If I told you there was a portion of your bill of materials which could make up 20% -40% of a major component would you want to know what that was? I hope the answer would be yes and that element is energy. I heard a person talk this week (A VP of a car company) talk about the "energy it takes to make a car". The interesting part of his talk is he was not just talking about the plant where the car was assembled.
Rather, he walked all the way back to the extraction of raw materials, through the various "tiers" of suppliers, to manufacturing then to the final delivery of the finished product. He discussed energy as a component of the BOM and therefore it needed to be managed.
In transportation, people are just now starting to look at this way and the more enlightened managers see this clearly. If you look at the "bill of materials" for transportation, energy is about 40% of the cost. Who would ever not manage 40% of the cost of a BOM?
Between emissions and the actual cost of energy it is clear the time is now to manage energy. Those who say to not manage it or, worse yet, turn it over to the transportation companies just do not understand how important this element is to their costs and to the security of their supply chain. What element could disrupt the supply chain worse than the lack of energy?
It is time to step up and take control of this and think like that speaker... thing about transportation as you would manufacturing. Think about what the bill of materials is and what deserves your attention. 40% deserves your attention.
A 25 year veteran of the supply chain and logistics industry blogs on all things logistics. Experience in 3PL, automotive and consumer goods logistics help bring a unique insight to this topic
Showing posts with label alternative fuels. Show all posts
Showing posts with label alternative fuels. Show all posts
Friday, October 25, 2013
Monday, June 24, 2013
Act Expo 2013
I will be using twitter a lot more than the blogging site as I will be attending the ACT EXPO 2013 this week. Please follow me at: my logisticsexpert twitter feed. twitter/logisticsexpert. I will follow up with at least a nightly recap.
Saturday, May 26, 2012
T. Boone Pickens on Morning Joe
I saw Boone on Morning Joe and I finally have got around to posting it. A fantastic interview from a man who is actually working like crazy to save America. Thank goodness for his common sense and I hope Washington will listen.
For those in the logistics industry, come to the CSCMP 2012 meeting in Atlanta and here him keynote!
For those in the logistics industry, come to the CSCMP 2012 meeting in Atlanta and here him keynote!
Alternative Energy and ACT Expo in Long Beach
A week ago I attended the ACTexpo in Long Beach and I came away more excited about alternative energy solutions than I was before the event. The lessons learned and the excitement around alternative energy (Mostly CNG and LNG) were fantastic.
The first item I was genuinely excited about was the transition to these fuels will not be government subsidy driven. Rather, the pure economics of the conversion will take precedent and those who see the value will convert on their own. We will truly do "Good for the planet while doing Good for our companies"
The second item and the clear overarching lesson is when a company is going to move to alternative fuels it truly is an engineered solution. By far, the biggest question was: Is it LNG or CNG for the future? Most respondents would make blanket answers as if it was an all or nothing. I continue to say you have to think of this as akin to a stock portfolio: Some bonds, some cash, some stocks. And you adjust based on the economics and your personal situation.
Alternative fuels are exactly the same: Some LNG, some CNG, a lot of diesel, maybe some hybrid (we will see where this goes - the hybrid discussions were the most disappointing). A company thinking of an alternative fuels strategy needs to do deep and INDEPENDENT analysis on what their applications are now and anticipated to be, the pros and cons of each application, the economics and then start putting the program together. My feeling is those who just jump in because it is "cool" and it makes them look like they are doing "something" may find their portfolio all upside down and it will be tough to correct.
I highly encourage this conference. A great place to learn a lot. Just keep your thinking cap on and understand a lot of people are there to sell what they have. The true answer is analyzing what the shipper wants and then finding the right mix.
The first item I was genuinely excited about was the transition to these fuels will not be government subsidy driven. Rather, the pure economics of the conversion will take precedent and those who see the value will convert on their own. We will truly do "Good for the planet while doing Good for our companies"
The second item and the clear overarching lesson is when a company is going to move to alternative fuels it truly is an engineered solution. By far, the biggest question was: Is it LNG or CNG for the future? Most respondents would make blanket answers as if it was an all or nothing. I continue to say you have to think of this as akin to a stock portfolio: Some bonds, some cash, some stocks. And you adjust based on the economics and your personal situation.
Alternative fuels are exactly the same: Some LNG, some CNG, a lot of diesel, maybe some hybrid (we will see where this goes - the hybrid discussions were the most disappointing). A company thinking of an alternative fuels strategy needs to do deep and INDEPENDENT analysis on what their applications are now and anticipated to be, the pros and cons of each application, the economics and then start putting the program together. My feeling is those who just jump in because it is "cool" and it makes them look like they are doing "something" may find their portfolio all upside down and it will be tough to correct.
I highly encourage this conference. A great place to learn a lot. Just keep your thinking cap on and understand a lot of people are there to sell what they have. The true answer is analyzing what the shipper wants and then finding the right mix.
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