January 2009 | News | Trends


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The end of the year, and beginning anew, always brings a wave of cathartic reverie—for better or worse. There is value in making a reflexive U-turn to take inventory of the year's positives and negatives—what was done well and what could be done better.

Better yet, there is merit in looking backward while still moving forward. Dwelling on the past can be nothing more than a fruitless effort of self-defeating analysis. "There was but one solitary thing about the past worth rememberingŠand that was the fact that it is past," Mark Twain wrote.

This past year pushed the patience of some with record-high fuel costs, a subprime mortgage collapse, and the financial sector implosion freezing, then fracturing, an already frail economy. For many businesses there was no escape; 2008 provided a crash course in crisis management, contingency planning, and courage. Now as some crawl out of their solitary confinement and others pry themselves away from the herd, 2009 heralds its own hurdles, both new and old.

While businesses are cautious about what lies ahead, they are equally candid in addressing the challenges they face and what they hope to do better next year.

Inbound Logistics canvassed readers and asked them to share their impressions and resolutions for 2009. Here is a snapshot of their responses:

Q:What are the main challenges you face in 2009?

IL READERS: "Volatility in oil prices and transportation costs." "Fewer consumers." "Optimizing inventory levels in a downward economy." "Uncertain fuel prices and transport industry consolidation." "Funding to promote new services and getting the word out about the use of short sea services." "Recruiting safe and reliable drivers and increasing freight opportunities." "Balancing revenue shortfalls against fixed charges."

IL's Spin: Understandably, shippers are largely focused on managing price pressures, identifying cost bleeds, and mining untapped revenue streams throughout the supply chain. One shipper documented the "volatility of oil prices" and its impact on transportation costs. Realistically, the only way to insulate supply chains from fuel fluctuations is to become more efficient and flexible—to ship less by consolidating shipments and pooling deliveries or to diversify transportation buying across modes. Fuel price fluctuations have reshaped logistics, forcing companies to get greener, leaner, and more resourceful.

Q:What steps will you take to cut transport costs in 2009?

IL READERS: "We're re-evaluating all of our partners as we expect 2009 to be a difficult year." "Inbound freight management." "Buying regionally." "Considering alternate modes." "Shorter and combined trips." "Taking full control of our freight spend (collect vs. prepaid). Our intent is to reduce empty miles." "Sourcing more domestic suppliers, investigating rail and transloading." "Re-bidding all lanes." "Lowering truck speeds to reduce fuel consumption." "Incorporate training so schedulers know when to ship LTL versus TL." "Buying less of everything and avoiding express shipments." "Using broker firms for additional cost comparisons."

IL's Spin: Driving economy is foremost on the minds of IL readers. Shippers are looking all over the supply chain for ways to reduce costs. They are entertaining broad-based strategic efforts such as managing inbound freight and sourcing domestically, as well as far simpler tactical approaches, including reducing truck speeds and improving employee training. Because they are overwhelmingly reluctant to invest capital in new technologies, equipment, services, and labor in a down economy, many companies are exploring ways to optimize operations and processes in situ. Regularly evaluating partners and modes—re-bidding as necessary—and empowering logistics and supply chain managers to make better decisions are ways shippers can make the best of what they can control.

Q:As you plan ahead, how far out are you looking? Are you focusing on short-term, back-to-basics improvements or more strategic process improvements?

IL READERS: "We take it one day at a time around here." "One year with a focus on execution." "Currently one to two years." "One and five years." "We work on a six-year short-term plan and a 20-year comprehensive plan." "Five years ahead: expansion and benefits." "We look out five years. The focus will be on strategic business process improvements. Our S/C 2010 program is our strategic program geared toward reducing inventory and increasing on-shelf availability." "We look ahead several years to promote new service options." "Looking out two to three years, focusing on both back-to-basics and strategic process improvements." "Right now, six months. We do not project out in years." "Short term back-to-basics." "We are looking at one year or less to review and implement changes." "Year by year until the economy improves."

IL's Spin: Shippers are mixed in how they forecast future needs, likely depending on the nature of their business and general industry trends. Retailers, for example, may be inclined to keep planning as fluid and adaptable as possible to meet fickle consumer demands, while commodity manufacturers take a longer-term approach, vetting broader industry variances. Businesses also have different types of forecast engagements, from near-term tactical improvements to more far-reaching—and time-consuming—business process strategies.

Q:What new globalization initiatives will you undertake in 2009?

IL READERS: "More offshore activity to reduce costs." "Low-cost country sourcing." "Using fewer suppliers." "Capitalize on Asian cube and direct-ship initiative in ports with critical mass. We're looking to increase cubage per container and eliminate touches at North American DCs." "Continue to shorten the supply chain, sourcing domestic suppliers in order to cut lead times, reduce inventory, and reduce transportation costs." "Outsourcing more contract logistics to gain better inventory visibility." "We're looking at opportunities to sell into emerging consumer markets."

