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Agility. That is the name of the game for shippers. (And I don’t mean the freight forwarding / logistics company.) At the recent Retail Week supply chain summit, that was the theme. And it sparked some thought-provoking perspectives for the future of air cargo.
“The biggest cost in the supply chain is markdown,” said one major high street retailer. (Nice to hear nobody mention the transport costs, for a change.) No markdowns? Then tighter inventory and supply chain management is needed. Step up, air cargo.
But it is taking some time to get the message across – not only to shippers but also to the air cargo industry – that there are opportunities here. As one senior air cargo man says: “There is unlocked economic value in the supply chain that companies aren’t realising. A shift of transportation can do it. Companies can get higher prices, if goods are there at the right point in time. As an industry we need to embrace and understand the fact that we can help shippers achieve these benefits.”
But agility, for shippers, goes beyond using logistics as a tool for revenue management. While one logistics speaker talked of spending two years setting up a supply chain strategy in a developing country, another, from a fast-paced clothing retailer, was astonished. Two years is simply too long. By the time you put the operation in place, the product costs will have changed and a better sourcing location could be elsewhere, he pointed out.
These just-in-time companies, encouraged by need-it-now consumerism, have to adapt almost daily to changing sourcing and supply chain conditions. And the issues they face in sourcing are truly diverse. (Apparently in Bangladesh, water used to be dug up using a 10mm drill. Now it’s a 50mm drill.) Input costs are increasing, for all sorts of reasons.
While it is not the job of carriers to help shippers understand how they can use transportation (that’s one for the forwarders), airlines and their partners can learn to build more efficient and integrated products that can help their ultimate customers. They need to offer adaptability and flexibility – solutions to both shippers and forwarders looking for an answer.
But there is something else required for those companies wishing to outlive their peers.
Jason Keegan, head of GM and international logistics for Marks & Spencers, put his finger on it. In the 1960s, there was a prediction that a computer would be used for online shopping. “When we see vision like that, what does it take to be able to act upon it? What is the willingness to take an informed risk to be able to respond to the next evolution of customer behaviour? Who are the companies that are going to do that?”
Visionary thinking. That is ultimately what will turn the sometimes slow-footed air cargo industry into a strong, globally recognised, benefit to commerce.