tomers wish they had worked a little bit closer with
their supply chain partners instead of chasing different
providers over a few dollars,” he said.
Another trend, according to McAdam, is that businesses
that took their logistics functions in-house for any number
of reasons are re-examining, and in many cases restoring,
their relationships with third-party service providers.
Time to put away the gloves
If the recession was a boxing match, it was an awfully bloody
affair. As demand fell faster than carriers could withdraw
capacity, shippers held the iron fist and were not afraid to
wield it. On the inbound side, shippers pressured their carriers for the lowest prices for their services.
As the recovery takes hold, the chickens are coming home
to roost. Demand is up, capacity is tight, and many suppliers—especially second- or third-tier vendors hit by the
double-whammy of weak demand and scarce credit—have
gone out of business.
“Consolidation of suppliers is something we should all
expect in the future,” said Hartnett of Penske.
Meanwhile, shippers continue to feel the pinch of slower
deliveries of products and raw materials from suppliers. In
its monthly report on manufacturing, the Institute of
Supply Management (ISM) reported that its index of supplier deliveries rose to 58. 3 percent in July, up from 57. 3
percent in June and the 14th consecutive month the index
has been above 50 percent. Any reading above 50 percent
indicates a slowing of supplier deliveries.
ISM Chairman Norbert J. Ore said slower supplier deliveries indicate an increase in manufacturing demand associated with economic growth or rebound. The longer-term
problem, Ore said, is that slower deliveries can lead to
materials shortages that, in turn, may spawn a resurgence of
commodity price inflation.
As for their relationships with carriers, the more candid
shipper executives say they will need to lie in the bed they’ve
made for themselves. “Shippers took advantage of the situa-
tion a year ago and jeopardized long-term relationships”
with their providers, Don Ralph, senior vice president, sup-
ply chain and logistics for Staples Inc., said at the June press
conference. “These levels of rates are not sustainable.”
Kate Vitasek, founder and president of consultancy
Supply Chain Visions, said the climate is ripe for a concert-
ed push to “vested outsourcing,” where companies nurture
relationships with suppliers so they are first or near-first in
line for products and services without having to pay a pre-
mium for it. (For more on the concept, see “how to write a
Vested Outsourcing contract” elsewhere in this issue.)
“The power has shifted to the suppliers,” she said. “People
came out of the gate with massive cost-cutting. But you
can’t beat up suppliers for very long. You will, at some
point, face retaliation.”
—Mark Solomon
short takes
Dematic has opened a new technology center in
Europe. Located near Frankfurt, Germany, the center is
set up to demonstrate many of Dematic’s integrated
material handling solutions. ... Intelligent Global
Pooling Systems (iGPS) has opened a sales and innovation center in Bentonville, Ark., to showcase the company’s reusable pooled pallet products. IGPS has also
opened a new global customer support and logistics
center in Orlando, Fla. ... KPMG has acquired the Supply
Chain Advisory Services practice of Grant Thornton LLP.
... Penske Truck Leasing has opened a new facility in
Tijuana, Mexico. … Accu-Sort has announced that its
new DM3500 Irregular Dimensioning System has been
certified by the National Type Evaluation Program of the
National Conference of Weights and Measures. ...
Finland-based Cimcorp, a supplier of automated material handling and picking solutions, has acquired RMT
Robotics. RMT is a Canadian manufacturer of robotic
material handling equipment. ... Pilot Freight Services
has opened a new operation in Harlingen, Texas, near
the border with Mexico.
BLUE HAS NEVER BEEN SO SOLID. A trusted business partner means confidence in your decision making. With decades of supply chain experience and an unmatched dedication to innovation and continuous improvement, CHEP is your problem-solving partner. Learn how we can help. Every day. chep.com/trustedchoice
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