Fuel costs, warehouse networks a supply chain concern

University of Tennessee forum points to key issues as economy improves

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At the recent Supply Chain Forum at the University of Tennessee, Knoxville, 146 business executives representing 44 companies across a wide range of retail and manufacturing companies discussed supply chain mega-trends, network optimization, sales and operations planning, inventory management, and forecasting.

“When supply chain leaders assemble from such a rich diversity of industry, the resulting discussions provide deep insights and realistic solutions to the issues faced by today's supply chain professionals,” said Paul Dittmann, PhD, executive director of UT Knoxville's Global Supply Chain Institute, of which the forums are a part.

Major observations from forum attendees were:

• As the economy recovers, transportation capacity will become increasingly scarce, causing costs to rapidly escalate. Plans to offset these increases need to be put in place now.
  
  
• The rising cost of fuel is causing many firms to rethink their network structure and question whether they have the right number of warehouses in the correct locations.
  
  
• It is challenging, yet possible, for firms to cut inventory while simultaneously improving customer service. All they need to do is follow a number of well-defined strategies such as minimizing the number of offered SKUs, making sure accountability is spread appropriately throughout the organization, and aggressively reducing lead time.
  
  
• Integrating and balancing supply with demand remains a popular avenue to achieve competitive advantage for most firms. Best practices for properly achieving this balance include gaining the support of senior executives, having disciplined agendas focused on strategic issues, and involving all key supply and demand functions (including finance) in the process.