A guide for uncertain times

Surviving the Slump—that's the title of the Council of Supply Chain Management Professionals' 19th Annual "State of Logistics Report." The information contained in this premier benchmarking tool is essential to help practitioners navigate the current economic downturn.

Although it focuses on the U.S. economy, it has much to offer supply chain professionals everywhere. It identifies and interprets significant trends so that managers can not only survive but also prepare for when the economy regains momentum. And while survival is important, supply chain practitioners must do more than just survive ... we need to thrive, so that our customers will, too.

Although not always visible to the consumer, supply chain costs are a major (and growing) segment of the U.S. economy. As we note in the report, total U.S. logistics costs grew to nearly $1.4 trillion in 2007, representing 10.1 percent of the U.S. gross domestic product (GDP). That's a US $91 billion increase over the previous year.

Our customers depend on us to deliver vital products and services, when the economy is booming, and when it isn't.

One trend that is dramatically impacting our organizations is skyrocketing fuel costs, which are eroding profit margins. Intermodal freight, international containers, and truck freight volumes were all down in 2007, and many trucking companies went bankrupt. This trend has continued into 2008.

Another trend we're seeing in the supply chain management and logistics environments is an increase in inventories. Wholesale inventories are larger than retail inventories for the first time ever, as retailers and manufacturers put pressure on wholesalers and distributors to hold inventory.

The only way the infrastructure crisis will be resolved is by public/private partnerships and governments at all levels working together toward a common goal. It's up to us to get the message about the vital necessity of restoring our infrastructure to our companies' leaders and to our politicians.

And it is likely to get worse: Freight traffic is projected to increase exponentially within the next decade or so. Our current transportation infrastructure will not be able to meet these needs, and our supply chains will be significantly affected.

A third key trend is the deterioration of the U.S. transportation infrastructure. Our roadways are the arteries that allow us to transport the products that American and global consumers want and need. But bridges are crumbling, the highway system is at capacity, and the Highway Trust Fund is inadequate to sufficiently address this critical and far-reaching problem.

The impact of what supply chain management professionals do—day in and day out, all over the globe—is of enormous significance. Our customers depend on us to deliver vital products and services, when the economy is booming, and when it isn't.

CSCMP's Annual "State of Logistics Report" will guide you through these uncertain times. Our companies and our customers can prosper in this difficult marketplace. If we confront the challenges directly, creatively, and with astute insight, we can produce the supply chain breakthroughs today that will define the parameters of business for years to come.