IL's Spin: By and large, respondents indicate little or no activity offshore beyond what is already in place. Those considering global initiatives are leveraging supply chain sophistication and geographic scope to find economies in different ways: exploring less-expensive production sites, divesting non-core processes to third-party logistics providers, and pushing business process improvements farther upstream in the supply chain to reap value closer to home. Alternatively, some companies are looking at ways they can expand their presence in new markets.

Q:What is your logistics/supply chain New Year's Resolution?

IL READERS: "Nearshore." "Hit or exceed budget/cost expectations and increase service levels." "Keep the pressure on." "Find a carrier group that can move all my freight (TL, LTL, CL, LCL and air freight) with competitive rates." "Better management of our driver workforce." "Dig in, get tough and don't spend money. And what money we spend will be on bare-bones necessities." "Monitor freight costs and damages more efficiently." "Buy low, sell high." "To be the best with all my might." "Cozy up to a bottle of Jameson's."

IL's Spin: New Year's resolutions come with one caveat—they are subject to change. Businesses, arguably, have more at stake to make sure these promises stick. Rest assured, one Inbound Logistics reader among us has already made a dash to the weight room; and another has snuggled up next to a crackling fire with his beverage of choice, pondering the imponderables 2009 may bring.

Pioneering a Rail Trail

When the rails meet the sails, intermodal shipments leave a trail—thanks to an innovative and collaborative effort between the Port of Tacoma, BNSF Railway, ocean carrier Yang Ming Line, and Edmonton, Alberta-based Safefreight Technology.

To enhance inland rail supply chain visibility, the Port of Tacoma is testing a Safefreight GPS system that tracks intermodal containers from the time they leave waterfront terminals until they reach their final destinations elsewhere in the United States. The system enables the port's intermodal planners to better understand inland rail issues and work with railroads and shippers to improve freight velocity, reliability, and security.

"We will be able to proactively work with our steamship and rail partners to plan for the future and make sure that Tacoma remains a high-velocity transit point in the global supply chain," says Rob Collins, Port of Tacoma manager of transportation and supply chain planning.

The port began testing the container tracking system in June 2008 and Collins says it has learned a lot about what happens to containers after they leave the waterfront. "People have assumptions about cargo scheduling, routing, and delivery, but when you dig into the data, many of those assumptions turn out to be false," he notes.

The linchpin of the Safefreight system is a rugged, portable tracking device, originally designed for truck trailers and vehicle fleets, that uses GPS and wireless technologies to provide actionable data related to location, speed, direction, starts, stops, and other metrics.

Aside from providing real-time visibility into intermodal movements, and historical data that can be used to analyze performance, Safefreight's system introduces a better means for securing the intermodal supply chain, explains Collins.

"The most secure supply chain is the most visible supply chain," he says. "Moreover, this system illustrates when cargo is moving and when it is standing still. Cargo in motion is inherently more secure."

A Real Recycling Taste Test

Now beverage manufacturers and consumers can put their bottles where their mouths are as they sip their green teas and compare how efficient they really are. A new beverage container recycling report conducted by San Francisco-based corporate responsibility watchdog As You Sow, evaluates the recycling practices of 23 U.S. beverage companies.

"Despite some impressive progress, most beverage companies continue to fail basic criteria for dealing with the environmental implications of their packaging," says Amy Galland, As You Sow's research director.

More than 200 billion beverage containers are sold in the United States each year, but 130 billion of those are sent to landfills, representing a huge waste of natural resources, according to the report. It also suggests that manufacturers are losing value in how they package product and redeem costs in the aftermarket supply chain.

The study, Waste and Opportunity: U.S. Beverage Container Recycling Scorecard and Report, analyzes beverage companies based on four criteria: source reduction, use of recycled content, beverage container recycling, and transparency.

Companies can reduce emissions and cap energy expense by using recycled materials in their containers. For example, recycled aluminum uses 95 percent less energy; recycled glass 35 percent less energy; and recycled plastic 30 percent less energy.

Aside from these benefits, "source reduction has the most direct impact both on a company's bottom line and on its environmental footprint," the report concludes.

And the Winners Are...

Coca-Cola Co. outranks beverage industry peers overall, leading in its commitment and performance on beverage container source reduction, company-wide recovery goals, and investments in recycling programs. It has pledged to recover 50 percent of its plastic bottles and cans by 2015.

PepsiCo reports the highest percentage use of recycled PET (polyethylene terephthalate) in its bottles (10 percent) followed by Coca-Cola at three percent.

No other company consistently uses recycled PET. Anheuser Busch uses standard aluminum industry ingots with 41 percent recycled content, whereas both Coca-Cola and Red Bull report they exceed the standard.

Nestlé Waters North America showed the greatest improvement since publication of As You Sow's 2006 scorecard, and recently set an industry-wide goal of recycling 60 percent of PET bottles by 2018.

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