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Supply Chain Management or bust!

Survival is all about the supply chain. If you know about the

supply chain and the

interconnected nature of its different parts then you have the big picture; with the big picture in view it becomes much more possible to manage the business and the economy.

If you fail to

recognise the significance of the supply chain then you are in big trouble and potentially destined for failure. Unfortunately, too few

politicians know or understand about the importance of supply chains and their management. If they did, argues Dave Blanchard, editorial director and associate publisher for Penton Media, economically speaking, the US economy for one would be in far better shape than it is today. In a recent blog ‘The US Needs a Department of the Supply Chain’, Dave Blanchard says: “Let supply chain people start calling the shots, before it’s too late.” It is time, he says “for a cabinet- level Secretary of

the Supply

Chain, somebody whose job is to oversee the interconnectedness of all businesses. This person would not be a career politician, nor an academic, nor a pundit. Instead, the Secretary would be an example of the best and brightest that the corporate world has to offer – somebody who knows from experience the importance of all the core supply chain functions: planning and forecasting, sourcing and purchasing, manufacturing, transportation and distribution

and all the processes in between along a product’s lifecycle.” This person would


“leadership, specifically, supply chain leadership. And by that I mean somebody who clearly sees the big picture. How refreshing it would be to have someone who actually understands the nature and the interdependency of global supply chains, and who is committed to making it easier for US companies to meet the demands of their customers in a timely and efficient manner.” This, he suggests, is a far cry

from what exists at present, namely career politicians

“Let supply chain

people start calling the shots, before it’s too late.”

without any experience of supply chains or private business. I would suggest the same is as true in Europe as it is in the US. But worryingly there is that

evidence supply

By Andrew Traill

are going bankrupt are the ones that have not really understood the strategy they are trying to accomplish through supply chain.” A study by Capgemini

Consulting, in cooperation with Penn State University, Korn/Ferry International, and Panalpina, revealed that

economic losses

from supply chain disruptions increased 465% from 2009 to 2011, while at

the same time, chain

awareness is not so common even in industry. In a round- table discussion on the merits of supply chain management to business fortunes, Jim Tompkins, CEO of Tompkins Associates, said: “There are companies that will get it, and some that won’t. Those that won’t will be gone. And I think the year 2014 we will have more bankruptcies than we have had any time in the history of mankind. Most of those that

the number of companies experiencing supply chain disruption grew by 15%. To blame for this were extended supply chains, reduced inventories and shortened product lifecycles that were

making disruption both

more likely and more costly than ever before. However, the report warned

that despite the increased risk of disruption, many companies are currently underfunding supply chain disruption mitigation Siim Kallas, Vice-President and

Commissioner for Transport said at the European Transport Forum in Brussels on 16 October: “Europe needs to connect to compete. It also needs to connect to grow. To

do that, we need to have smooth and seamless transport links, and no barriers. “This is about building the

roads and bridges missing in the trans-European network, whose completion is a top priority. It is about linking east better with west, removing all the bottlenecks, creating a joined-up logistics chain that combines different transport means to get goods and people from A to B.” I wouldn’t disagree, but I would

also say we have to have a parallel approach to planning which ensures the supply chain is seen as the key focus of decision-making. Infrastructure


must be justified on the basis of the supply chain needs of industry, and made to match. In the words of Siim Kallas,

infrastructure is required so that Europe stays competitive. It is also about ensuring long- term sustainable growth at a particularly difficult economic time. But it must be aligned with supply chain management expertise which is still, it appears, sadly lacking in many parts of government and industry.

