2009 Logistics Technology Roundtable: Navigating the Storm

The supply chain management software and technology investment research that’s been trickling in during the past few months (logisticsmgmt.com/software) has revealed that while times have certainly been tough, a percentage of savvy shippers continue to strategically invest in new implementations and upgrades.

That really shouldn’t surprise anyone considering the challenging transportation market over the past year; and the fact that increased trade regulations are putting even more pressure on global shippers for data at a time when nearly every logistics staff is doing more with less. For the vast majority of shippers who told us that their hands have been tied by upper management in terms of technology spending, the following panel discussion may offer you a clearer path through the current nasty weather.

Click here to read what the following four leading supply chain management technology analysts have to say on helping shippers to better harness existing systems and a make a stronger case to the C-suite:

1. Adrian Gonzalez, director of ARC Advisory Group’s Logistics Executive Council, discusses rising interest in Transportation Management Systems (TMS) and Global Trade Management (GTM)
2. Belinda Griffin, global supply chain executive program manager for Capgemini, discusses the growth of network optimization software
3. Greg Aimi, research director for AMR, shares tips on optimizing your current Warehouse Management System (WMS)
4. Brad Wyland, senior research analyst for the Aberdeen Group, wraps things up by helping shippers overcome technology adaptation issues

Near-Sourcing: The Way Forward

In the immortal warning of the Jaws movie poster, ‘Just when you thought it was safe to go back into the water,’ so it is with near-sourcing.

“Last spring and summer,” recalls Charlie McGee, Vice President of International Development for Averitt, “near-sourcing was hot as firecrackers.” The competitive advantages that had been driving U.S. supply chains in a mad dash to China over the previous decade had seemingly all turned sour. Now, though, he’s seen that wave of enthusiasm begin to ebb.

The pressures to bring sourcing closer to home came to a focus when hefty ocean fuel surcharges (remember $150 a barrel oil?) were wiping out much of the savings from cheap labor. But compounding that difficulty was the rising levels of the ‘China price’ of goods themselves. With the economy flush, the government started eliminating the energy subsidies to domestic companies it had granted to spur production. There were other concessions to the pressures from global trading partners to level the playing field. Minimum wage laws were instituted (while demand pressures were putting workers in industrial regions in short supply, also pushing up pay). The melting of scrap into steel was subject to environmental oversight, adding costs. And hovering over the entire economy, like the perennial grey pollution, was inflation in basic commodities.

“Lots of people started to re-think their overall supply chains,” observed McGee. “Near-sourcing got pretty strong legs.” This was especially true with products which less labor intensive, like tooling and metals. The Americas started looking good again.

To view the full article, visit World Trade Magazine.

Now's the Time for an India Strategy

In 1602 when Sir James Lancaster arrived in India, commanding the first trading expedition of the East India Company, the economy of the Indian subcontinent dwarfed that of the British Isles. What many people in the West don't realize is that, except for the last 500 years, this has always been the case. What even fewer realize is it likely will be true again. A huge, educated, and motivated population with access to capital—such as India's—will demand a strong economy, and India is reclaiming its traditional role as an economic power.

Considering the bright future that lies ahead for India, now is a good time for companies to develop their supply chain strategies for serving the country. India's 7% growth rate for its gross domestic product (GDP) may not be as attention-grabbing as China's. But India is the second fastest-growing economy in the world, and it is more diversified. Its burgeoning middle class is employed in a wide variety of business services, leading some experts to believe that India will be more resilient in the current economic downturn than China.

India's government has begun implementing tax-law changes that will make delivering goods to consumers and businesses much more efficient, making products more affordable and spurring demand. The government also is gradually lowering barriers to foreign direct investment, and soon retailers will be able to operate in India by taking majority positions in Indian subsidiaries.

Although India offers a huge growing market for outside products, setting up a distribution network there presents a host of challenges in areas ranging from infrastructure to human resources, from warehouse site selection to hiring a trustworthy trucker. These challenges shouldn't discourage companies from expanding into the country. Rather, they should simply motivate firms to start their planning now. Based on our experiences in India, we believe that if a company starts to navigate the obstacles now, it will be well-positioned to reap the benefits when government regulation and economic reforms finally align behind this very large consumer economy.

To read the full article, visit CSCMP's Supply Chain Quarterly.

Global Supply Chain: Balancing Cost Reduction and Performance Improvement

Over the past decade, globalization has helped many companies improve their competitive positions. Organizations that pushed their supply chains to become ever longer were often rewarded with lower input costs and increased sales to emerging markets.

