fueled the company until 1934. The Boeing Company didn't stay in Seattle but moved its headquarters to Chicago.

Boeing has become a national and international model of a modern aircraft company, manufacturing valuable carriers that transport the bulk of our air freight. That is still the case, but air traffic is under siege from many directions. This year the Boeing Company lost $40 billion, along with the U.S. airborne tanker deal.

It suffered this loss during a very protracted delay in launching the 787 Dreamliner. Several times during production, Boeing faced shortages in resupplying aerospace fasteners. Who wants a plane that is not fastened together properly?

The Dreamliner's parts are made all over the world.Delivering them via a 747 is not a big problem, but the parts supply is. Competition from Airbus continues, and who knows what will emerge when the air clears.

Oh well, it did leave Seattle.

Starbucks Wakes Up.

In 1971, a recession year, Howard Shultz started Starbucks in Seattle. Customers came to think of the stores as a friendly place to check e-mail and linger over expensive coffee. At its peak, the company operated 10,000 retail outlets.

After briefly leaving the company, Shultz is back, trying to fix a multiplicity of problems.

First, Starbucks faces serious competition from Dunkin' Donuts and McDonalds, which offer cheaper and increasingly competitive product. Second, Starbucks expanded its menu by adding food, resulting in a more complex supply chain. Third, recession thinking and expensive coffee don't necessarily go together.

Oh well, at least it is still in Seattle.

As times and customer demands change, companies such as Starbucks, UPS, and Boeing have to adapt and move to survive and compete. And cities such as Seattle are incrementally losing the business and logistics creativity that helped guide economic growth from the last century to the present.

Let's hope this intellectual knowledge and innovative spirit don't leave town in the first decade of this century.

Otherwise people will remember Seattle for its precipitation, rather than the people and products that put it on the map.

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