Supply Chains: Are You Managing Your Risk?

There are many challenges to moving material within the continental United States. Yet it seems that everyone takes it for granted that it will occur. UPS, FedEx and DHL all have their operations moving materials all day and night. Yet they only manage a fraction of all the material that moves across the U.S. everyday. And it is going to keep growing. The Department of Transportation estimates that the volume of domestic truck freight will likely top 15 million tons in about three years. This is nearly a 50% increase from 1998. When this happens, the competition to secure cargo containers will be fierce, especially during the peak holiday seasons. 

One major challenge is our own U.S. infrastructure. It is typical to think that the U.S. infrastructure is top notch, among the best in the world. But a review of the 2005 report card provided by the America Society of Civil Engineers rates our Roads a 'D', Rail a 'C-' and Aviation a 'D+. The scores are mediocre at best. Our infrastructure enables the movement of material in a timely fashion. However, it is not too timely anymore.

Adding to the challenge are the many mergers and acquisitions that are occurring in the trucking industry. As these continue to grow, the amount of national carriers continues to diminish. “Over the past three years, demand has clearly out-stripped supply”, notes Tim Coats, vice president, supply-chain logistics, at General Mills. “Many companies have been caught short.” Capacity constraints have enabled trucking operators to become selective about the routes and customers that they will support. Trucking operators have shut down marginally profitable routes or lines that no longer fit with their strategic goal. Today, carriers have the advantage, and its not likely to change anytime soon.

Today’s situation has led many companies to initiate supply-chain risk-management initiatives. They must assess and mitigate risks in their supply chain in order to ensure that they can deliver to their Customers. For example, at General Mills, the cereal-maker’s management team identified the company’s busiest delivery routes. On arteries where the volume is consistently high, the company is negotiating dedicated service from cargo haulers. “We want trucks on those lanes available to General Mills 100 percent,” says Coats.

Today’s carriers find themselves in a unique position, they have an advantage when negotiating with customers. Beth Enslow, Supply-Chain Service Director at the Aberdeen Group consultancy stated, “The situation has completely shifted. Manufacturers and distributors used to have the upper hand in setting prices.”

With the grass so green, what should today’s carriers do? Now is the time to invest in their own infrastructure to make sure they are ready for the new challenges of the future. Fuel costs, road construction, driver availability, equipment maintenance, these challenges will always be there. The carriers who look to the future, continue to invest and introduce new technology in order to scale to future demands are the ones who will hold a competitive advantage. Business is good. But it still comes down to managing cost, operating efficiently and keeping your customer satisfied. Don’t sit back and wait until the competition drives you to improve. Instead, be a change agent and take the calculated risks in order to drive continuous improvement and profitability. The right steps now can lead to continued profits down the road.

contributed by Michael Vigil
Co-Author of Driving Complex Change

Spotlight: Holiday Hoopla

As the Holiday season begins to take full swing you can see the activity levels growing everywhere... more shopping, more shipping, more spending. Indeed the Holiday Hoopla is now center stage.

As many businesses begin to wind down, others are winding up to deal with the busiest time of the year. This is when our expectations as consumers are the highest and when customer service is truly tested. A clear competitive advantage is flawlessly completing each transaction in an efficient manner.

Delivering excellent customer service can make a long day better, or even make an excessive wait seem reasonable. Ultimately your experience is within your control. How you react to any given situation will have a significant impact on your day. In many ways the Holiday Hoopla is a high intensity window of time when we can learn much about ourselves and how we deal with performance and even change.

During this season, take a few moments to think about your day and how you may have reacted to a given situation. Hindsight is a wonderful way to self-assess, in order to gain insights and learnings. Take those learnings and try to apply it the next opportunity. When all else fails, count to ten and start again.

Happy Holiday wishes to you from the ASIL team!

contributed by Pete Pazmany

Industry Trends

Improving Strategic Planning

According to a recent McKinsey survey of nearly 800 executives worldwide,, the respondents believe that critical to the success of any organization is strategic planning, however less than half of the respondents were satisfied with their company’s approach to planning and implementing strategy.

When asked who makes the important strategic decisions in their company, more than half of all respondents said by a small senior group, including CEO or equivalent. Regardless of whom leads the decision making, executives that make good use of a formal process are more satisfied with strategic planning. Among those with a formal process, more than half say its plays a significant role in developing corporate strategy.

The top two key concerns of the respondents expressed towards executing strategy were:

Reflecting on these concerns, monitoring progress was the primary area many executives could see for improvement. Only 56 percent of respondents say that their company currently tracks the execution of its strategic initiatives. Secondly, the need for integration between the company’s strategic planning group and its human resources group. Lastly, companies need to focus their strategic planning on new growth opportunities.

To read the entire article, go to: http://www.bettermanagement.com/library/library.aspx?libraryid=14229

contributed by Deborah LeBaker

Product Highlight

Common terminology within an organization is key to effective communications. MAX Partnering™ software has a built-in glossary of industry standard terms that is accessible by all system users. In addition, the glossary function allows each company to add their own terminology, acronyms, and definitions to augment the built in system glossary. This allows your company to customize definitions that may be unique to your organization or group in order to accelerate the adoption of those unique terms. 

ASIL’s MAX Partnering™ Software application delivers this and much more. For a full feature description of the MAX Partnering™ software application, click here.