But today, growth in many global economies has slowed, and the economic prosperity of the past several years is being replaced by uncertainty. This reversal of fortune is placing downward pressure on business, causing corporations to seek savings and improved efficiencies. Since a large portion of a company's revenues and expenses flows through its global supply chain, it will come as no surprise that management will expect its supply chain to increase efficiencies during the current downturn.

To guide your company, it is important to recognize where these efficiencies may be found, to understand how leading companies approach their global supply chains, and to take the appropriate actions.

To view the full article, visit SupplyChainBrain at http://www.supplychainbrain.com/content/nc/general-scm/global-supply-chain-mgmt/single-article-page/article/global-supply-chain-balancing-cost-reduction-and-performance-improvement/

US FTZs and Duty-Free Treatment

In the 110th Congress (2007-2008), Representative Bill Pascrell sponsored legislation that would have corrected an inequity currently faced by manufacturers operating in U.S. Foreign-Trade Zones (FTZs). Such manufacturers must compete in the US marketplace against duty-free imports manufactured abroad by firms in FTZ partner countries. This unequal treatment occurs even when the FTZ products meet the rules of
origin under NAFTA and other US Free Trade Agreements.

Pascrell’s bill (H.R.6415;110th Congress)would have provided that goods that are manufactured in a US-based FTZ and comply with the rules of origin under a trade agreement, to which the United States is a party, may enter the customs territory of the United States at the rate of duty applicable under that agreement.

Pascrell’s bill was not acted on during the last Congress, so it died at the end of the session. There is a renewed effort to reintroduce this bill, as part of an effort to boost the competitiveness and reduce costs of US based manufacturers who employ US workers. The initiative is being supported by a combination of public and private entities that recognize the importance of trade as an economic stimulus, and seek to increase the competitiveness of US-based manufacturers in the global marketplace.

Is your company interested in furthering the goals of this initiative? For further information or to learn more, please contact Megan Wilson, AAEI’s Director of Government Affairs at mwilson@aaei.org

Global Trade is Important Engine for Recovery

Reflecting on the ongoing debate of nationalization versus globalization in the margins of the recent meeting of European heads of state in Brussels, CEO DHL Express Europe, Scott Price, said: "Global trade is the engine for economic recovery and any move towards national protectionism creates the reverse. As a European industry we know that global trade is a job and growth facilitator and it is now more important than ever to underline this fact in order to encourage business, finance and not at last the European public to build up confidance again."

To view the full article, visit Outsourced Logistics at http://outsourced-logistics.com/global_markets/news/global-trade-recovery-0304/

Export Control Reform Examined in Context of Economic Recovery

Export control reform has been an item of interest for a number of U.S. industries for several years, and a congressional hearing this week suggests that lawmakers may be ready to seriously consider it. Witnesses at a February 25 hearing of the House Science and Technology Committee said that the current system puts U.S. companies at a disadvantage in the global marketplace and that reforms could play an important role in government efforts to promote economic recovery.

In the post 9/11 environment, Congress has had little appetite for taking any action that could be construed as a liberalization of export controls. In opening the hearing, however, Committee Chairman Bart Gordon asserted that “it is time for Congress to take another look at the nation’s export controls regime to ensure that it is working effectively and without unintended adverse impacts.” As part of that review, Gordon stated, “we want to understand any negative effects that the current export controls regime may be having on our efforts to stimulate the economy and promote long-term growth through investments in science and technology.” Both Gordon and Space and Aviation Subcommittee Chair, Gabrielle Giffords, expressed hope that the House Armed Services and Foreign Affairs committees will review this issue as well.

To view the full article, visit WorldTrade\Interactive at
http://www.strtrade.com/wti/wti.asp?pub=0&story=30375&date=2%2F27%2F2009&company=

2 Main Concerns for Importers & Exporters

Integration Point Inc.'s CEO, Tom Barnes, explains: "In the current global economy and political environment, there are two main concerns facing importers, exporters and the vendors who support them. The first is managing cost. The second is remaining competititve. In global trade terms, savings can be accomplished by managing inventories more carefully, reducing the time of transport, ensuring proper customs paperwork and minimizing tariffs. These opportunities require planning by the importer or exporter. They need comprehensive, up-to-date information and easy-to-use tools to make quick, accurate decisions as well as to increase visibility into their supply chain. Information must come from numerous third party sources and be compiled in a comprehensive manner. The collaboration of the various trade participants and effective tools that support the multiple languages of global trade are critical areas in which I expect to see accelerated progress in 2009."

The full article can be found in The Journal of Commerce 2009 Annual Review and Outlook.