Levans on logistics: Which freight transportation management camp are you in?
September 01, 2013
That crisp, fall breeze signals that it’s time to dig into the findings of Logistics Management’s (LM) Annual Study of Logistics and Transportation Trends (Masters of Logistics), the clearest breakdown available of transportation spending across modes and the by far the most comprehensive summary of how logistics professionals are managing their operations in current economic conditions.
First, and most importantly, I’d like to thank the 1,263 domestic and global logistics, transportation, and supply chain management professionals who took the time out of their schedules to participate. This is a fairly detailed questionnaire, so the fact that we hit this near-record response tells us that the results are well worth the effort in the eyes of our readers.
This marks the 23rd year that LM has partnered with Karl B. Manrodt, Ph.D., of Georgia Southern University, and Mary C. Holcomb, Ph.D., of the University of Tennessee (UT), to capture and deliver this important study. The LM editorial staff would like to thank Holcomb and Manrodt for driving and innovating this project over that time. By delivering the results in our pages, through our Masters of Logistics webcasts, and live at CSCMP’s annual conference, they’ve helped countless logistics professionals re-engineer their operations for more than two decades—and we’d be a less enlightened profession without their work.
And I’d be remiss if I didn’t thank the group of UT graduate students who have the tough job of crunching the numbers, as well the folks at Con-way Inc. who have again lent their financial and intellectual support in presenting the findings.
As Holcomb and Manrodt share on page 22, there appear to be two camps emerging in terms of how logistics operations are approaching freight transportation. According to the authors, what camp you fall into depends on how you view the concept of transportation “flexibility”—the ability to get the capacity you need at the rate you need when you need it.
One camp is clearly moving toward treating transportation as a “commodity,” using a wide range of carriers to get the job done. “This camp believes that if transportation is all the same, who cares who is moving the freight as long as it’s getting moved,” says Holcomb. Not surprisingly, this group tends to have its purchasing and procurement group more heavily involved in transportation decision making.
The second group view transportation as a value-added service and are developing relationships with a set of carriers who will work with them to provide the needed flexibility. “We started to see this camp emerge in last year’s findings,” says Manrodt. “But this year we find the value-added approach goes beyond the core carrier program and has evolved into a two-way street, where both parties are committed to the long-term success of the other.”
These research findings, along with interviews with directors of logistics and supply chain at Fortune 100 companies, tell us that there’s been a pivotal change in the way transportation is being viewed and managed. “In fact, we’re seeing a critical mass emerging at both ends of the commodity/value-add spectrum,” says Manrodt, who adds that both sides cite compelling, data-driven reasons for their current positions.
However, our findings do reveal that one camp is outperforming the other in terms of continuous operations improvement and keeping costs in check. It’s your homework to find out which one.
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