Logistically Speaking: You knew this job was dangerous when you took it

Welcome to 2005, the year of the logistics manager.

This is the year when your boss will expect you to control carrier costs. Your boss is getting kind of concerned, you see, about all the rate hikes expected in 2005. In fact, he's getting downright spooked by Morgan Stanley's predictions that shippers should expect to spend 6% more on truckload this year, 4.4% more on rail and nearly 4% more on less-than-truckload (LTL).

So you get to figure out how to keep any rate increases to an absolute minimum. Your boss can learn to live with 2% rate increases, but that's as far over backwards as he's willing to bend.

Of course, it'll be something of a challenge to beat carriers down on price since, for once, transportation will be a seller's market this year. If you've got any goods a carrier might consider "low margin freight," this will provide you a rare opportunity to prove that you're a better salesperson than half the people in your sales force.

This is also the year when you'll be shepherding your company's radio frequency identification (RFID) initiative to the point where you can satisfy the mercurial whims of your biggest customers, whether they be Wal-Mart, the U.S. Department of Defense, or some other 800-pound gorilla capable of getting your boss to shout, "How high?" every time they say, "Jump!" Your boss won't want to hear all the details — just regular updates on how soon you expect to achieve a decent return on investment from all that money and manpower you're devoting to RFID.

Get used to hearing about outsourcing in 2005 because you'll be up to your neck in RFQs from prospective thirdparty logistics providers. Your boss keeps hearing that your competitors are getting to market faster and spending less money to do it, all because of their use of 3PLs. So now it'll be part of your job to figure out how to do it even faster and cheaper, without antagonizing your customers or suppliers.

If you manage a private fleet, this will definitely be your year in the spotlight. Truck drivers are running away from the industry in record numbers, with turnover rates at some carriers well over 100%, a pace that rivals fast food workers. With the economy continuing to pick up, drivers are insisting on routes that have them home at night. They're also insisting on — and getting — pay raises. If you're a fleet manager, you'll have to clear enough out of your budget to ensure your drivers are adequately compensated. If you hire carriers, you'll get to see those driver costs passed on to you in rate hikes.

Oh yes, and along about the end of September, if not before, you'll get to see what the new and (they better be) improved Hours of Service rules look like. That "perfect storm" scenario of reduced capacity, higher carrier rates and complete confusion over the new hours could very well play out in 2005. Your boss has already told you in no uncertain terms he doesn't want to hear the words "capacity crunch" any more as an excuse. Your job will be to keep that perfect storm isolated as far from your company's operations as possible.

And then there are various security compliance issues, and we haven't even mentioned port congestion and data synchronization and... well, you get the idea.

You and your fellow logistics professionals have been entrusted with managing nearly $1 trillion worth of logistics costs every year, or nearly 8.5% of the total U.S. gross domestic product. While it's undeniable that many of you work in isolation for senior managers who consider logistics a necessary evil, it's also true that some of the biggest and best-run companies in the world credit their success to their management of worldclass supply chains.

Logistics people face seemingly insurmountable hurdles every day, and yet manage to clear them and continue on to the finish line — the delivery of product to a customer. That takes grit, determination, experience, cleverness, self-confidence, and enough of a sense of humor to keep coming back for more.

So yes, 2005 will be the year of logistics managers — just as every year is the year of logistics managers. Happy new year.

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