An electronic survey at our FVL North America event asked 250 delegates what OEMs thought was more important: inbound or outbound logistics. Perhaps it was unsurprising that the audience, mainly vehicle logistics providers and outbound managers at OEMs, saw the grass as greener and voted 73% for inbound.
Asked which was more advanced, the audience voted 93% for inbound. Either executives in the vehicle logistics industry are a naturally self-deprecating bunch, or they see outbound lagging inbound, whether for technical reasons or a lack of investment.
Let’s put aside flaws in the sample, including too few LSPs or executives handling both areas, and accept that the results reflect a perception—even prejudice—that the sector generally accepts.
This perception might be language related. Over the past 20 years, executives and academics have come to use terms like ‘just-in-time’, ‘lean inventory’ and ‘demand-orientated’, which are more common for manufacturing or consumer goods logistics. Operations like ‘crossdocking’ and ‘milkruns’ also tend to describe parts and general freight more than vehicles. Even the ‘container revolution’ is more relevant to parts than vehicles. Thus, ro-ro shipping and vehicle logistics rely on different lexicons to those that many would use to describe ‘advanced’ logistics.
It could be argued, first of all, that these terms should also refer to outbound, particularly as OEMs build more integrated order-to-delivery systems. But even if we accept that they don’t (or can’t), there are other areas in which vehicle logistics is arguably ahead of inbound in some ways. In Europe and North America, multimodal transport often makes up the majority of outbound budgets. Ford of Europe, for example, spends 60% between water and rail transport (see p16). It’s a ratio several times higher than is common for inbound, and ahead by several decades of EU-set targets for multimodal penetration for general logistics.
Somehow, more has also come to be considered at ‘stake’ for inbound logistics. It is a banality to point out that vehicles often arrive days late at dealers, but that inbound material arriving just a few hours late could cost millions of dollars in plant stoppages. But are we only measuring one side? Earlier this year, GM had 4,000-6,000 cars stuck in Mexico because of rail wagon shortages (see p25). Besides potential sales losses, accounting rules meant that GM could not register the revenue until the cars crossed into the US, keeping hundreds of millions of dollars off its books, with potential financial and credit implications. Is that any less costly than halting or slowing down a plant?
A straight comparison of importance or advances between inbound and outbound is too simplistic, but perhaps the industry does need to re-evaluate its most common perceptions.
Christopher Ludwig, Editor
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