Crossing the Boundaries to a 21st Century Transportation System
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Crossing the Boundaries to a 21 st Century Transportation System Ann M. Drake Chairman and CEO DSC Logistics The Annual William O. Lipinski Symposium On Transportation Policy November 2, 2009 Northwestern University Evanston, IL
Crossing the Boundaries to a 21st Century Transportation System
The Annual William O. LipinskiSymposium On Transportation Policy
November 2, 2009Northwestern University
Evanston, IL
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Presentation Notes
As I was preparing for today’s discussion, I thought about something Mark Twain said – and that is: “Even if you’re on the right track – if you stand still, you’ll get run over. Clearly, if we are going to succeed in positioning Chicago for its future as A vibrant center for commerce and a key player in America’s economic rebirth – we can’t stand still. We need to keep moving – and we need to keep moving TOGETHER! We’re going to need some new directions – and, as we heard today, we’re going to need some new tracks. I’d like to thank Northwestern University and the Infrastructure Technology Institute for bringing us together for this discussion today – and my colleagues, Mike and Ed, for sharing their ideas. Without any doubt, there’s good news in that people are talking about transportation. Just two weeks ago, at another forum – this one entitled “Chicago and the American Metropolis,” where transportation was one of several topics, Mayor Daily pointed out that…”Americans sometimes act too quickly and think in the short term – whereas China is looking at infrastructure 40 years down the road. Today – we’re looking down the road.
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We’ve heard how population growth and congestion create extra pressure on our transportation systems.
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We’ve focused on infrastructure – and how an inadequate and outdated infrastructure limits our capacity for growth.
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Whether we’re talking about highways or railways – ports or intermodal centers – It’s clear that a viable and sustainable transportation system is absolutely critical to the economic vitality and well-being of our region and our nation. So, what can the topic of logistics add to this discussion? First of all, logistics covers the transportation spectrum.
Logistics
The flow and storage of raw materials,
finished goods, and related information
from point-of-origin to point-of-consumption.
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It can be defined as: (Read): The flow and storage of raw materials, finished goods, and related information from point-of-origin to point-of-consumption. But as logistics professionals – playing an increasing role in helping our customers meet Their overall challenges and achieve their goals – we see our business as “supply chain management.”
Supply Chain Management
A set of strategies, processes and technologies
that link a company internally and externally
to its suppliers, business partners, and customers.
Manages design, sourcing, planning, production
and fulfillment of goods, services, and information
across the full business network.
Council of Supply Chain Management Professionals
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Supply chain management is: (Read): A set of strategies, processes and technologies that link a company internally and externally to its suppliers, business partners, and customers. Supply chain management manages design…sourcing…planning…production…and fulfillment of goods, services, and information across the full business network.
Evolution of Supply Chain Management
Business Strategy
Strategy
Planning
Coordination
Execution
Frei
ght
Tran
spor
tatio
n
War
ehou
sing
Customer
Customer
Traditional 3PL Lead Logistics Provider Strategic Partner
Contract Logistics Other Business Process Services
Frei
ght
Tran
spor
tatio
n
War
ehou
sing
Valu
e-Ad
ded
Serv
ices
3PL 3PL 3PL
Customer
Lead Logistics/4PL
Decision Making+ Relationship Management
Frei
ght
Tran
spor
tatio
n
War
ehou
sing
Valu
e-Ad
ded
Serv
ices
Customer + Partner
Supply Chain Strategy
Transportation
VAS
WarehousingBusiness Process
Integration
Sourcing
Planning
Engineering
Network Analysis + Design
SCM
Adapted from Clarkston Consulting
TIMELINE
Supply Chain Network
Douglas M. Lambert, Supply Chain Management: Processes, Partnerships, Performance, 2008
Suppliers Customers
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In today’s complex world, the supply chain is not actually a “chain” of businesses with one-to-one relationships – but rather a “network where we can capture the synergy of intra-and inter-company integration and management. SHALL WE RE-DO THIS AND MAKE IT OUR OWN, SO WE DO NOT HAVE TO SOURCE SOMETHING FROM 1999?
Supply ChainNetwork
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It is a system of relationships, people, and processes. And, as with any system, the only way to fully understand why a problem occurs and persists is to understand the part in relationship to the whole. We approach our customers’ needs by working with the linkages and interactions between the elements that compose the entirely of the system.
Transportation
VAS
Warehousing Business Process
Integration
Sourcing
Planning
Engineering
Network Analysis + Design
SCM
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As supply chain partners, we apply a variety of capabilities to our customers’ needs. On a strategic level, one of the most essential capabilities we apply is network analysis and design.
