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HDL Executive Briefing
- 1. OUT OF SIGHT OUT OF MIND FOUR CURRENT ISSUES THAT EFFECT THE ABILITY TO OPTIMIZE LOGISTICS
- 7. U.S. Logistics costs rise to 1.3 Trillion Dollars in 2008 SIGNIFICANCE TO U.S. ECONOMY Source: Gilmore, Dan, State of the Logistics Union 2009 , Supply Chain Digest, 6/17/09 This represents an annual Dollar increase of approximately $450 Billion Dollars between 2003 and 2007
- 8. LOGISTICS VERSUS G.D.P. 23.3% 17% 7.15%
- 14. I-710 Corridor from the Port of Long Beach I -710 Under normal conditions I -710 During Port Shutdown
- 19. “ Domestic air-traffic delays last year cost the U.S. Economy as much as $41 billion” - Joint Economic Committee Report, 2008
- 22. Cap & Trade
- 28. The Price of Fuel
- 29. Future Demand Source: OECD/IEA -2008
- 30. PEAK OIL Source: www.thesocialcontract.com , May 29 th , 2005
- 31. THE CURRENT ECONOMIC STORM
- 33. “ International air cargo is expected to slump 17% this year World airlines are flying towards a combined global loss of $9Billion” - IATA (International Air Transport Association)
- 34. Challenging times for the air cargo industry
- 38. WHAT ABOUT THE FUTURE?
- 39. Performance today is more important than ever
- 44. Don’t let the recession cause you to make the wrong decisions Source: Penn State Smeal College of Business, 2008
- 46. The best plans developed today can be obsolete tomorrow The best plans developed today can be obsolete tomorrow
- 49. High Definition Logistics Insert Logo Here High Definition Logistics Insert Logo Here
Notes de l'éditeur
- History lesson showing significance of logistics. Napoleon invades Russia in the fall of 1812 with 600k men returning in the winter of 1813 with less than 10k. Focus on the role of the supply chain break down as a key reason for defeat.
- Past-takes up back to time when freight was a back-end function. Viewed as a cost of doing business and very little focus was placed on innovation Today-extremely complex supply chains that are engineered for maximum efficiency. Focus has been on reduction of cost. Future-supply chain will be used by the most progressive companies to build competitive advantage and gain market share. One area of focus will be on “green” solutions.
- This is a significant portion of a companies operating budget. Ask questions to the viewer to determine how much they know about their company. This can give great insight as to the level of person which you are dealing.
- Macro Economy issue. How large of a total cost this constitutes to the nation. Rate of increase in real dollars is noteworthy.
- Percentage of overall GDP. Some comparisons to other countries of the world as interest generator.
- In spite of the large cost only a small percentage of senior executives believe that they are very effective or better. This is a good chance to Pre-sell the remaining survey result near the end of the briefing .
- Three points: Everything is dependant on logistics The rate of change is fast and ongoing The options to execute are vast Transition with that while these are key issues of today’s climate we will now follow up with five specific issues that are worthy of strategic discussion.
- Here they are laid out. We will cover them in detail one by one
- The US currently has one high speed rail from Washington to Boston and it is limited to 80mph due to congestion France, Spain, Germany and Japan have extensive networks that travel at over 200 mph China operates 20 lines toady and will have an additional 8,00 mile of HSR by 2012 13 Billion set aside over next 5 years from recent stimulus package. The estimated cost of the California portion alone stands at over 40B.
- Cap and Trade American Clean Energy And Security Act of 2009 Designed to reduce economy-wide greenhouse gas emissions 17 percent by 2020 Passed the House, now in the Senate Heritage Foundation estimates that total costs will be 161B annually by 2020, rising to 586B annually by 2035 Britain’s Taxpayer Alliance estimates that the cpa and trade in effect only a few years is costing the average family $1,300 per year
- HOS – Hours Of Service Safety and Drug & Alcohol testing programs NAFTA Trucking Regulation These are examples of regulation that is changing frequently –Are you informed?
- This has affected everyone. More so in 2008 but prices are once again rising and we believe that longer term this is the most serious issue.
- Facts of interest
- ***Need an Update for $ per Gallon*** This is a visual of the longer term historical trend. We are current off the peak and obviously the trend is overall upward. Transition with the lead into the disturbing facts about the long term energy demands from the entire world.
- Center vertical represents 2008. The top red line for the chart shows that the global demand for crude oil will rise 25% by 2030. This si at the same time that we must face the reality of “Peak Oil”
- Center vertical represents 2008. The top red line for the chart shows that the global demand for crude oil will rise 25% by 2030. This si at the same time that we must face the reality of “Peak Oil”
- Capacity for domestic all-cargo planes lost 3M lbs per day in early 2008 with the bankruptcy of Kitty Hawk. Commercial airlines are reducing capacity at double digit rates for the second consecutive year- over 25% of all US air cargo still flies on commercial passenger carrying jets. This reduced volume today will lead to further constraints in the future that will reduce the overall number of options.
- 260,00 new truck orders in 2006, less than 100k in 2008 Major FTL carriers have taken over 10% of capacity out of operation
- Relate it to customer – How the effect of extra capacity will play out Driver shortage of 20k existed as early as 2005. YRZ, the largest LTL company in North America has asked the federal government for bailout money. Volume is down 30% year over year and credit status has been downgraded to junk
- Regardless of these tough issues we are required to perform. During the recession keeping clients is more important than ever. Client satisfaction is key to survival. Budgets must be met and reduced. Productivity must increase. Those who rely on critical logistics must be open minded to new ideas.
- No significance to order of list. The important things are the lessons learned with experience within one industry that are transferrable to other industries through best practice.
- In a recent survey, 1,644 customers talked about their experiences as customers of third-party logistics providers and freight forwarders revealing important trends that can help others shape and enhance their own shipping relationships These are the people who operate companies day to day and would know first hand the relevance of this topic. Draw a comparison to the earlier survey that showed only 37% of senior executives feel that a very effective or better job is being done. This represents an area of opportunity. Transition: One of the main tactics utilized to accomplish this would be to stay ahead of emerging trends
- Velocity of change is increasing, the amount of knowledge required to stay on top of these changes is overwhelming Outsourcing new ideas from innovative partners is critical to staying ahead
- More data that supports the outsourcing concept. In a recent study, companies going through recessionary periods fared better in the long run where they didn’t let the fear of recession affect their decision to strategically source Some companies during recession feel they should take over the duties in-house Unfortunately, 79% of those companies taking on non-core competency projects in-house (logistics included), lost profits during the recession
- Superior value creators – based on mathematical formula Research by Bain and Company further supports the notion that the best performing businesses during and after recession are those that focus on the core activities. We do know that difficult periods have historically lead to innovation.
- Just like the story in the evolution of recorded music, one of the most complex problems faced by logistics managers is that the world is never static Supply chain requirements keep changing Customer demands change Manufacturer requirements change due to product changes Implementing a shipping plan based on today’s data will become obsolete under tomorrow’s conditions
- This report has taken a look at the significance of logistics historically and into the future It has demonstrated that there are many issues that are complex and that many of them are constantly changing Talked about the importance of execution It has shown that in today’s recession, companies must control costs, while at the same time position themselves for future growth Companies need to select the best logistics partners in order to capitalize on innovation and best practices that achieve outstanding results
- Efficiency of business model Pricing strategies Innovation
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