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Sunday, 09 June 2013 22:00

Employers collaborate in search of logistics relief, best practices

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Amid rising logistics costs, a group of West Michigan executives is banding together to see what results they can produce by tackling the issue collectively.

What started as a conversation between executives at Cascade Engineering Inc. and Amway Corp. about the escalating costs of logistics has morphed into a monthly meeting of managers from many of the largest West Michigan employers to examine logistics best practices and common issues.

“The goal is improved logistics and reduced logistics costs as a percentage of doing business,” said Rick Chapla, vice president of business development at The Right Place Inc., one of the conveners of the user group along with the Grand Rapids Area Chamber of Commerce. “We want to attack the increasing proportion of business that these companies spend on logistics.”

Modeled after The Right Place’s alternative energy user groups that bring together representatives from across the industry to discuss best practices and trends, the logistics group includes logistics managers from some of the region’s largest companies who have been meeting on a monthly basis since the start of the year, Chapla said.

“We’re trying to characterize the entire logistics networks of some of the biggest logistics generators in the area to see how logistics can be improved through facilities improvements or service improvements or a combination many things,” he said. “If these businesses, by virtue of their awareness of what each other is doing, can find logistics opportunities between and among the companies, that’s a good thing. It’s the beginning of a novel, collaborative approach.”

Representatives from Amway and Cascade contacted for this report were mum on their involvement in the fledgling group. Chapla said other companies are participating, but he declined to name them specifically, other than to say their involvement is being driven by top executives.

“It’s advancing with a little more of a priority because (of) front-office acknowledgement that costs associated with logistics are increasing,” Chapla said.

According to the “State of Logistics” report released a year ago by the Council of Supply Chain Management Professionals, logistics costs in 2011 grew 6.6 percent from 2010 and 17 percent compared to a recession-induced dip in 2009. From 2003 to 2008, logistics costs increased 50 percent nationwide, according a report from DC Velocity, a publication for distribution center executives.
Those involved in the local project caution the initiative is still in the earliest stages of development, but the hope is that a collaborative group of companies will be able to effect a better result than if each of the companies was acting individually.

“I am 100-percent confident that there is savings through collaboration,” said Josh Lunger, public policy coordinator with the Grand Rapids Chamber. “Some companies already do it. You’ve seen the big furniture makers … bring in products and materials together, even though they’re direct competitors. It saves them all money, so why not?”

To date, the meeting participants have delved into multi-modal transportation challenges, including getting freight from one form of transport to another, such as moving goods from rail to trucks, Chapla said. The group has also discussed how to better use West Michigan’s deep-water port access for moving freight across the lake, he said.

“We (must) get smarter on how we move stuff … from one mode to another, including water,” Chapla said. “It’s about increasing the options for moving stuff. Waterborne is the form of logistics that we haven’t examined as well as we could.”

The local effort comes on the heels of a broader statewide examination of logistics issues and their impact on the statewide economy. Both the Michigan Economic Development Corp. (MEDC) and Business Leaders for Michigan last year issued long-term studies on logistics challenges and opportunities.

“We are going to fit this into statewide policy,” said Chapla, who acknowledged he’s had conversations about the group’s activities with key state government leaders in Lansing. “But we’re also going to run concurrently with a similar, regional planning effort for improving logistics and supply chain opportunities.”

MiBiz Managing Editor Joe Boomgaard contributed to this report.

Read 4876 times Last modified on Friday, 19 July 2013 12:18