March 12, 2017

New "Logistics Manager's Index" helps round out economic picture

Index developers say logistics pros' "close-to-the-ground" observations offer clues to the direction of the economy.

By DC Velocity Staff

If you want to know where the economy is headed, ask a logistics manager. At least that's the theory behind a new economic index launched in September by five universities and backed by the Council of Supply Chain Management Professionals (CSCMP).

The Logistics Manager's Index (LMI), which is similar in approach to the long-running Purchasing Managers Index produced by the Institute for Supply Management (ISM), is based on a brief monthly poll that asks North American logistics managers whether factors like warehousing capacity, utilization, and prices; inventory levels and costs; and transportation capacity, utilization, and prices are increasing, decreasing, or staying the same. This information can serve as a leading indicator of the health of the overall economy, according to Dale S. Rogers, professor of logistics and supply chain management at Arizona State University, one of the five schools collaborating on the index.

Separate indices for the various elements are combined to create the overall LMI score, which is indicated as a percentage. The November/December LMI came in at 62.9 percent, an increase of 8 percentage points from the October reading of 54.9 percent. The LMI is calculated using a "diffusion" index—a reading above 50 percent indicates that logistics activity is expanding, and a reading below 50 percent indicates that it is shrinking.

In addition to Arizona State, researchers from Colorado State University, Portland State University, Rutgers University, and University of Nevada, Reno are working on the index. Media partners are DC Velocity and its sister publication, CSCMP's Supply Chain Quarterly. If you'd like to be part of the standing panel that takes the brief survey each month, please contact Rogers at dale.rogers@asu.edu.


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