Logistics Consulting Trends
A management consulting colleague recently had an uncomfortable event that I would like to share with supply chain, logistics consulting and supply chain management professionals.
His client asked him, at a board meeting, to give a fifteen-minute speech (he was not given time to prepare) on the trends in his industry that are affecting the company.
This raises a good point to be prepared to “be an expert” in your industry on short notice.
Experts in Supply Chain / Logistics Consulting and Senior Supply Chain Managers need to know the trends.
The following are the logistics consulting industry trends I would speak about:
The first logistics consulting trend is the need for cost reduction with the current economy. Companies are identifying best practices and revising poor practices. Labor is retrained after any process is revised. From doing this simple exercise, I have seen a 5% labor reduction. Another simple labor saving process companies have been completing is slotting and re-profiling. Re-slotting has typically saved companies 10-20% on their picking labor. Another cost savings trend is renegotiating Distribution Center / Warehouse leases that are coming due in the next couple of years. Landlords in current economy are motivated to be resourceful to keep tenants and find new ones. The warehouse must be in a favorable location and the correct size to take advantage of the situation.
Volatility of energy prices and its related effect on transportation costs change optimumized domestic distribution networks. The price of diesel was at a low of $2.44 a gallon in 2006 rose to $4.76 a gallon in 2008. In 2009, it went down to $2.02 and then shot back up to $2.62 a gallon by midyear. At the end of the first quarter 2010, diesel prices were $2.94 per gallon. Global demand drives oil and diesel prices. That demand is driven by the economical situation, and the experts predict that when the global economy returns to “normal,” oil and diesel will rise.
Company executives need to estimate the future cost of transportation. In a few network optimization studies I have seen, just a 25% increase in transportation costs changes the distribution center (DC) network by an additional DC.
From our logistics consulting engagement we have noticed that everybody is going green from reducing packaging to more recycling programs, to replacing warehouse metal halides lighting with T-5 or T-8 high bay fixtures, to using waterless urinals in Distribution Centers.
Insurance companies have become more active in warehouse design. When using pneumatic conveyors, insurance companies usually tell the insurer where they want the dust collectors located. When designing a recent storage rack layout, the insurance company demanded the use of “z pallet stops” to make sure the flue space is maintained between the back-to-back pallet racks.
Many companies are Outsourcing their Transportation Management functions. The outsourcing usually includes transportation analysis, rate negotiations, procurement of transportation, both contractually and in the spot market, shipment execution and tracking, carrier management, reporting and compliance, executive dashboard presentations and detailed shipment reports, freight bill audit and payment, claims processing and service refund management, design and management of inbound client freight programs and customized web portals and self-service data warehouses.
The last noteworthy trend I have seen is the move to the use of slip sheets for transportation instead of pallets and instead of floor loading. Slip sheets save on the wood pallets and the storage of wood pallets in a distribution center. When compared to floor loading, slip sheets save on the labor of loading and unloading floor loaded trailers when an automated palletizer and push-pull attachments are used.
Please comment on any different logistics consulting trends you have seen or confirm above trends in Logistics and Supply Chain Management. Additionally, please comment on any 2012 logistics consulting trends that may be emerging.