Shrinking the Globe (Somewhat) Locally
Logistics Management’s Patrick Burnson wrote this month about alternative distribution networks on the rise as global shifts prove traditional off-shoring to no longer afford the savings it formerly did. With contributions from several logistics experts, Burnson has provided much food for thought.
Dr. Dale Rogers, co-director of the Center for Supply Chain Management at Rutgers University details the cause and some of the effects that have set these coming changes in place. There has already been a noticeable decrease in reliance on China due in part to the country’s rising wage structure. While one of the automatic reactions to this for U.S. shippers will be to dump aftermarket products in landfills, this will not be tolerated for very long. Globally, shareholders and consumers alike are calling for increased focus on sustainability.
Burnson reaffirms Rogers’ profession that many countries such as, “Brazil and other emerging nations are drafting laws to require manufacturers to recycle unsold goods,” and thereby moving to meet these sustainability demands. Additionally, near-shoring is on the rise. For the U.S., sourcing “local” manufacturing options in Mexico will save both time and money, especially in the refurbishment market.
MIT’s Center for Transportation and Logistics research director, Edgar Blanco weighed in with other regions to keep an eye on for reverse logistics services. Both the Caribbean Basin and Colombia, especially once the Panama Canal expansion is complete, are expected to experience a boom in logistical activity. Colombia’s manufacturers are already “recycling batteries and cartridges on a massive scale” and leading the way for others to do so as well.
While it is agreed that greater 1<sup>st</sup>, 2<sup>nd</sup>, and 3<sup>rd</sup>-tier partner transparency will be vital to this growth, “one also runs the risk of too few suppliers,” according to Diane Mollenkopf, Ph.D., McCormick Associate Professor of Logistics at the University of Tennessee. Says Mollenkopf, “Shippers will surely be reconsidering how much inventory is really needed in the supply chain and where that inventory should be located.” The emphasis on distance of course being to increase efficiency in recapture of return goods and to decrease supply risk.
One of the last voices Burnson echoes is that of 4PRL, LLC’s cheif operation officer, Gary Cullen. Cullen reaffirms that “much efficiency can be found in near-sourcing third party service providers who specialize in redeployment, repair, reuse, recycling, reclamation and resale.” Cullen highlights the opportunities to both find cost-effective options and to reduce movement and handling, and says “combine this with the improving of your environmental image and you have a win-win for your clients, consumers, and shareholders.”
For a deeper look at Patrick Burnson’s original article, see the February 2013 issue of Logistics Management.