2010 Annual Global Conference Report
An improving economy and a strong lineup of speakers and presentation topics drew more than 3,100 supply chain professionals from 41 countries to this year's Annual Global Conference in San Diego, California, USA. Participants enjoyed three days of educational seminars along with the new "Supply Chain of the Future" exhibition, which showcased cutting-edge supply chain technology, equipment, and services.
Not able to attend the conference this year or unable to get to all of the sessions you would have liked to attend? The following roundup of some of the sessions and events CSCMP's Supply Chain Quarterly's editors attended during the conference will help you fill in some of those gaps.
For additional information on this year's conference as well as the 2011 conference, which will take place from Oct. 2?5 in Philadelphia, visit the conference's website.
New board officers announced
In addition to being an educational event, CSCMP's Annual Global Conference also serves as the association's annual business meeting. As part of those proceedings, members elected the following officers to its board of directors:
- Board of Directors Chair: Keith Turner, vice president of marketing and sales, Alcoa World Alumina
- Immediate Past Chair: Robert B. Silverman, vice president of IT business systems, Tommy Hilfiger USA
- Board Chair-Elect: Nancy W. Nix, executive director of the EMBA Program and professor of supply chain practice, Texas Christian University
- Board Vice Chair: Rick J. Jackson, executive vice president, Limited Logistics Services
- Secretary and Treasurer: Heather L. Sheehan, corporate director of global logistics, Danaher Corp.
A list of committee chairs who were appointed to CSCMP's Board of Directors is available here.
Long-time innovator honored with Distinguished Service Award
Chuck Taylor has never been afraid to tackle a difficult problem. In the 1980s, Taylor helped logistics and transportation professionals envision how the industry could operate after deregulation. Now, he's helping supply chain professionals envision how they can succeed after the end of "cheap oil."
CSCMP recently recognized Taylor for his lifetime commitment to finding practical solutions to intractable problems as well as for sharing that knowledge with others. At its 2010 Annual Global Conference in San Diego, the organization presented Taylor with its 45th Distinguished Service Award.
Taylor currently serves as principal of Awake! Consulting, an organization he founded to encourage supply chain professionals to get involved in shaping national energy policy. (See Taylor's article "The end of cheap oil: Are you ready?" from the Quarter 2/2007 issue of Supply Chain Quarterly.) It was appropriate, then, that Taylor used his acceptance speech at the conference to remind those in attendance that the industry is facing the unprecedented challenge of growing the economy while simultaneously reducing our dependence on oil.
But his message was not all gloom and doom. Taylor remains optimistic about the supply chain profession's ability to respond to this challenge. "There are incredible opportunities available for reducing waste and for conservation," he said. "In that way, supply chain improvements are better than new oil fields."
In fact, the end of cheap oil presents an enormous opportunity for supply chain professionals, according to Taylor. "You are a prerequisite for survival, and you will deliver as you always have," he said.
CSCMP session sampler
Here are summaries of just a few of the educational sessions that sparked interest at the annual conference. CSCMP members can learn more about these and other sessions by downloading the presentation slides from CSCMP's website. Slides are available at the "2010 Session Presentation Search" section under the "Educational Events" tab. A member log-in is required.
Panama: crossroads of global trade
The long-awaited Panama Canal expansion, slated for completion in 2014, will be a "game changer" that will make Panama "the most important cargo hub in the Americas," declared Rodolfo Sabonge, the Panama Canal Authority's vice president of market research and analysis, in his keynote speech at the Annual Global Conference.
Sabonge said the new, larger locks now under construction will fundamentally change the way carriers deploy their vessels because they will accommodate much bigger ships than the current infrastructure can handle. He predicted that some carriers would adopt a "reverse intermodal" approach, skipping calls on the U.S. West Coast and funneling containers destined for other U.S. markets through transshipment hubs in Panama. That route will be cheaper than intermodal moves via West Coast ports, particularly for 53-foot containers, he asserted. Furthermore, carriers will see financial benefit in picking up backhauls from the U.S. East and Gulf Coasts and Central and South America and feeding them into east-west routes served by the new class of giant, post-Panamax vessels, Sabonge said.
Containerized shipping is not the only industry segment that will benefit from an expanded Panama Canal. Large bulk and liquid carriers that currently are too large to transit the canal will have an entirely new route open to them, Sabonge said. For example, liquid natural gas (LNG) tankers will for the first time be able to use the canal. As a result, transportation and logistics costs for some commodities will drop sharply, and new markets and trade lanes will open up. In particular, this development will facilitate new trade flows between South America, Europe, and China, he said.
