The Supply Chain Quarterly features an article by MIT’s Chris Caplice on the future of transportation. It can be found here: http://bit.ly/15n91D8. The four main points of the article are:
Natural Gas will slow fuel inflation. My research based on publications I have read is that fuel cost savings on large tractor trailer, class 8 trucks is about 20%. with payback for extra cost of natural gas engines being covered in two years. As these engines become more common they will undoubtedly command less of a premium over diesel engines. Many truck lines are hesitate to spend the capital costs for natural gas engines but I believe the market will force changes particularly for local delivering sooner rather than later. Mr. Caplice wonders if this will slow to switch from truck to intermodal. I suspect that if the cost savings are there for rail, they would switch to natural gas also, than it will be slower than trucks whose capital costs are spread over many owners.
The Panama Canal expansion will not affect containers anywhere near as much as bulk sourcing. Larger bulk vessels going through the canal may create new markets for products, particularly those bulk products originating in South America
The growth of rail movements from interior China to Europe. Mr Capline points to growth of manufacturing in western China. There is infrastructure in place to ship rail from these areas, almost better than shipping within China to the congested East. This coordinator which goes through Russia will be of increasing importance.
Lastly the changes in software. Cloud computing will open new data analysis and operational functions to smaller shippers. One area of future growth will be in data visibility not so much in being able to see the data, but in making sense of the massive amount of numbers.
When one reads the logistics and supply chain magazines, blogs or social media comments, one sees many thoughts. Words like “the end of warehouses”, “preemptive distribution”, and “3D Printers” causing the demise the supply chain, keep flashing at you. By being dramatic the creators of this information hope to catch your attention. What does all this mean to the organization and its success? In supply chain, after “change” is what we do.
Supply Chain and Logistics has the word “change” imbedded in its existence. Markets change. Suppliers change. Production changes occur. There is both small change and big change. In the course of my career, industrial transportation has changed from a regulated industry to deregulated one, for cost center to a business optimization strategy, from a stand alone silo to an integral part of the supplier chain. To deal with this level of change, a solely internal focus to the organization will not work. The world of ideas can provide an approach and a context to deal with a changing world.
As managers we know that any change requires energy, time, money and commitment.There is cost efficiency one there is not constant change in the organization. So it is important to spend the time educating one self about what is going on. Yes, healthy skepticism is good. With that there is a context so you can understand the changes in the marketplace and the world. Then you will have information to determine is change is worthwhile.
PS: Will 3D printers end the supply chain? 3D printers make plastics articles from software. Jay Leno uses a 3D printer to make car parts for his extensive personal car fleet. If the technology becomes cost effective it will have its effect on simple product lines. Really, this not want supply chains in modern companies do most often anyway. The trend in products is for them to become more complex because that is what the market place is demanding. Supply chain is really part of how an organization deals with that complexity, so it is not likely to disappear any time to soon.
Paperwork, regulatory bureaucracy, freight bills, claims, accessorial charges., reports, data entry, emails and calls. For many of us that is really our day at work. If you are in the logistics field, you know inaccurate details can stop a freight shipment in its tracks like a brick wall. But more importantly, that error will take time and energy for the organization to correct. When you budget your logistics costs, many times there is an assumption in those numbers, that a certainly number of things will go wrong. That takes labor time and usually extra transportation costs to resolve.
I am a big picture type of person, but it just as important to look art the small picture. What is using your time. Is it adding value to the firm and is it just keeping things humming?
Lets take a look at one example. Is somebody spending hours reviewing every freight bill that comes your way. One tends to happen is the small errors tend to grab attention and the large cost errors are not handled. Would not you learn more, by looking at the cost totals various the anticipated costs totals on set period of time, like a week? If transportation costs are not what is expected, there is an issue worthy of your time. The individual daily reviews probably is not. Give your accounts some rules on payments, and pay the bills. Mine the data and learn.
In large the operational excellence of your organization will be based on the ability to hand the mundane in a way that adds value to your business.
Watching the damage to the national infrastructure and the transportation of Sandy, maybe a once in a decade monster storm, it is easy to focus your supply chain risk strategy to Mother Nature events. A more happy blog post from Greg Reimer of C H Robinson, http://bit.ly/TsKQka, discusses significant sudden demand changes social media may have on the supply chain. Here things that a very large number of people might think as fun or funny, generally something we think as a positive can swamp the supply chain.
In the blog post, Mr. Reimer mentions Psy’s Utube video has 595 million views. With Halloween coming, all of sudden Psy’s trademark Tuxes became Halloween costumes. When Big Bird after one of the debates was mentioned, Big Bird costumes for Halloween shot way up. Can your product have spikes in demand? Is planning done in advance to address those demand spikes?
The article listed above shows Psy on the Ellen show and you can see why he is a such a popular entertainer. One can pretty safely predict sometime in the future that something like this will happen future, maybe to the business that employs you!
Between September 23 and 25 up in Winnipeg, the North American Corridor Coalition (NASCO) will be meeting. One of the major topics of the convention is developing a midwest freight corridor from Texas ports to the Midwest.
What is driving this is the expansion of the Panama Canal in 2015. Lots has been written about how the Panama Canal expansion will affect East Coast ports. But there is an opportunity to significantly increase ocean freight from Panama to the Port of Houston and other Texas ports. By doing so, inland transportation distances can be cut substantially. With fuel costs rising and trucks being scarce, shippers may find a low cost opportunity through Texas and Panama to ship from or to Asia and western Central and South America. Today the inland freight corridors from Texas to the Midwest are not fully developed and circuitous.
The Midwest Freight Corridor provides a chance for grain and heavy machinery users in the Midwest to increase their competitiveness. Walmart choose to bring some product from Asia into Midwest through the Port of Houston a few years back to gain alternatives to the west coast ports. Today, in all probability Walmart is paying a small premium on this freight rather than come through the West Coast, but has instead a more reliable supply chain, which is crucial to their operation.
The standard these days is to work for joint public-private partnerships on the infrastructure of this nature. Likely to potential to increase employment and growth in an area needing it, will propel this process along. See the process develop will be of great interest. How new is this? There is not a website established for it yet.
South Loop Logistics helps new businesses find help in the world of supply chain, logistics and transportation. Shipping into or out of the United States takes expertise. I will help your firm find that expertise in a cost efficient matter.