Supply Chain Drivers

Supply Chain Drivers

One of the favorite pastimes for most business leaders, after the profits are counted, is lamenting how deeply the government misunderstands the needs and the drivers of business.

That’s why there was so much to admire about Washington’s most recent attention to the supply chain, even if the admiration comes filtered through what we might charitably call diminished expectations.

In fact, last week’s public session on U.S. infrastructure in Washington run by the departments of Transportation and Commerce not only gave hopeful signals about government understanding of the industrial supply chain, but also went beyond many of the debates within the transportation industry itself about policy priorities and funding needs.

That’s because the summit went beyond the familiar rhetoric about infrastructure investment that comes from an often insular transportation community to get to the heart of supply chain needs by putting the real drivers of trade at the center of the event. Speakers from Cisco Systems, Caterpillar and Coca-Cola covered a broad spectrum of manufacturing and shipping. More importantly, their presence provided a vivid reminder that transportation and infrastructure investment based on the entrenched, mode-based interests doesn’t really help if your goal is to establish a national, intermodal supply chain strategy.

Cisco didn’t build its technology networking business on the idea that different nodes within networks should remain separate and make plans in blind silos, a point Cisco supply chain management chief Angel Mendez had no trouble linking to transportation strategies. Supply chain infrastructure “has to be thought of as a system, not just roads, rails and ports,” he said.

Equally important as the shipper presence was the close working relationship evident between Commerce and the DOT. While transportation operators traditionally go through the DOT in matters where the lines between regulation and broader policy goals often seem to blur, the Commerce Department has a clear eye on what drives, well, commerce.

Commerce Secretary Gary Locke said his view of supply chains was formed as governor of Washington, where the import and export trade supported 10 percent of the state’s private-sector jobs.

“America’s job prospects depend on the health of the infrastructure that supports our domestic and international supply chains,” he said. “Of five major industry sectors that represent over 80 percent of the U.S. economy, four — manufacturing, retail, services, and agriculture and natural resources — are critically dependent on transportation. The fifth sector is the transportation and distribution sector itself.”

That’s an important lesson for transportation companies and groups looking to have an impact on coming infrastructure investment. The government is looking for evidence of the returns that investment will bring to Cisco, Caterpillar and other companies that depend on infrastructure.

Ports, railroads and truckers may serve supply chains, but the drivers are the shippers, Locke is saying, and that’s where the administration wants to see the return on investment.

The government might just understand business after all.

Paul Page is the editorial director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com.