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Supply Management

LOGISTICS MANAGEMENT
A Profession in Transition

Lee Buddress, Ph.D., C.P.M.
Director, Supply and Logistics Management Program
Portland State University
leeb@sba.pdx.edu

There are probably as many different definitions for logistics as there are authors on the subject. Variants range from a minimum of pure transportation to an integrated supply system approach, including purchasing and supply management, transportation, warehousing and inventory control, production planning and control, and outbound distribution of finished product. While each of these has value, the scope of this column will be confined to transportation, warehousing, inventory control and distribution.

Certainly, there have been many revolutions in logistics. In 1769, James Watt perfected the steam engine that eventually found its way into steamboats and railroads. In 1869, the continent was finally spanned by rail. In 1903, the Wright brothers initiated air transportation. In 1956, Eisenhower revolutionized automobile and truck transportation when he signed legislation creating the interstate hiway system. In 1958, the concepts of Just-in-Time originated with Toyota (although some would argue that Henry Ford really invented the concept in the 1920’s). That same year saw the publication in Harvard Business Review of an article by Jay Forrester called “Industrial Dynamics,” in which he laid out the concepts of supply chain management and the bullwhip effect. Deregulation began in 1978 with the airlines, and continued in 1980 with deregulation of the railroads and the trucking industry. Admittedly, each of these was a revolution in its time, but ponder the following.

Today, logistical considerations include global supply chains and the global logistics processes necessary to support them. Currency exchange rate fluctuation risk and the risks and delays associated with terrorism must be addressed. We now frequently use intermediaries such as third party logistics firms, freight forwarders and custom house brokers to assist us. Commonly, intermodal containers facilitate the transportation of cargo among truck, ship and rail carriers.

Technology is transforming logistics like no other profession. It is hard to imagine a more mature industry than trucking, but FedEx is reinvigorating that industry, using technology to know where each truck and piece of freight is at all times. This enables them to give customers guaranteed delivery times. The one characteristic desired by industrial buyers above all else is on time delivery. Guaranteed delivery times, enabled by technology, have attracted an avalanche of customers to that service. The BNSF Railroad is working toward the same sort of delivery guarantees as they invest more than a billion dollars in technology.

Lean supply management concepts such as Quick Response Systems, direct store deliveries and vendor managed inventories are all part of an increasingly demanding set of customer requirements. Radio Frequency Identification (RFID) tags are interactive chips, some as small as fingernails, that when affixed to products or cartons, help track usage and location, thereby enabling logisticians to address these customer needs. Some speculate these tags will quickly displace bar coding as the mechanism to track inventory.

It would be hard to imagine a period of time where more changes of a revolutionary nature have taken place than today. The concepts of lean supply chain management are both exacting and exciting. In the future, this column will explore in detail, many of the evolutions that make this discipline so entertaining.

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