MHI Newswire

Gartner, Inc. has released the findings from its 10th annual Supply Chain Top 25. A primary goal of the Supply Chain Top 25 research initiative is to raise awareness of the supply chain discipline and how it impacts the business.

 

"2014 marks the 10th year of our annual Supply Chain Top 25 ranking," said Stan Aronow, research vice president at Gartner. "As we reach this milestone, we have several longtime leaders with new lessons to share and a number of more recent entrants from the high-tech, consumer product and industrial sectors in the Top 25."

Organizations that integrate their purchasing and logistics functions deliver better business results, according to a new study from the Global Supply Chain Institute at the University of Tennessee, Knoxville.

But the study, involving more than 180 supply chain professionals, also shows that many firms fail to capitalize on this opportunity and have supply chains where purchasing and logistics operate in "silos" with little cohesion.

UPS announced the opening of its new contract logistics distribution facility in Beijing. The 6,500-square-meters of non-bonded warehouse space located 19 kilometers from Beijing Capital International Airport serves growing demand in China and is capable of servicing contract logistics orders with four-hour delivery within the metropolitan Beijing area and next-business-day orders for major cities throughout China.

Behind every product on every shelf everywhere, there has been some mode or combination of modes of transportation involved. Whether it be hand carry, truck, cargo vessel, rail, or air, that product had to be moved from its place of origin to become accessible to the customer.

It is always a privilege to be able to look behind scenes to understand how things work, who the major players are, and even get a glimpse of the unsung heroes that keep everything moving forward in shipshape condition. Recently I had an opportunity to interview Ronald Kleijwegt, Hewlett-Packard's director of logistics for Europe, the Middle East, and Africa. Among other questions, I asked him to highlight some of the major trends in shipping over the past 10 years.

The lower cost of fuel for natural gas-powered highway tractors compared to their diesel-fired brethren could make it more profitable for trucking companies to engage in longer lengths of haul for intermodal shipments.

That’s the viewpoint Jason Kuehn, an associate partner with transportation/railroad consulting firm Oliver Wyman and 20-year railroad industry veteran, expressed during a conference call sponsored by Wall Street investment firm Stifel Nicolaus & Co. last Friday.

If you follow rail traffic trends there sure doesn’t appear to be any signs of economic weakness there.  The latest rail traffic data showed record gains in intermodal and the highest 12 week moving average since 2011 at 8.5%.  

This certainly seems to validate the idea that weather substantially impacted Q1 and we’re starting to see a resurgence in Q2 data.  Current Q2 GDP estimates also appear to validate this view with the consensus at 3.5% as of now.

As cost overruns and local labor disputes delay the expansion of the Panama Canal, Russia and China are increasing efforts to partner with Nicaragua to build the Nicaragua Canal. The Panama Canal’s expansion, which costs over $5 billion USD, comes during a period of rapid growth in the country’s emerging economy. The canal would be three times as long as the Panama Canal and would take about a decade to complete.

Nicaragua plans on tapping into the growth potential that  sea trade presents by building a wider canal that can fit larger ships that are too wide for the Panama Canal. The $40 billion project is expected to begin in late 2014. 

It’s no secret that U.S. manufacturers are on a hunt for talent, and as senior management gets closer to retirement (25% of all Baby Boomers will reach retirement age in 2015), the need for a new generation of supply chain managers is more important than ever.

 

Every year or so, U.S. News & World Report puts together a list of the top supply chain programs in the country, but their rankings don’t shed much light on why exactly these schools are worthy of being on such a list. True, U.S. News reveals how much tuition costs at each of these schools, but left unaddressed is the more relevant question of: What do these schools offer in the way of supply chain management that goes over and above merely teaching a class or two on procurement or sustainability?

A bill to create a national hiring standard for motor carriers was introduced last week by Congressman John Duncan (R-2nd/TN), Congressman Erik Paulsen (R-3rd/MN) and Congressman Rodney Davis (R-13th/IL). H.R. 4727 is intended to enhance interstate commerce by requiring a shipper, broker, forwarder, and/or receiver ensure that a prospective motor carrier is: Properly registered with the Federal Motor Carrier Safety Administration (FMCSA); has obtained the minimum insurance; and has not been given an "unsatisfactory" safety rating. 

The national hiring standard would clarify and standardize industry best practices for hiring safe motor carriers.

In March 2011, a major earthquake and tsunami hit Japan. Beyond the immediate devastation inflicted on residents of the area, the disaster revealed a significant vulnerability to unexpected parts shortages and supply chain disruptions in a broad range of industries. Unprepared companies around the world suddenly found themselves confronting ripple-effect issues from quality control and customer service to business interruptions.

Supply chain and other third-party risks are understandably capturing increased attention these days. The potential repercussions of disruptive natural and human-made events, whether isolated or simultaneous, highlight the importance of planning for and managing such risks. The companies that have identified their risks in advance and planned for these contingencies are the ones best positioned to survive the disruptions that result when third-party risks manifest.

Many manufacturing companies believe they are doing all they can to adapt to the changing tides they are facing, such as new manufacturing regulations, and have implemented measures to stay ahead of the information curve. They use legacy transaction systems such as Enterprise Resource Planning (ERP) software, which should give a holistic view of resources and processes across the organization. They have also supplied employees with smartphones and laptops or let employees "Bring Your Own Device" (BYOD), embracing the BYOD trend that is supposed to ensure fast communications and improve access to key business intelligences.  

What often isn’t realized until too late is that ERP solutions reach plateaus in the unpredictable and ever changing nature of the manufacturing industry.

The first quarter of 2014 revealed optimism among manufacturing and logistics workers, according to the Randstad Manufacturing & Logistics Employee Confidence Index. The index rose to 50.5, an increase from 48.0 in Q4 2013.

The quarterly survey also found workers' job security rose with the majority (63%) of manufacturing workers feeling it is unlikely they will lose their jobs in the next 12 months, compared to 59% the previous quarter.

The U.S. House of representatives passed a $12.3 billion water resources bill that lawmakers said would boost dredging to accommodate larger ships built to transit the expanding Panama Canal. The bill would authorize 34 projects including dredging, flood control, hurricane recovery and environmental restoration.

 

The Water Resources Reform and Development Act, H.R. 3080, would also revamp the way major U.S. shipping projects are funded with ports paying the cost of deepening harbors up front and seeking reimbursement from the government.

The biggest obstacle that retailers face in moving toward an omnichannel strategy is "being able to see where all the inventory is," says Bimschleger. Despite highly sophisticated information-technology systems and supposedly tight partnerships with suppliers, many retailers still lack that capability. Such knowledge becomes even more essential as customers ordering over the internet come to expect two-day service as the norm for home delivery.

In addition, companies are still working out how to service multiple channels, which often have quite different requirements for order size and frequency. Some retailers have tried to address the challenge through separate fulfillment distribution centers, but many more are attempting to bring all types of inventory under one roof, as a means of controlling costs.

There is no doubt about it: sustainability and green initiatives are hard at work in extended supply chains. The focus on sustainability is occurring at a time when the overall global energy balance is changing. These energy balance changes have rendered positive impacts on logistics and facilities in some cases, but in other cases, energy management concerns remain unchanged.