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The Role of Logistics in Manufacturing Robert Wheeler Cresa Industrial Services Group
The Role of Logistics in Manufacturing
Robert Wheeler Cresa Industrial Services Group
2 | Cresa—Area Development Consultant’s Forum, June 2013
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3 | Cresa—Area Development Consultant’s Forum, June 2013
Agenda – Things to Remember
• Logistics is a key component of site selection for manufacturing.
• Manufacturing doesn’t exist in a vacuum, it’s only part of a supply chain.
• Supply chains are constantly being evaluated and redeployed.
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Logistics Matters
Major decision making factors included: - Proximity to ports
for exporting finished goods.
- Proximity to local suppliers.
5 | Cresa—Area Development Consultant’s Forum, June 2013
Logistics Matters
Incentives included money for rail infrastructure. Meetings were arranged between Port of Houston and Toyota to address logistical challenges. OB Transportation costs minimized by selling finished goods in the Texas market.
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- Growth in a regional market drove the need for regional support.
- Regional
manufacturing drives down the cost of transportation to service a market.
- Increased Asia
Pacific consumption leads to logistics driven opportunities in the North American market.
Logistics Matters
7 | Cresa—Area Development Consultant’s Forum, June 2013
Manufacturing Site Selection Considerations • Logistics Infrastructure
• Existing Infrastructure • Future Planned Enhancements • Risk Mitigation
• Logistics Cost
• Proximity to Suppliers of Raw Materials • Cost to Serve Customers
Logistics Matters
8 | Cresa—Area Development Consultant’s Forum, June 2013
Supply Chain Cost Allocation The majority of supply chain costs are logistics related.
Transportation
Inventory
Labor
Customer Service
Rent
Administration
Supplies
Other
Transportation outweighs all other supply chain costs combined.
Logistics Matters
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When a site selection decision is made, up to 80% of costs associated with a facility become fixed.
Site Selection
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The Supply Chain
Operations Planning Sourcing Manufacturing
Sales Channels Fulfillment Transportation
Logistics
Suppliers Manufacturers DCs Markets Sales Channels
Materials, Information, Capital
Manufacturing is only a piece of the total supply chain.
12 | Cresa—Area Development Consultant’s Forum, June 2013
Trends In Supply Chain Alternative Fuels
Fleet operators are looking at Liquefied Natural Gas as an alternative fuel. • Domestically Produced • Cheaper Alternative
13 | Cresa—Area Development Consultant’s Forum, June 2013
Trends In Supply Chain Onshoring/Nearshoring
Boston Consulting Group
• 2015 is a watershed year.
• Costs to manufacture in China will equal North America. Why?
• Labor • Transportation • Cost of Capital
• Other Considerations
• Supply Chain Risk • Intellectual Property
14 | Cresa—Area Development Consultant’s Forum, June 2013
Efforts to share transportation costs have increased as fuel costs have risen. Vendor Collaboration - Proactively directing vendors to coordinate raw materials deliveries. - Actively taking over inbound transportation routing.
Distribution Collaboration - Increased use of mixing centers.
- Support Large Retail - Minimize OB Transportation Costs
- Collaboration in the Neighborhood - Working with similarly located companies to find synergies.
Trends In Supply Chain Collaboration
15 | Cresa—Area Development Consultant’s Forum, June 2013
Things to Remember
• Logistics is a key component of site selection for manufacturing.
• Manufacturing doesn’t exist in a vacuum, it’s only part of a supply chain.
• Supply chains are constantly being evaluated and redeployed.
16 | Cresa—Area Development Consultant’s Forum, June 2013
Questions
Robert Wheeler 312-376-4119
