The future of managing inventory flow

One of my roles as CSCMP's president and CEO is to chair the U.S. Department of Commerce's Advisory Committee for Supply Chain Competitiveness. The committee is important because it makes recommendations to the administration on what the country needs to do to improve its competitiveness on the global supply chain stage.

One of the key questions facing us is how to adapt the country's infrastructure and supply chains to meet the rise of e-commerce. E-commerce currently accounts for about 14 percent of total retail sales, and supply chain costs for the e-commerce channel are 25 to 30 percent of sales. If e-commerce grows to say 30, 40, or 50 percent of total retail sales, how will we deal with that?

One area in particular that the committee is concerned about is urban freight congestion. The demand for urban freight delivery is climbing dramatically at the same time that service standards are tightening. But the operating environments in cities are neither prepared nor designed for this change. This fact threatens to compromise the performance of supply chains and the delivered cost of goods to U.S. consumers.

In the face of this challenge, supply chain leaders are gearing up to figure out how to better position inventory and manage the flow of goods. One response has been the emergence of a "nested" system of distribution that includes large distribution centers (DCs) at the periphery of metropolitan regions feeding smaller ones closer to end users. As a result, the average number of DCs used by U.S. supply chains has tripled in less than five years, but the average DC square footage has declined.

This is why supply chain management is such an important element of modern business around the world. We are at the forefront not only of keeping all of commerce, in all of its various forms, focused on the customer and lowest total delivered cost, but also of creating new ways to deliver value to those that we serve, within our company and to the ultimate customer.

At CSCMP, it is our job to help you keep up with these emerging trends through local roundtable events; our CSCMP publications; and our annual EDGE Conference and Supply Chain Exchange, which will takeplace September 15-18, in Anaheim, California. The educational sessions and keynote addresses at the conference will keep attendees abreast not only of future methods of distributing products but also help them control their costs, cultivate and acquire the needed talent, and develop and embrace the new technologies that will help them do their job more effectively and efficiently. Meanwhile the Exchange will introduce them to new companies and new technologies that will undoubtedly be imported into our supply chains of the future.