Execution Strategy

Execution Strategy

When the Council of Supply Chain Management Professionals held its 2008 annual meeting almost exactly a year ago, the banking industry’s meltdown was spreading across Wall Street and sent an almost palpable sense of dread across an event that is, after all, built on the premise that there is a supply chain solution for any business problem.

The impact of the economy wasn’t quite so evident on the faces of shippers, carriers and logistics providers at this year’s meeting, held late last month in Chicago, but it was there nevertheless.

And the mood at this, a public meeting more closely focused on shipper strategies than perhaps any other in the supply chain business, was likely more important this year than in 2008 because it will say a lot about where the economy is heading now that the shock of the rapid economic decline is translating into real plans from shippers and service providers alike.

In fact, there was rare agreement between the shippers and carriers we spoke with in Chicago about long-term strategic planning. Unfortunately, many said, there’s little room for that in today’s uncertain economy.

In the world of moving supply chains, that means there was less interest among those at the CSCMP event in the overarching, strategic concepts that have driven logistics practices in recent years than in the nuts-and-bolts tactics companies are using to get to the other side of the downturn.

Kraft Foods’ Paul Avampato said inventory reductions this year “are being driven not by supply chain strategies but by necessity.” The need, he said, is driven by the quest for cash, and that means moving “more to a cash-to-cash cycle.”

That translates into the services shippers are looking for. As Sundar Swaminathan of Oracle’s travel and transportation group said in summing up corporate views of technology investment, “Shippers are looking for execution-focused applications.”

Oracle was among the companies that put together the latest edition of an annual survey of shipper views of third-party logistics services, and the authors seemed shocked at results that showed shippers easily swapping potential service enhancements over the long term for price breaks right now. Shippers “often contend 3PLs should focus on execution,” said Georgia Tech professor John Langley, a co-author of the survey.

The results in the numbers matched up remarkably to what we heard from shippers at the meeting. But that does not mean shippers necessarily were willing to drop providers on price with barely a look back. Several, in fact, made a point of saying they were sticking with particular carriers and logistics providers, rejecting pleas from competitors to switch over for bargain-basement prices.

But that, too, is a tactic shippers are using to ensure their position in a recovery. As one domestic trucking user told us privately, “I want to make sure I have the carriers I need when we come out of this.”

He can only hope his carriers execute as well as his company does.

Paul Page is editorial director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage.