World Trade - February 2009 - (Page 28)

TRANSPORTATION in Turbulent Times Striking the balance between cost volatility and customer service demands poses tough challenges. BY GAIL DUTTON F leet operators know that these are the times that test their mettle and business savvy. The economy is tough and getting tougher as the litany of woes increases. Product volume is dropping. Distribution options are shifting. Employment levels are dropping. The one bright light is decreasing fuel prices, which plummeted from more than $147 per barrel of oil in July to just above $30 by December. Coping with all that is causing companies to reevaluate how they conduct business. Commercial ﬂeet managers, for their part, must work smarter and run their ﬂeets more efﬁciently than ever to stay ahead of the forces that are buffeting major corporations and ‘ma and pa’ businesses alike. Michael Cole, director of North American Transportation for Kraft Foods Inc., summarizes the situation this way: “The biggest challenge in managing a ﬂeet today is dealing with a time of extreme unpredictability, whether it is fuel costs or overall volume, and doing so in an environment of ever-escalating expectations from our customers and our shareholders.” 2009 The spate of layoffs triggered by the recession adds another layer of complexity. “The biggest thing we’re challenged with is deciding when to buy vehicles if we may be stuck with cars because of downsizing,” according to Tony Rossi, senior program manager and operations support for Xerox. His solution, at the moment, is to keep vehicles longer, at least until the situation solidiﬁes, and to work closely with the human resources department to forecast vehicle demand. Fuel efﬁciency Xerox lists fuel efficiency as one of its biggest challenges. When Xerox’s Canadian Technical Service team audited the automotive ﬂeet in 2006 (when oil was just below $70 per barrel), it found that nearly 60 percent of operating costs were attributed to fuel consumption. To combat that, it began what it dubbed a Green Belt Lean Six Sigma project. One of its ﬁrst actions was to assess the need for the minivans, cargo vans and pickup trucks that comprised most of the 800-vehicle ﬂeet. Downsizing to smaller, more fuel-efﬁcient vehicles—including small 28 WORLD TRADE FEBRUARY

Table of Contents Feed for the Digital Edition of World Trade - February 2009

World Trade - February 2009 Contents Taking Stock in America Confronting Corruption in Latin America Supply Chain Watch Tradewinds Where's the Goods? Where's the Money? Hope on the Horizon Managing Fleets in Turbulent Times The Impact of China's Economic Slowdown on U.S. Supply Chains The Fuel Volatile Supply Chain Getting the Most from On-the-Fly Transactions Managing Supply Chain Risk by Managing China Sourcing Capacity OECD Global Economic Outlook for 2009 'Natural' Agricultural Monopolies No More

World Trade - February 2009

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