The Presidential election is looming, and even though the topic of infrastructure occasionally gets a brief mention, specifics are usually absent. Here are the three top challenges facing the logistics industry that the next president needs to understand in order to keep America competitive.
Supply disruptions: The cost of oil, raw materials and many household items continues to climb. Unstable economies and political situations around the world affect us, such as the jump in oil prices we saw after a refinery explosion in Venezuela or when Hurricane Isaac shut down rigs in the Gulf of Mexico.
In order to stay competitive, America’s supply chain must respond to global supply disruptions and be able to switch materials or suppliers quickly when natural disasters or economic turmoil hits a region. The next President needs to understand the speed and force with which events in other countries can affect more than just oil prices – they can seriously affect the cost and transport of goods across our entire economy.
Transportation capacity: Although U.S. manufacturing and retail industries have increasingly relied on imports, our highway and rail infrastructure has been neither maintained nor expanded in critical places. Other factors, such as increased fuel prices, security requirements, border delays and a shortage of truck drivers are eroding the freight transport system’s performance. These slow-downs and delays lead to higher prices for the industry and ultimately for consumers.
What’s more, our inefficient infrastructure will continue to be a hurdle as our economy recovers from the slow-down: Because of the recession, many transportation companies have cut back on labor, trucks and services in response to fewer products being produced, moved and stored. But as the economy picks up, demand will eventually saturate current capacity. In other words, there’s going to be a gap of time between the increase in consumer buying and when the supply chain industry can fully ramp up to meet those needs.
Although the logistics industry can’t build its own rail, roads or bridges, we can ensure that we have the right technology in place to provide the most accurate picture of the current situation and future predictions for forecasting. Furthermore, we need to take a serious look at using a more diverse mix of transportation options to stay competitive in price and delivery, such as relocating distribution centers closer to rail corridors or ports.
Shortened distances and faster response times will mean faster responses to the market. The next President must understand the need for a diverse, reliable infrastructure base and for fostering innovation to help our industry continue to serve the most important economy in the world.
Product safety and security: Food safety is one of the biggest issues affecting the U.S. agricultural and food industries. For those of us in the logistics business, we must be able to execute a recall as quickly and accurately as possible as well as comply with stricter industry regulations. Food and beverage manufacturers have traditionally relied on manual data collection methods to provide information on product and ingredient tracking, with reports based on paper records. Automated systems, however, are providing manufacturers with access to much more reliable, real-time information. Such technology enables manufacturers not only to meet regulatory demands but also to respond more effectively in product recall situations—tracking products faster, more accurately, more efficiently, and more cost effectively. A robust warehouse management system can help a company achieve this level of detail, including quickly identifying batch numbers and location without having to run multiple reports.
Of course this doesn’t just mean pulling items off the shelves, but having a thorough understanding of our suppliers: If one supplier is taken offline, are there others in the region we can turn to as a back-up source? How quickly are their materials available? Did they originate from the same place that triggered the recall? If the recall is food-related, is this new source run through a different warehouse? What are the ingredients that go into this product and are there other products at risk?
The next President must understand the complexities of responding to a recall and help support the logistics industry as it manages those risks. Again, technological innovation and a strong transportation system will help our industry ensure that the products we are moving are safe and that the American people can have confidence in their food and infrastructure systems.
In January of this year, the White House released its National Strategy for Global Supply Chain Security. This is a good start, and hopefully our industry can continue to partner with the White House administration to improve infrastructure, transportation options and the logistics of food safety. As the economy and consumer demand strengthens, so too does the importance of America’s responsiveness and ability to be nimble in the face of an uncertain economic climate.
Chuck Fuerst is the director of product strategy at HighJump Software. He has more than 12 years of experience in the technology market, working for supply chain and ERP software companies to deliver innovative solutions. Chuck is responsible for monitoring supply chain industry and technology trends and identifying ways to enhance the value of products for HighJump’s customers. He holds a Bachelor degree in Marketing Management and Innovation from Concordia University.