Globalization Has Forever Changed the Landscape of Logistics
Logistics Comment, A CLM Publication, May 2004 - By Carla Reed

Spring signals a new beginning, a fresh start. With the coming of spring, there is also time for reflection. While doing a little spring-cleaning recently, I was reminded that I have been part of the global logistics community for almost 25 years.

From being a junior member of a team that assisted Japanese automotive manufacturers importing CKD components into Southern Africa in the early 1980s, I worked in a variety of positions where I lived the 24-hour world of global trade. Armed with a “globe” of the world to reflect the different nations I communicated with each day and tuned into the challenges related to rules, regulations, currencies, and time zones, I learned how to play the complicated game of global logistics.

Relocating to the United States in 1990 from South Africa, I was keen to catch up with what was going on in the logistics community in this vast country. One of the first things I did was join the Council of Logistics Management.

Eager to learn first-hand what was new and wonderful, I attended CLM’s Annual Conference in 1991. To my surprise, I found that America was truly “a world in one country”—or so it would appear from the material and presentations that were shared by the “movers and shakers” of the US logistics world. The challenges of deregulation in the transportation industry and regional warehousing strategies took center stage; of lesser concern was the impact of NAFTA and other “international” topics.

As the years went by, I stayed involved with CLM, and was more than happy to assist the Roundtable Advisory Committee when they asked me to act as “Advisor” for the embryonic South African Roundtable. In fact, this was a new direction for CLM, as up to this point, it had been a fairly exclusive forum for members from the 50 United States.

A colleague and I shared the dubious honor of representing the first two international roundtables—South Africa and Singapore. Although these countries were sophisticated in terms of international trade, there were language, time zone, and cultural boundaries that made our jobs a bit challenging.

In subsequent years, CLM’s annual conferences attracted delegates from far-away shores like Argentina, Australia, and Brazil. The list continued to grow, making it necessary to add tables to the “geographic representation” that comprised some of the networking luncheons.

In 1997, I volunteered to lead a track at the 1998 conference that focused on global issues and logistics challenges. The leadership team at CLM was supportive but wondered if US logisticians would really be interested in what was taking place in other lands. The empty chairs at the sessions I managed revealed the truth: warehousing strategies, storage technologies, and regional issues—not global ones—were on the minds of the attendees.

After all, this was the USA, the economic superpower whose innovation and technology had enabled them to create goods and services at a consistent quality and quantity never-before possible. The challenge of the moment was harnessing the energy of the booming economy and ensuring that supply met the growing demand of consumers across the country.

But all this has changed. When CLM offered a global logistics track at its 2003 Annual Conference, most of the sessions were packed. A visit to CLM’s web site reveals that there are numerous roundtables spanning the globe—even a “virtual” roundtable. This is a testament to the ubiquity of the Internet and the ability to connect, converse, and conduct seminars and “webinars” with the ease of a simple phone call.

The convergence of technology—television, the Internet, and other media that connect the peoples of the world—offers a 24/7 perspective of what’s happening and where, and has created an environment of immediacy.

Military activity in Iraq beams into the living rooms of the American public almost as it occurs. Natural disasters that take place in different continents are viewed with the same clarity as that of a local traffic report. News events and economic reports from Hong Kong, Japan, Australia, and Europe are accessible through a variety of satellite television channels, with dispassionate reporters providing updates in crisp English intonation, irrespective of their country of origin.

We’ve truly become a global community. What happens in Beijing will no doubt have some impact on the economic and social structure in Europe and in the Americas.

The implications are important, as they require more than knowledge of the storage and distribution aspects of global logistics. Things can change dramatically overnight, and those with a finger on the pulse of global trade will be the winners in this economic game.

Staying informed about issues that impact international logistics separates the winners from the losers. For example…understanding the impact of a reduction in passenger aircraft on the movement of goods in reaction to cancelled travel plans as the threat of disease, warfare, or terrorist activity keeps global executives close to home.

Unlike the viewer who’s able to empathize with those on the television screen, logistics participants are not engaged in a virtual activity. They need to have their “feet on the ground,” and the equipment, expertise, and technology to ensure that all the links in the supply chain stay connected. This means a global network of logistics professionals all working together to identify constraints, develop new transportation modes, and route combinations to ensure that the required documentation and information complies with the global rules and regulations.

There are many opportunities for logistics professionals who’ve mastered the complexity of warehousing and distribution in the continental US to share these skills with emerging nations who are becoming the “super factories” of the world.

Strategies developed to optimize transportation assets and technologies used to transform storage facilities into “product assembly and processing” centers…these are all part of the “value add” of logistics that the US is able to share with its trading partners in these new markets.

Time and place are no longer relevant. Destination is more important as it is the final point of consumption for the many products manufactured in the extended global supply chain. Concepts like “mass customization” and “postponement” can be applied in the transportation and distribution networks—common components being assembled to meet specific market needs.

A personal computer destined for Europe has different power supply and keyboard requirements than one for the growing market in Latin America. These requirements can be custom-tailored in the order fulfillment and distribution centers that are increasingly becoming an extended part of the supply chain.

And then there is the interesting shift in the flow of products between the continents. The US has already abdicated its throne as the manufacturing capital of the world. Automation and technology enable the production of high-quality products on an “anywhere” basis, reflected in the changing status of countries whose labor component has guaranteed them a place in manufacturing nations.

However, in their haste to gain a competitive position, these countries are neglecting some of the duties they have as custodians of their ecologies. The result is a reduction in the ability of these nations to feed themselves, with imports of meat, fish, poultry, and water being exchanged for the fruits of their labor—industrial goods.

The recent outbreak of “bird flu” had an impact on the stock prices of food production companies in Asia and the US. The export of poultry to meet the demand of Asian nations with contaminated sources is big business. The repercussions are also being felt in other food-related areas; the potential of mad cow and bird flu diseases make fish and other seafood viable alternatives. This is reflected in stock prices almost instantaneously. Response to this change in demand creates value for producers and shareholders alike, as well as for the logistics service providers who keep the wheels of trade turning.

At the beginning of the last century, the United States evolved from an agrarian economy into an industrial one. The next evolution, as a service-based economy, is now being threatened by global outsourcing. Is the pendulum swinging back? Will the US, with its extensive land mass and ability to produce food, become the “granary of the world?” If so, what does that mean?

One thing’s for certain…logistics will be part of the evolution.

Carla Reed has been a member of CLM since 1991 and is the Founder and President of New Creed LLC in Apex, North Carolina.