October 14, 2008

Economy falters but execs hold steady at CSCMP

By DC Velocity Staff

Last week was not an easy time to be a supply chain executive. Freefalling stock markets, tightening credit, and yo-yoing oil prices could make even the most battle-tested industry veteran contemplate staying in bed. But participants at CSCMP's executive panel, "Unprecedented Instability Offers Global Opportunities," all put their best face forward, seeing opportunities in the challenges ahead.

Perhaps no one is as aware of those challenges as William Zollars, president and CEO of YRC Worldwide, who saw the stock for his less-than-truckload company plummet by a third on the same day as the panel discussion. "It's hard to look over the horizon and see good news," Zollars admitted, "but you have to remember that this too shall pass."

While Zollars believes the turnaround will come, he acknowledged that this time it will painful, and it will be gradual. "But this is an opportunity to take a step back and look at the business model you've got and that your customers have got," he said. "There is no better time to do that than when you are on fire, and we are on fire."

Jeffrey Schwartz, chairman and CEO of the industrial real estate firm ProLogis agreed. "It's time to examine everything in your business from how you can serve customers better to how you can access capital better," he said. In spite of the shaky economy, Schwartz is confident that ProLogis is in a good position to use the economic downturn to gain market share and grow new business.

There are even some positives coming out of the current crisis. For example, Bruce Edwards, global CEO for DHL/Exel Supply Chain, has noticed that companies have been making faster decisions since the downturn began. Deals in the logistics industry, according to Edwards, typically have a long gestation period of 18 months to two years. "Companies now are focusing and getting on with what's important and that's leading to quicker decisions," he said.

The key to surviving this down economy is to "play defense while planning for offense," according to Richard Jackson, executive vice president of Limited Logistics Services, which provides transportation and distribution to the Limited Brand retail stores. The company has added discipline around expense control and is managing its inventory tightly. "It's not the most fun place to be, but it's the appropriate place to be," said Jackson. "We have been spending a lot of time talking ourselves off of the ledge. But it truly is a cycle. While we may not know what the bottom is, we want to plan for offense so we know how to begin to ramp up when it does pull out."