Changing trade and cost patterns as well as strong economic growth in South American markets will attract more manufacturing, assembly, and logistics operations to Panama, Sabonge predicted. To accommodate that anticipated growth, Panama is expanding the already city-sized Colón Free Zone near the canal's Atlantic entry point. According to the Free Zone's website, there are now 10 warehouse projects under way or planned for the near future. At the other end of the canal, the Panamá Pacífico industrial development is opening new office, warehousing, and manufacturing properties for international companies at a rapid pace. To help meet expected demand for a trained workforce, the Massachusetts Institute of Technology (MIT) and its Colombian affiliate, the Center for Latin American Logistics Innovation, will soon open a logistics and transportation education center in Panama.
New metrics will forecast supply chain trends
Academics and software companies are developing "predictive metrics" that will detect early warning signs of future problems in a supply chain. Unlike traditional metrics, which use historical data to benchmark activities, predictive metrics use information to identify a trend line and predict a shift in an activity before it happens. "Predictive metrics complement historical reporting for better decision making," said Lynda Haydamous, a project manager at the Boeing Company, in a session on that topic at the conference.
Current research on predictive metrics is attempting to determine the underlying factors that could cause future supply chain problems. For instance, high employee turnover might indicate that a supplier may have trouble delivering quality products. Other research is focusing on shifts in the areas of supply and demand, said Lawrence Lapide, a research affiliate at the Massachusetts Institute of Technology (MIT) Center for Transportation and Logistics. Examples of a supply shift include a supplier becoming unreliable, going out of business, or manufacturing degraded products. An example of a demand shift would be a customer dramatically increasing its orders.
The most important supply chain predictive metric now in development is the "Inventory Mix Quality Index," which indicates how an overstock or understock will affect the profit margin of a particular product, said ToolsGroup Chief Executive Officer Joseph D. Shamir. He believes that this metric could indicate when supply chain planners need to take corrective action to maintain profitability for specific stock-keeping units.
Ultimately the development of predictive metrics will help companies to better align their supply chains with their corporate objectives. As a result, the new metrics are popular with many corporate executives, Shamir said.
Get to know your customer
At many companies, supply chain interactions with the customer begin and end with making sure that the products are delivered when and where the customer wants them. At Avery Dennison, however, supply chain managers don't just focus on getting product to the customer, they also serve as an extension of the sales force.
Avery Dennison, which is one of the largest manufacturers of pressure-sensitive materials like labels, is both bigger and more supply chain-savvy than many of its customers. In fact, members of the company's Supply Chain Services Group often find themselves serving as logistics teachers and consultants to their customers, said Kent Packer, director of supply chain services, during a presentation at the conference.
Avery Dennison's supply chain specialists use sales calls as an opportunity to learn more about a customer's supply chain by asking questions like: What aspect of your supply chain drives you crazy? What's holding you back from success? What are your inventory turns?
If the customer reveals, for instance, that it's struggling with stocking problems, the Avery Dennison specialist might walk the client through basic inventory management concepts. From there, the discussion might turn to ways in which Avery Dennison's delivery services can help the client reduce its inventory (35 percent of Avery Dennison's offerings can be delivered in 24 hours). "We tell them, 'Let us be your warehouse,'" said Packer.
Programs such as this can not only help you make additional sales but also make you indispensable to your customer, said co-presenter Stan Fawcett of Brigham Young University. He noted that more companies want to rationalize their supplier base. A supplier that makes itself indispensable to its customer has a greater chance of keeping that business, he said.
Easy days are over for shippers
A top executive at International Paper said the days of abundant capacity and cheap rates in the U.S. trucking market are over. As a result, shippers need to prepare for a world where "we're not going to be able to move freight... the way we have in the past."
Tom Carpenter, director of logistics for North America for International Paper Company (IP), said the possible tightening of driver hours-of-service regulations together with the implementation of federal rules governing driver safety could take thousands of drivers and their rigs off the road. Another problem is the lack of infrastructure investment. "We are not, as a country, sufficiently reinvesting in our infrastructure to keep up with tonnage increases," said Carpenter, noting that truck traffic is growing 11 times faster than the growth of highway capacity.
IP belongs to the Coalition for Transportation Productivity, a group dedicated to raising the gross vehicle-weight limit to 97,000 pounds for single-trailer trucks operating on the nation's interstate highways and adding a sixth axle to the trailer for better braking and balance. Carpenter said that raising the gross vehicle-weight limit would enable the same amount of freight to be hauled in fewer trucks.
