Storm Clouds

Copyright 2008, Traffic World, Inc.

The U.S. economy was a cloud hanging over the annual meeting of the Council of Supply Chain Management Professionals in Denver last week. But no one wanted to say there was a storm on the way.

The underlying message of just about any CSCMP meeting is that there is no supply chain imperative that can''t be achieved without just the right strategy, without the proper mix of data analysis, C-level buy-in and imagination.

But the gathering economic storm puts those supply chain strategies in a different light. Outside the educational sessions at the world''s largest gathering of supply chain managers, the shippers, consultants, logistics providers and carriers found the sort of common ground they have always sought - just about everyone suggested that business was somehow holding up, sort of, but that they were getting ready to duck for cover in any case.

"It''s hard to look over the horizon now and see some good news," YRC Chairman, President and CEO William D. Zollars told the group. "It''s hard to look around the corner and see something good happening in the coming months. It''s going to be a painful time."

Shippers and logistics providers sound like they are already getting ready.

Richard Jackson, head of global logistics for The Limited, said the company is "playing defense. We probably have been for the last year. So it''s important to get in out of the season with inventory lean. So you buy less because (consumers) are buying more conservatively. There are added discussions around cost control and you really want to lock down inventory. We want to make sure we are moving inventory (that sells) and not holding it in distribution centers where we get caught with it."

Jay Scott Fleener, vice president of supply chain management for telecommunications equipment shipper Qwest, says the focus is not on internal financials but the state of Qwest''s customers.

"We''re very concerned about the impact on our customer base," he said. "Even in Q1 and Q2 we were starting to see that people were cutting back. We''re seeing declines in our volumes now and we''re projecting more in the fourth quarter."

Terri Ferraro, director of supply chain and transportation at Famous Footwear, says the footwear company doesn''t bank much on a big holiday season - "Shoes are not usually under the Christmas tree," she says - but sees the clouds in her industry. "Store-to-store traffic is down."

Many shippers are preparing for the next phase in the economy, the recovery after a downturn, no matter how steep. Ferraro says she is holding rates to truckload carriers steady even as weak demand has many operators cutting prices; she reasons she''ll get better service when demand ramps up and capacity is tight.

"It truly is a cycle," says Jackson. "We don''t know where the bottom is, but it is a cycle."

But then, Rebecca Ledhlbach, a logistics director at Dell, may have the most sanguine view. "I guess you could say about this what you can say about a lot of issues surrounding supply chain management in good times and bad: ''Logistics is always the last to know.''"

For the full story: Log In, Register for Free or Subscribe