Supply Chain & Logistics - Business issues

The prosperity of the supply chain and logistics industry will naturally rise and fall in line with general economic activity.

With the onset of the global financial crisis in 2008, the emphasis in that equation was very much on “fall”.

The situation was neatly summarised by the International Air Transport Association (IATA): “Geneva - The International Air Transport Association (IATA) released international scheduled traffic results for both December 2008 and the full-year. In the month of December global international cargo traffic plummeted by 22.6% compared to December 2007. The same comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%. For the full-year 2008, international cargo traffic was down 4.0%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%¹.”

For logistics firms, a 2009 survey revealed that 65% of managers believed that the financial crisis was the most important issue throughout the supply chain industry².

But the economy is far from the only concern.

The volatility in oil prices and the consequent high price of fuel continues to impact the industry’s profit margins and competitiveness, increasing inventory costs for customers and encouraging some to keep more inventory on hand and thus reduce the frequency of deliveries.

Margins and competitiveness are also under threat from an increasing regulatory burden associated in particular with the industry’s environment impact. A pressure which the more progressive providers such a DHL are attempting to turn to competitive advantage under the theme of “green logistics”:

“Sustainable logistics are a challenge to our industry, but also an opportunity. In this time of climate change, it is not enough to make a significant improvement in our own CO2 balance. Logistics operators also need to meet the growing demand from customers for environmentally friendly services. Large corporations look for the support of their logistics providers when it comes to reducing their own CO2 emissions. For them, logistics have long been much more than a standard service to manage their business. Rather, they are a strategic lever to fulfill their own responsibility to contain climate change³.”

It is a complex time for this industry and agility is needed to navigate it safely. Some of the biggest names have asked Xchanging to help deliver that agility.

By taking away a range of complexities, we can provide supply chain and logistics firms with an enhanced ability to seize opportunity and adapt to threats and shocks.

So they can survive when time are bad – and thrive when times are good.

1 http://bit.ly/rgiDWC
2 http://scr.bi/mR3WIJ  
3 http://bit.ly/r3JKZF