Painting Europe green

Green Freight Europe has just launched its platform to allow its members to enter their transport/ shipment data for 2011 in order to assess their environmental performance in terms of CO2 emissions. This is part of a much wider programme to help companies reduce their carbon footprint in road freight operations and supply chains. A drive to increase membership is now under way; currently there are 66 paying members, although smaller firms can join free of charge. “Now that we’ve got the platform, we are now really starting to push things,” explained Andrew Traill, who is helping to provide the secretariat for

the GFE. GFE is based in Brussels, but

although it uses the ESC office as its registered address, it is run as an independent organisation. ESC and the EVO Netherlands transport organisation provide the secretariat. Major founding members include

among others the likes of Heineken, Ikea, Dow, DHL and TNT. “Now we’d like to get more pure road hauliers in as well as shippers and big logistics service providers,” said Andrew Traill. He has a target of around 200-250 member companies by the end of the year. “We are currently targeting medium and large companies in order to maintain momentum which

has grown since our launch back at the end of March this year. But that said, smaller companies are more than welcome to join right now - the more the merrier. The benefits for smaller companies are just the same as they are for larger companies. The aim of all the companies involved in this is to make this the principal platform and vehicle for monitoring, reporting and facilitating reductions in emissions from road freight - and we are beginning to consider how we can do the same for other modes of freight transport,” Traill pointed out. Focussing, however, on road

freight operations, at least for the time being, GFE is just as relevant

to companies with purely national, domestic operations as it is to those with international services operating moving goods all over Continental Europe, including non- EU countries such as Turkey and Russia. Members will be able to use GFE to calculate and monitor their own emissions performance against the rest. “Everything is compliant with the international standard methodologies for this sort of thing, but sticking to one method enables comparability, something which just has not been possible up to this point with so many different schemes in place” said Traill.

Recent cuts by shipping lines to Asia/Europe schedules could be just the start, if the economic forecasters are to be believed. Unless the world economy starts to pick up seriously soon – and there is little sign of that to any significant extent as yet – we may have only seen the beginning of the cutbacks. You could even argue that it is surprising that it has taken the lines so long to wield the axe. If the shipping industry is to

avoid total meltdown, it will surely have to look at delaying deliveries of new vessels. The lines may be bleeding, but

shippers could also suffer in the current upheaval. It’s a pity that the reductions have not come about in a more orderly fashion, rather than being announced at just a few weeks’ notice, so that customers can plan accordingly. Sadly, as Shippers’ Voice winds

up its activities, I’m not entirely sure that the message has got through to the shipping industry – they badly need to give their customer relations a thorough overhaul. Nor can the lines afford to be complacent; they would do well to analyse some of the trends towards ‘near-sourcing’ of products in Europe or places such as Turkey or North Africa. There’s also rising talk

of protectionism in some parts of the world, notably the US and South America, but we also know other regions are not averse to ‘managing the markets’ to support their own companies and jobs. All this could have a serious impact on trade volumes and needs to be watched closely by the lines who could find it adding yet further uncertainty to future volume forecasts. While these trends may be

comparatively small at the moment, they could easily grow into something bigger and before they know it, the lines may find themselves having to reshape their services to cope. Everybody, too, will have to

become more supply chain-savvy including Governments, who will need to improve on their current very sketchy knowledge. So, my passing shot would be:

Look at the trends, get closer to your customers and suppliers and, above all, build trust by being good at customer service and not dropping people in at the deep end when and if you need to make service cuts. Do that, and you will gain a considerable service advantage – but I’m not sure that the message is yet fully understood or being put into practice. Good luck to all in the future.

Farewell to Shippers’ Voice

Shippers Voice and Shippers Digest will effectively disappear from this month. While the two names will be retained by their owners, The Shippers’ Voice web site will not be resurrected. It has been off-line since the start of the year as part of a re-development to become the portal for the European Shippers’ Council, but an unexpected change in policy put paid to this in the summer. Shippers Digest will for the time-being become an in-house research tool of one of its current

owners, MDS Transmodal. Former policy director of the

ESC and frequent commentator on shipper’s affairs for the Shippers’ Voice and Shippers’ Digest, managing partner Andrew Traill is currently focussing his efforts on helping to provide the secretariat for Green Freight Europe, an organisation that aims to help shippers and transport operators manage and improve their environmental performance.

The end of gloablisation?

As Andrew Traill bows out from the Shipper’s Voice, he gives his assessment of the issues that the shipping lines and their customers will face. He hopes that lessons have been heeded.

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