DC Velocity - April 2012

Friedmann’s fearless forecast,
2012 edition

Each year, Peter Friedmann, Washington counsel for the Coalition of New England Companies for Trade (and a 2011 DCV Thought Leader), closes the group’s annual Northeast Trade & Transportation Conference with his rapid-fire take on likely developments in international trade and transportation. This year was no different; the following are a few highlights from his March 16 presentation at CONECT’s conference in Newport, R.I.:

▪ In its lame duck session, Congress will impose new fees or taxes on transportation and logistics activities to help pay for infrastructure improvements. Some legislators have proposed a manifest tax on domestic moves as a way to fund construction.

▪ As giant container ships begin arriving at U.S. ports, relationships with waterfront labor will become increasingly sensitive. A delegation from the West Coast’s dockworkers union recently visited OOCL in Hong Kong to discuss how much automation would be in place at a new terminal in Long Beach that will serve the bigger vessels. ▪ Efforts to promote coastal shipping are gaining some attention, but Congress will have to revise regulations like the Jones Act that discourage domestic shipping if it is ever to be viable.

▪ Exports will sharply increase over the next few years, but carriers will have difficulty shifting equipment, infrastructure, and processes to accommodate exports after years of focusing on imports. Among the issues to be addressed: export commodities typically are much heavier than imported merchandise, and export origins often are located far from import destinations, making it costly and difficult for exporters to get containers.

▪ Importers can look forward to “pretty darn good rates” in the next few years as exports become the headhaul and carriers chase imports to fill what may soon become the backhaul. ;

Do you know someone who deserves a place in the supply chain “hall of fame”? The Council of Supply Chain Management Professionals (CSCMP) is now accepting nominations for the 2012 Distinguished Service Award.

Candidates will be evaluated on the following criteria: sustained and distinguished record of contribution to the field, recognition as a leader, recognition as an innovator, and a record of enhancing the understanding of the supply chain management profession through both oral and written communications.

The deadline for nominations is April 30. For more information, including the nomination form and a list of past awardees, visit http://cscmp.org/education/awards/distinguished-service.asp. ;

Do you know a supply chain
“Hall of Famer”?

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Retailers shift focus from
cost cutting to growth

After several years of laser-like focus on cost cutting, retail supply chains are starting to return to a more balanced strategy that places equal emphasis on cost and customer service. At the same time, they’re striving to respond to the explosive growth and ever-changing demands of multichannel, direct-to-consumer commerce.

Just under 40 percent of the retail supply chain executives surveyed for the latest edition of The State of the Retail Supply Chain Report said they would pursue a balanced cost and service strategy for their organizations in 2012. That’s a significant change from the findings during the economic downturn, when most respondents focused primarily on cost. This time out, only 12 percent said their supply chain strategy would focus on controlling costs. Another 32 percent said their strategy this year would support store revenue growth, and 17 percent said enhancing store-level customer service would be a priority. The annual study was conducted by the Retail Industry Leaders Association (RILA) and Auburn University College of Business, and was sponsored by the consulting firm Accenture.

The report devoted considerable attention to the growing impact of electronic commerce and multichannel direct-to-consumer sales on retail supply chains.

In a multichannel scenario, retailers would ideally fill orders for store, online, and mobile sales from a common pool of inventory. But the complexity of multichannel operations makes that difficult to achieve, the report noted. Retailers that are dealing with multichannel fulfillment face challenges associated with variation in shipment size, order filling processes, and delivery methods, as well as differences among sales channels in the stock-keeping unit (SKU) assortment. Less than 18 percent of the retailers surveyed currently offer the same SKUs across channels, the research found.