Tom Andel

Fat, agile and green
June 11, 2008

If you want to see true craftsmanship in making silk purses out of sows’ ears, look to a logistics pro. The sow’s ear I’m referring to is the trend of carrying more and more inventory. This used to be a sign of weakness and cause for shame because it indicated you didn’t have a good handle on supply chain information. Now managing more inventory seems to be the new “best practice.”

I was on my way to Sacramento to attend the “Greening the Supply Chain” Conference this week and read a New York Times article I knew I’d have to mention during my panel on “Best Practices for Working Green and Saving.” The headline was, “Manufacturers Sharing the Pain of High Oil Costs.” It quoted the CEO of Costco about his strategy for dealing with the rising cost of oil-based products. What’s he doing? He’s buying in extra large quantities so he has stock on hand to carry him through future price increases.

Five years ago this would have been unthinkable. “Lean and agile” was the business mantra. Now it’s green to have more warehouses and less transportation. If you look at my conference report in the top news stories on our site, you’ll see I mention a presentation where yogurt-maker Stonyfield Farms is working with Ryder System to move from one large distribution center to four smaller ones to reduce transportation. This adds two days to the delivery cycle, but customers seem to understand the reason.

And just this morning The Council of Supply Chain Management Professionals (CSCMP) sent out a press release saying it would be releasing its 19th Annual "State of Logistics Report" at a press conference on Wednesday, June 18 at 9:00 am at the National Press Club in Washington, DC. Rick Blasgen, CSCMP president and CEO, summarized one of the key findings:

"Distribution systems are being redesigned to optimize the handling of growing inventory levels. Carriers are entering new markets and providing new services as volumes decline and length of haul continues to drop. New technology that enhances supply chain visibility and enables dynamic rerouting is being employed to optimize systems."

Lean and agile used to require lots of transportation. New emission reduction targets will put and end to that. Now it’s up to the materials handlers in this growing network of distribution centers to be the muscle behind lean and agile. So get rid of those sows’ ears. Work directly with the silk worms on those purses and shorten your supply chain.

Posted by Tom Andel on June 11, 2008 | Comments (0)