We expect to see a continuing push from our customers throughout 2012 to minimize on-hand inventory, and an ongoing effort to manage their businesses with leaner inventories. This is encouraging more demand-driven supply chains, as companies look to reduce operating expenses and preserve working capital and cash flow. Although on the surface this does not represent a material change from 2011, it is evidence of a renewed focus on reducing variability and risk while creating resiliency in the logistics network.
For a company headquartered in Japan as well as the U.S., the earthquake in Fukushima earlier in the year, as well as the recent flooding in Thailand, showed us significant supply chain disruption is more than just a talking point. For many companies, the upcoming year will be a time to seriously analyze their exposure to risk, and to look at how their supply chains and inventory flow and stock are susceptible to unforeseen events.
How the transportation industry prepares for this and supports its customers in developing more robust supply chain solutions will be a key issue we should expect it to remain so for several years to come. It is no longer acceptable to have a supply chain without some contingency planning built in, and companies that can manage risk will be in a stronger position in the future.
Partly as a result of this, although also emerging from other economic drivers, is the heightened interest to transition heavy manufacturing back to North America from overseas. This “near-sourcing” is being pursued as a way to better serve the U.S. and European markets and manage the uncertainty and cost that arise from extended global supply chains.