Economic Recovery Signals New Direction

Five catalysts that will drive profound change for supply chain professionals.


The Panama Canal expansion is driving interest in southeastern U.S. and Gulf Coast port locations and will direct real estate decisions where applicable. These regions are closer to the largest U.S. population centers (two-thirds of Americans live on or near the East Coast). The eastern and southern port cities are key elements in the risk mitigation strategy of port diversi?cation pioneered by Wal-Mart. These locations are also pursuing corporate business with aggressive incentives; their supply chain attractions for companies include lower-cost, non union labor.

5. Sustainability pressures

The primary sustainability issue for supply chain practitioners today is carbon/greenhouse gas emissions. This concern is already driving an increased focus on supply chain network redesign to reduce distances and fueling a greater interest in alternative transportation modes.

However, a majority of corporations (65 percent, according to IBM’s CSCO study) have focused their greening efforts on product design and packaging. Still, more than half have incorporated carbon management initiatives and goals in their supply chain strategies, as well as water management, energy usage and waste management.

Approximately 51 percent of companies have set carbon management targets for manufacturing (where applicable), and 39 percent include carbon capabilities in their criteria for selecting suppliers. Nearly a third of companies seek to minimize CO2 emissions in their outsourcing policies, and 27 percent reported that their contracts with warehouse and distribution service providers favor those with low direct and indirect emissions. Transportation companies are evaluated by 25 percent of companies for carbon emissions, energy consumption, and carbon management approach or strategy.

Signi?cant Opportunities Will Abound

Major catalysts of change will direct the focus and provide the momentum for supply chain optimization. Globalization will drive companies to seek alternative, “greener” modes of transportation and improved network ef?ciencies, with access to multimodal-logistics hubs an important consideration, as well as low-cost labor and materials. Improved technologies, including visibility tools, will help manage complexities, mitigate risk, and allow for more ?exibility and ef?cient inventory management.

Rising oil prices, and their impact on transportation costs, will lead to more regionalized distribution networks closer to the end customer, and a trend toward alternative transportation modes. The Panama Canal expansion will bring greater economies of scale and port diversi?cation options targeted to major U.S. population centers. These, and other changes, will make tight collaboration between supply chain and real estate professionals even more important in the future.

Thompson is executive vice president, Jones Lang LaSalle and is Knee is managing director. Based in Chicago, Jones Lang LaSalle is a financial and professional services firm specializing in real estate.

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