An executive summary of industry news
Staff -- Logistics Management, 2/1/2002
Mail delivery from the United States to Europe is likely to change significantly under a new agreement between the U.S. Postal Service (USPS) and Consignia LLP, the recently privatized British Post Office. The deal covers delivery of Global Express Mail and Global Air Parcel Post to 23 countries in Western Europe. Delivery will be made through General Logistics Systems, Consignia's pan-European subsidiary. "We will be using a single delivery partner with an integrated IT system," said James P. Wade, the USPS's vice president of international business, at a press conference announcing the new service. "This will be a vast improvement over working with 23 different postal administrations and delivery agents with dissimilar methodologies and standards."
Taking advantage of his right to make recess appointments when Congress is not in session, President George W. Bush last month installed John Magaw as undersecretary for transportation security and head of the newly created Transportation Security Administration (TSA). The appointment is for a five-year term. Shortly after the law that established the TSA was enacted, Secretary of Transportation Norman Mineta said that DOT wanted "constructive involvement" from stakeholders. But with so much on TSA's plate, Mineta noted at the time, industry outreach was not an immediate priority. "... I regard this transition process as an all-out sprint, not a leisurely stroll," he said. "And, as others have correctly pointed out, sprinting is not a team sport."
The on-again, off-again alliance between American Airlines and British Airways appears to be off for good. The two airlines have been attempting for several years to forge a much tighter relationship, which competitors charge would completely dominate U.S.-U.K. air routes and lead to higher rates and market abuses. Periodic negotiations between the U.S. and British governments over that issue have gone nowhere and the governments have yet to finalize a long-expected "open skies" agreement. Now, demands by the U.S. Department of Transportation that the partners give up more than 200 slots at London's Heathrow International Airport to other airlines appear to have permanently killed the deal. Carrier executives said it was too high a price to pay and withdrew their applications with their respective governments.
Who isn't caught in a whirlwind of change these days?
When asked whether they were involved in a major organizational change initiative, all 300 attendees at a recent Council of Logistics Management (CLM) seminar raised their hands. When asked if they were satisfied with the results of those changes, not one of those attendees raised his hand. This lack of confidence in companies' ability to manage change is widespread, say Jo Ellen Gabel, Ph.D., and Saul Pilnick, Ph.D., authors of CLM's new book,The Shadow Organization in Logistics: The Real World of Culture Change and Supply Chain Efficiency. Their book explains why change efforts fail and provides an eight-step change process that specifically focuses on supply chain environments. The book is available from CLM's publications department. To order, call (630) 574-0985 or go to www.clm1.org. Cost is $40 for CLM members and $75 for non-members. For more on this topic, look for a feature story in the March issue ofLogistics.
As more companies focus on supply chain collaboration, pressure to standardize information systems between shippers, their customers and suppliers, and third-party logistics (3PL) service providers is growing, says Dr. C. John Langley Jr., professor of supply chain management at the Georgia Institute of Technology. Shippers often rely on a 3PL or a systems integrator to make internal and "customer-facing" software work in concert. But some shippers insist that all parties use the shipper's IT system, a decision that can backfire. Langley cites one such situation, where two 3PLs had to drop their proprietary warehouse management systems in favor of the shipper's software. That put all three of them at a disadvantage, he says, because the providers' systems were more efficient than that of the customer. (For more on the relationship between shippers and 3PLs, see the article on page 45 of this issue.)
Huge corporations aren't the only ones changing their names these days. The National Association of Purchasing Management (NAPM) last month recast itself as The Institute for Supply Management (ISM), a name the group has trademarked. According to CEO Paul Novak, the change recognizes that members have taken on a broader, more strategic role that encompasses more than the traditional purchasing function. The Tempe, Ariz.-based organization also will expand its educational offerings to reflect its members' changing information needs.
Completely electronic ocean bills of lading were once considered an impossible dream. But a unique new service offered by ocean carrier APL Ltd. makes it possible for exporters, importers, brokers and banks to handle B/Ls—including the negotiable "original" copies that convey title to goods and trigger payments—online while still controlling possession of those documents. Until now, exporters had to submit negotiable B/Ls on paper to banks in order to receive payment. Thanks to technology developed by Electronics for Imaging (EFI), called E-BL Print, APL customers can transmit encrypted, negotiable bills of lading directly to multiple parties, including banks. Importantly, exporters can control who can print this critical document as well as how many copies can be reviewed or printed. In addition to improving security, the carrier says, using the online B/Ls can cut days out of the exporter's payment cycle.
The little port that roared? Well, it's still more of a squeak, but the Port of Eastport, Maine, is trying to let shippers of bulk commodities know that it has some advantages other ports can't offer. Eastport, which specializes in forest products, is located on the U.S.-Canada border halfway between Bangor, Maine, and Saint John, N.B. Supporters note that in addition to being the easternmost port in the United States, it's also one of the deepest: At 64 feet deep, Eastport's Estes Head pier can accommodate ships up to 900 feet in length with virtually no restrictions on draft. A motivated workforce keeps bulk cargoes and ships moving, says Roland "Skip" Rogers, general manager of Federal Marine Terminals at the port. "This is what we do, and we intend to see it done efficiently and quickly," he says with classic Maine understatement.
The move to replace inventory with information has never been stronger. And although software typically gets the credit for making that substitution possible, materials-handling control systems (MHCS) also play a significant role. As a result, compounded annual growth in MHCS sales will be 13.8 percent through 2006, says Sal Spada, director of discrete industries for the research firm ARC Advisory Group. That would push current MHCS sales of $494 million this year to $840 million in 2006. In a recently released report, Spada says MHCS are in such strong demand because they provide both real-time and historical data about inventory in transit, manufacturing work in process, and inventory stored in warehouses and distribution centers. Without that information, he says, companies are unable to make informed decisions across departmental boundaries.
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