@Risk

Rising labor costs and quality concerns have many US companies reevaluating their overseas strategies.

In fact, new research conducted by Cook Associates Executive Search found that a full 85 percent of manufacturing executives see the possibility of  certain manufacturing operations returning to the US.

What are the reasons for this potential shift? Survey participants cited:

• overseas costs (37 percent)
• logistics (19 percent)
• other, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes (36 percent)

The study, which polled nearly 3,000 manufacturing executives primarily in small- to mid-sized US companies from October 13 through November 18, 2011, identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the US. (more…)

The House Oversight and Government Reform Subcommittee held a hearing last week about a proposed rule to limit truck driver time.

The rule, proposed by the Transportation Department, is an effort to reduce the risk and prevalence of fatigue-related truck crashes through improvements in the hours of service (HOS) regulations. Under the proposal, the current 11-hour HOS daily limit for drivers would be reduced to a 10-hour limit. In addition, the 34 hours of time off currently required between each week of driving would have to include at least two midnight-to-6 a.m. periods of nighttime rest.

In a statement, Anne S. Ferro, administrator of the Federal Motor Carrier Safety Administration, offered detailed historical perspective on this rulemaking, as well as an analysis of its economic impact.

From the statement:

With regard to the economic impact of the proposed rule, FMCSA estimated that the regulatory option that included a 10-hour limit on driving time during the work day would impose costs of approximately $1 billion per year with annual safety and economic benefits of approximately $1.4 billion. The net benefits would be $380 million per year. The regulatory option that included an 11-hour limit on driving time during the work day would impose costs of approximately $520 million per year with annual safety and economic benefits slightly greater than $1 billion. The net benefits for this option would be $560 million per year. FMCSA acknowledged that the 10-hour driving time component of the rulemaking contributed more than $500 million to the estimated cost of the rule while providing only $330 million in safety and economic benefits. However, taken as a whole, the regulatory option that included a 10-hour driving time limit was cost-beneficial, based on the Agency’s analysis of the crash data and research.

Not everyone agrees the changes would be beneficial. Opponents of the proposed rule say shortening the daily driving limit would: (more…)

Even though the possibility of a double-dip recession is beginning to loom large, most shippers who took a recent Logistics Management readership survey appear to be adopting a “wait and see” attitude, rather than rushing to  significantly change the way they handle their supply chains or logistics operations.

Take a look at these poll results:

• 78 percent of the 339 survey respondents said they are concerned that the economy is on the verge of a double-dip recession.
• However, only 37 percent said that they plan on making changes to their supply chain operations or logistics planning processes. The remaining 63 percent indicated they have no such plans.

Among those who said they would make changes to their supply chains, the options being considered were quite varied. Some reported they may reduce inventory. Others said they may slow down manufacturing or production operations while waiting for a more sustained recovery. A sporting goods shipper said he/she would consider numerous alternatives, including evaluating supplier capacity, improving delivery time frame (particularly for international suppliers), reviewing internal procedures, adhering strictly to S&OP calendar and assessing systems used.

On the logistics side, survey respondents who are considering changes said they may: (more…)

Even though many have had to cope firsthand with disruptions caused by recent natural disasters such as Iceland’s volcanic eruption or the earthquake and tsunami in Japan, executives now see cyber attacks –rather than physical attacks –as potentially the most damaging to their supply chains, according to new report from PwC.

The report, Volume 4 of the Transport & Logistics’ 2030 series Securing the Supply Chain, is a joint project between PwC and the Supply Chain Management Institute (SMI) at EBS Business School in Germany.  It warns that cyber attacks are now so sophisticated that any business, or even country, could be at risk. (The German internet, for example, is attacked every two seconds, PwC says.)

On average, the 80 science, government and business executives polled agreed that there is a 56 percent probability of a rise in attacks in some form. Overall, those surveyed said they were even more concerned about hacker attacks affecting their supply chains than they were about actual physical attacks.

In addition, survey respondents said there was a 70 percent probability of logistics companies having to perform obligatory security checks on their whole supply chain, and they said there was a 60 percent probability that modern technology would offer businesses better protection.
(more…)

Business logistics costs last year were on par with 2005 and still well below the pre-recession years, according to the 22nd annual State of Logistics Report from the Council of Supply Chain Management Professionals.

Since 1988, the report has tracked and measured all costs associated with moving goods through the US supply chain, and this year’s analysis shows that: (more…)