Trains, Planes and Boats Add Up: US Reaches $1.4 Trillion in Logistics Spending
Many US politicians spend quite a bit of time attempting to solve what they consider out-of-control health care costs. But perhaps their time would be better spent on targeting logistics -- these costs topped $1.4 trillion in 2007, according to a recent article in Supply Chain Management review. This number "was equal to 10.1 percent of the nation's Gross Domestic Product, a percentage not equaled since 2000," according to the story. Supply Chain Management Review notes "total logistics costs have risen in each of the last five years, rising 52.3 percent" over the period. Transportation accounted for 52% of the rise in logistics costs in 2007 with inventory carrying costs accounting for 44%. What can companies do to keep logistics costs in line? Smarter sourcing, that's what. By deploying advanced sourcing tools and services from vendors like Emptoris, CombineNet, Iasta, Ariba and BravoSolution, some companies have achieved double-digit savings in different logistics categories. Of the five, CombineNet offers perhaps the best success stories, though all are worthy of consideration depending on the specific requirements. If I'm missing anyone on this list, please chime in.
- Jason Busch
- Jason Busch
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Would have expected you to include the software products that help companies be smarter about what needs to be moved where and when, not just those that minimize the cost of a given set of moves. Advanced Inventory Planning and Optimization tools can take out a big chunk of that inventory number, while also doing a better job of ensuring you have enough in the right places to avoid expensive expedites and make the best tradeoff of transport mode (e.g., sea vs air) and inventory. Of course I am biased as an investor in one provider, Optiant, but it is an important domain with a few good suppliers.
# Posted By Brad Corrodi
| 7/18/08 3:43 PM
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