The Supply Chain Industry Can Lead The Way
Toward An Oil Free Economy

SergioRetamalWe have watched the price of a barrel of oil rise from $30 dollars, towards $90 dollars and recently, to over $130. Sadly, it may not be long until that price nears or tops $200 dollars. The harsh reality is that we can continue to expect increases in the price of oil in the future, and a reverse in the direction of prices would be regarded as an aberration.

It is imperative that we, as an industry, rethink our supply chain and sourcing decisions. We must optimize order management and the movement of goods. We must be SMART in our decisions. The transportation industry, along with supply chain professionals, manufacturers, and retailers need to devise a workable plan. We cannot afford to be complacent for the next 10 to 15 years. We must be active participants and supporters, driving new programs towards reducing our dependence on oil.

How do we, as an industry, address this challenging situation?

Vote - We should urge the next president of the United States to mandate all government agencies to buy hybrid, plug-in hybrid, and other alternative fuel vehicles immediately. Taking this step would broaden the technology and help companies overcome some of the challenges that new technologies often face. This mandate is likely to cascade into other sectors.

Lobby - Encourage your legislators to invest in railroad infrastructure and nuclear energy. If we improve and expand our railroad infrastructure, we would decrease our reliance on fuel-dependent ground transportation and combat rising fuel costs. We should also encourage government to develop and implement nuclear energy technology. Nuclear energy has been successful in the past, and with new and more stringent safety guidelines, it can be successful again.

Spend - The industry can benefit from the influx of hybrid and alternative fuel vehicles as manufacturers build them at lower costs. Tell vehicle manufacturers that we won't buy any more traditional oil-based fuel vehicles, but that we will purchase vehicles running on new technology fuels. Buy hybrid vehicles for your entire sales staff. Offer incentives to employees that drive hybrids.

Plan - Increase the number of consolidations in our supply chains. Make use of tools to better streamline supply chain models. By buying less and spending less on shipping costs, we will use less fuel in the process. Relocate distribution centers near major ports of entry to reduce the amount of drayage.

Compare - Which vessel operators have the oldest fleets? Which carriers use the most fuel per container? What is the carbon footprint of each carrier? Make this information part of the RFQ decision process.

Study / Experiment - Our industry should study and experiment with alternative fuels for ocean vessels, airplanes, trains, and trucks, and then share the findings.

It is evident that we are in a crucial time for the U.S. economy. The supply chain industry has a unique opportunity to impact the future of this nation by the way we manage our supply chains. We can help free our country from dependence on oil by demonstrating leadership in embracing new fuel technologies. Not only will smart supply chain management practices pave the way for new technology fuels, our efforts will also help to reduce global warming. That opportunity is too big and too important to ignore.

Sergio Retamal
President of GSCLG
June 2008
See the recipients of the 2009 Top 25 Supply Chain Executives Award.