Don’t get lost. Here’s one expert’s advice to navigate supply chain challenges and spot opportunities.
Refrigerated & Frozen Foods
talks with Jack Ampuja, president and CEO of Supply Chain Optimizers, a Buffalo, N.Y., consulting firm.
R&FF: What was the best news for supply chain executives in 2011? What was the worst?
Jack Ampuja: Oil prices have gyrated up and down. However, they aren’t worse than they were at this time last year. So, although fuel surcharges are still evident, they haven’t been a significant issue for most shippers.
The big “negative” relates to how quickly trucking capacity is tightening and rates are increasing. Many shippers are so concerned about this development that they already have been lining up equipment commitments for 2012. Carriers are reviewing low-priced accounts for increases and are much more reluctant to enter into long-term pricing arrangements.
R&FF: What was the most surprising supply chain news?
Ampuja: I’m surprised the Federal Motor Carrier Safety Administration seems so intent to reduce truck drivers’ hours of service. The trucking industry’s safety record has been outstanding. That’s why many observers – including me – don’t understand the need for tightened regulations.
R&FF: Do you see processor-shippers changing network optimization strategies?
Ampuja: Network optimization is high on the [must] list for virtually every major food processor-shipper. Remember that many companies’ logistics networks were set when oil was $40 per barrel. With oil now hovering around $100 per barrel, it really pays to analyze the validity of the network in light of this major cost increase which directly impacts fright rates.
During the 30 years I’ve worked on network optimization, I’ve watched it evolve from a five-year strategic tool into a quarterly tactic. Bud Lalond leads Ohio State University’s annual survey of supply chain executives and he asks about their careers. Bud told me that network optimization now has the highest level of management attention it has received in the 35 years since the survey has been conducted.
R&FF: How are shippers tackling sustainability?
Ampuja: The green movement continues to escalate. Nearly every major company has an executive responsible for sustainability. In the largest firms, this is usually a stand-alone, vice president’s position; in smaller firms it is typically linked with another function, such as “director of transportation and sustainability.”
Our consulting clients ask us to report on green impact [of proposed actions] as well as financial measures. Green is here to stay and it will only escalate in importance. I believe it was green guru Andrew Winston who said “If you are not at the table discussing sustainability, someone at the table will probably have your company for lunch.”
R&FF: What about packaging optimization as a green strategy?
Ampuja: Last spring, I was asked to speak about packaging optimization at the first “Supply Chain Day” of the Food & Consumer Products Association of Canada. Many top supply chain executives attended that event and subsequently, I have been contacted by as many as seven companies that want to explore the opportunity.
A month before that Canadian conference, I hosted packaging optimization workshops in London, Rotterdam, Stockholm and Aarhus (Denmark’s second largest city). I already have been asked to conduct similar sessions in China, India and Vietnam.
R&FF: What’s your read on 2012 supply chain strategy?
Ampuja: It already looks like a challenging year. A worldwide financial malaise still blocks numerous programs and investments. No one really knows what will unfold in Europe and what that means for North America. To me it looks like processors will have difficulty raising prices. Meanwhile, I think you’ll see continued pressure on logistics costs due to the impending tightening of carrier capacity, increased driver shortages and no relief in high oil prices.
It will not be easy to maintain profit margins. Leading shippers already are working proactively with logistics service providers to get ready. Anyone waiting for carriers to contact them is probably missing the boat.
MEET JACK AMPUJA
Background: Ampuja has more than 30 years of supply chain experience with five Fortune 500 firms, including Rich Products Corp.
Education: B.A., University of Massachusetts; post-graduate logistics study at Northeastern University.; MBA, Univerisity of Connecticut
Personal: Ampuja teaches MBA supply chain management courses at Niagara University and serves as Executive in Residence. He also teaches online for the University of Massachusetts.
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