CSCMP 2009: Cautious optimism drives supply chain planning
Speakers and attendees at the 2009 Council of Supply Chain Management Professionals conference in Chicago in September were expressing some cautious optimism about the economic outlook and its impact on logistics and supply chain.
By David Hannon -- Purchasing, 10/15/2009 2:00:00 AM
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Speakers and attendees at the 2009 Council of Supply Chain Management Professionals conference in Chicago in September were expressing some cautious optimism about the economic outlook and its impact on logistics and supply chain. In fact, many of the discussions focused on getting the right inventory levels, supplier and carrier relationships and demand visibility in place to meet the coming demand.
In a session titled Resourcing to Mexico, three panelists highlighted the trends that are making Mexico a more viable global sourcing option in the new economy. Pete Montano, vice president of sales at Con-way Truckload, told Purchasing that fuel prices may have dipped recently compared to their record-high levels a year ago, but long-term they will trend up and sourcing from Asia may not make as much sense.
One of those companies is LG Electronics, which has several plants in Mexico. Panelist Larry Monaghan, director of transportation and logistics for LG, pointed out that truckload shipments can go direct to U.S. customers from Mexico and "steamship lines are retiring ships at a record pace" which may impact ocean capacity and rates when demand increases again. LG ships about 80% out of Mexico by truck and 20% by rail, he said.
In a session entitled Transportation Measurement, John Wooten, senior procurement manager for logistics at Clorox Co., outlined that firm's strategies for a recent truckload bid, saying thanks to the pre-bid planning and data collection, the bid went better than expected. Clorox worked with benchmarking firm Chainalytics on benchmarking its processes and rates.
In a session entitled Collaborative Procurement Strategies panelists provided tips on how to build truly collaborative relationships with logistics carriers. "Collaboration is easy to say and hard to do," said Paul Newbourne, vice president at LXP, a lead logistics provider. He also said shippers should ensure the carriers they are working collaboratively with want to work that way.
JB Hunt's Mark Calcagni said LXP's strategy of bidding out business in smaller, more "digestible" chunks helps the carrier plan capacity. And Mike Bunnell of CR England said LXP works with his company on rearranging some lanes that were not working for England.
The second day at the CSCMP conference was highlighted by a panel session moderated by Chris Caplice, executive director of the MIT Center for Transportation and Logistics on the impact of fuel surcharges on freight rates.
"Fuel is ridiculously volatile," Caplice said, adding that because of that, fuel prices are virtually impossible to predict, pointing to a 2008 forecast by the Energy Information Administration which was well off the current market. "So is there a better way to manage it?"
"We try to make fuel neutral in our costs," said panelist Wayne Skinner, vice president of supply chain at HJ Heinz, who hedges against the cost of fuel by using heating fuel futures.
Building more collaborative relationships with carriers is one way to avoid their using fuel surcharge programs to escalate rates, said panelist Deverl Maserang, vice president of global product supply and logistics at Chiquita Brands International. He said Chiquita's CEO speaks at its annual carrier conference to show logistics providers what a critical part of the business they are to Chiquita.
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