Every once in a while, it's worth taking a moment or two to stop and consider the "higher calling" of logistics. Whether the reflection is sparked by a speech delivered by a particularly passionate member of the profession or television footage of a breathtakingly rapid military deployment in a far-off land, the exercise can be enlightening.
Many years ago, a speaker at an industry conference showed a slide of a typical supermarket in Middle America, fully stocked with everything from celery to dog food. The speaker then asked the audience to consider what that store would look like if there were no motor carrier industry in this country. His next slide? The same supermarket, with its shelves devoid of anything but a few stray dustballs.
Corny? Perhaps. But accurate. It's doubtful there are any workers in this country (or any industrialized country, for that matter) who do more to drive economic growth and sustain Americans' quality of life than those who work in this profession we call logistics.
Think about it. Here we have an industry that has accounted for almost 15 percent of the country's gross domestic product at times. And its influence reaches far and wide: It's hard to think of a business sector that would be left untouched if the engines of logistics stopped humming.
Then there's the new theory being advanced by the head of the business school at Boston University. According to Louis Lataif, we have logistics to thank for keeping the meteoric economic growth of the late 1990s from blossoming into an economic hangover of epic proportions.
That may sound like a stretch, but the estimable academic, who once headed Ford's European operations, may be on to something here. Lataif argues that we were able to avert a catastrophic economic backlash from the most recent boom because logistics technology helped avert dangerous inventory buildups.
Historically, as a recession takes hold, consumer confidence—and hence, consumer spending—sags. That results in severe inventory corrections as companies struggle to sell existing stock.
But the most recent recession was not subject to that rule because inventory levels at the recession's outset were running well below historical norms. In fact , according to Lataif, inventory levels were as much as 30 percent lower than the 40-year average.
And for that we can credit technology. During the economic boom of the 1990s, companies invested heavily in logistics technologies that reduced the need to hold large stores of materials and finished goods in their warehouses. New technological tools allowed them to use actual demand data rather than historical sales data to drive manufacturing, which eliminated the need to hold large quantities of inventory.
The story gets even better. Lataif asserts this was not a one-time occurrence. He maintains that the same technology will come to our aid in the all but inevitable future economic recessions.
If ever there was a time to give thanks for the role logistics plays in the economy and in our everyday lives, this might just be it.
Wreaths Across America
