joel sutherland from the center for value chain research, lehigh university & ohl, relationships...

All rights reserved, Joel Sutherland, 2010

Executive Workshop: Developing a Flexible Relationship

to Respond Intelligently to the Economic Rebound

8th Annual 3PL Summit June 21-23, 2010

Agenda

Economic Indicators Shipper Feedback – SCLA Conference 3PL’s - Supporting Customers’ Req’ts Interactive Discussion


Economic Indicators


US GDP Growth

The US GDP is $14.2 trillion or 22.9% of the world economy – the world’s largest. US GDP growth for Q110 revised down to

3%, showing that the recovery may not be as strong as many had expected.


US Balance of Trade

The US leads the world in imports while remaining one of the top 3 exporters.

The US balance of trade deficit in April was $40.3B. US trade deficit with China was $19.3 billion – nearly 50% of total.

Total 2010 deficit estimated at a record $1.84 trillion. Represents 12.9% of the economy – highest since 1945. Forecast to decrease in 2011 – but iffy.

Higher fiscal deficits will likely lead to higher taxes.


Unemployment

Employers in the US hired fewer workers in May than forecast and Americans dropped out of the labor force - showing a lack of confidence in the recovery.

Consumer spending (needed to increase production) is weak mostly due to high unemployment rates.

It may take a few years to revive 8.5 million jobs lost since the recession began in December 2007.

The federal government added 412,000 jobs.


Logistics Indicators

Logistics costs fell to 7.7% of US GDP in 2009 from 9.3% in 2008.

Warehousing costs fell 2% below 2008. Although early 2009 saw warehouses full of inventory, by mid-year

inventories were reduced leaving facilities with empty space.

Transportation costs 20.2% lower than 2008, with all modes of transportation being negatively affected. Trucking had a 9% drop in tonnage carried.


Source: CSCMP’s 21st Annual “State of Logistics Report®”

US Logistics Costs - 2009


Source: CSCMP’s 21st Annual “State of Logistics Report®”

Looking Ahead

The jury is still out on when the economy will realize a meaningful and sustainable recovery. Understanding your customer’s needs, and

adapting an effective strategy that responds to these needs, is essential in achieving successful and sustainable 3PL-customer relationships.


Shipper Feedback

SCLA Conference May 25-27, 2007


SC Management Challenges

Economic slowdown/recession recovery Supply chain disruptions – natural & manmade Managing global supply chains Supply chain visibility and event management IT: Internet, web applications, social networking Developing ROI for going “Green” Organizational issues


Source: SCLA Annual 2010 Conference

“Best” SC Management Strategies

Customer-driven

Aggressively pursue innovation and creativity

Capitalize on skills of people in every area

Leverage core competencies

Develop solutions, NOT technology (do after)

Inspire competitors to imitate



Supply chain accounting/finance (CEO & Wall Street)

KPI’s (more supply chain focused)

Increasing skill requirements (continuous learning)

Using available information technology

Areas for Improvement



What SC Leaders Need to Master


Strategy, tactics and execution “Push” to “Pull” Lean Cash flow and people management Sustainability and “Green” Collaboration Fundamentals


3PL’s: Supporting Customers’ Changing Requirements


3PL’s Can Help Their Customers’…

Contain Supply Chain Costs Increase Supply Chain Visibility Prepare for SC Disruptions Improve Customer Service Expand Globally


Opportunity: Develop lean and agile SC capabilities that allow rapid response to customers’ changing needs and

provide variable cost structures that fluctuate with revenues.

Opportunity: Provide effective visibility tools and facilitate the identification, collection, and use of information to

improve supply chain performance.

Opportunity: Become an expert in managing a variety of potential supply chain disruptions. Enhance processes and IT to more effectively monitor and respond to disruptive events.

Opportunity: Facilitate increased coordination, integration, and collaboration with shippers and suppliers, utilizing information

technology, to improve end-customer satisfaction.

Opportunity: Provide end-to-end solutions, including comprehensive visibility and event management, to ensure

reliable service and lowest total supply chain costs.

SC costs are significant and the pressures to reduce costs are severe

Supply chains are global, increasingly complex, and challenging to manage

Effective SC management has a high impact on customer service

SC disruptions can be catastrophic if not planned for

Technology is a game-changer

Takeaways


Interactive Discussion

What are YOU doing in each of these areas?


Contain SC Costs

Increase SC Visibility

Prepare for SC Disruptions

Improve Customer Service

Expand Globally

Questions?


Joel Sutherland Managing Director

Center for Value Chain Research Lehigh University

[email protected]

joel sutherland from the center for value chain research, lehigh university & ohl, relationships...

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