Network Design
• Mathematically assess trade-offs between warehousing, transportation and inventory
• Define network alternatives
• Identify scenarios
• Enable customers to respond to change Clarkston Consulting
Cos
t
Locations
Total Spend
Storage & Handling
Transportation
Inventory Carry
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Network design helps us mathematically assess trade-offs between service and cost – weighing the balance of warehousing, transportation, and inventory – based on customer demands and requirements. Through network modeling, we define alternatives, identify scenarios, and enable our customers to respond to change. The added benefit of designing efficient networks is a reduction in carbon emissions and environmental impact. Lean is Green!
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We already know this about Chicago: It's the nation's largest job market... the only location where all six Class I railroads meet... the worlds busiest airport... and the world's third-largest shipping container hub. Chicago is also within one day's truck drive of 50 percent of the nation's industrial economy. And look what happens when network modeling is applied.
Best 4-Site Model
Bakersfield, CA
Chicago, IL Lancaster, PA
Meridian, MS
Best 6-Site Model
Tacoma, WA
Pasadena, CA
Dallas, TXMacon, GA
Best 9-Site Model
Oakland, CA
Denver, CO
Chicago, IL
Gainesville, GA
Lakeland, FL
Summit, NJ
America 2050: An Infrastructure Vision for 21st Century America
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It’s part of a new way of looking at what drives the economy. It’s called the Megaregion model – where 11 megaregions across the U.S. have been identified. The megaregions are large networks of metropolitan centers and their surrounding areas – where, by the year 2050, more than half of the population growth is projected to occur. More than half the population growth! – and as much as two-thirds of the economic growth in the U.S.
• Environmental systems
• Infrastructure systems
• Economic linkages
• Business and manufacturing chains
• Travel patterns
• Settlement patterns and land use
• Shared culture and history
Commonalities within each Megaregion
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Each Megaregion is united by important commonalities: Environmental systems… Infrastructure systems… Economic linkages… Business and manufacturing chanins… Travel patterns… Settlement patterns and land use… And a shared culture and history.
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Chicago is part of the Great Lakes Region, which includes all or part of 12 states… And __?_ of the nation’s largest metropolitan centers.
• 97 Million People (40M in major metros)
• 32.5% Gross State Product
• 30% U.S. Exports
• 300 Companies in Fortune 1000
• Top educational and research institutions
Strengths of Great Lakes Region
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What do we find in the Great Lakes Region? There are 97 million people living in this megaregion… 40 million in the major metros located within the regaion… Nearly one-third of the Gross State Product… 30 percent of all U.S. exports… 300 of the Fortune’s top 1000 companies… As well as many of America’s top educational and research institutions. These strengths and others make the Great Lakes Region a solid innovator, an economic powerhouse, And an interconnected system that must be harnessed in future planning efforts. We need to think regionally – and megaregions form the model to do that. At the October 23rd forum on “Chicago and the American Metropolis,” Valerie Jarret, President Obama’s Senior Advisor and Assistant for Intergovernmental Affairs and Public Engagement also spoke. She stressed the need for better coordination and breaking down the silos – and emphasized that gaining access to federal funds is going to require regional thinking. This brings us back to the point also stressed by my colleagues – the need for collaboration. To ensure Chicago’s future vitality and prosperity, we need to think, plan, and act across boundaries.
America 2050: An Infrastructure Vision for 21st Century America
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Chicago is part of the Great Lakes Region, which includes all or part of 12 states… And __?_ of the nation’s largest metropolitan centers.
ThinkPlan& ActAcross
Boundaries
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One of the boundaries is geographic – and so forward-thinking solutions need to reach beyond the traditional divisions of municipalities and states. Our megaregions will be the future source of America’s economic strengths and competitiveness.
ThinkPlan& ActAcross
Boundaries
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One of the boundaries is geographic – and so forward-thinking solutions need to reach beyond the traditional divisions of municipalities and states. Our megaregions will be the future source of America’s economic strengths and competitiveness.
ThinkPlan& ActAcross
Boundaries
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In the area of transportation – we need to think across all modes. The highway experts and the railway experts and waterway experts must work together. We can apply supply chain thinking and learning to this area – because what we actually have is a system that requires holistic thinking, management, and leadership of organizations, people, and processes – Just like the supply chain. Our transportation needs require systems thinking – with passenger interests and freight interests and others working together to create a comprehensive plan.
ThinkPlan& ActAcross
Boundaries
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Our infrastructure issues are part of an entire system that also involves concerns for creating jobs, for, education, innovation, livability, and sustainability.
ThinkPlan& ActAcross
Boundaries
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Our solutions are part of a system, too. Because as we’ve already said about systems, the only way to fully understand why a problem occurs and persists is to understand the part in relationship to the whole. Six months ago, Chicago’s Metropolitan Planning Council issued a white paper that lays out three principals for how we should approach and invest in solving our areas’s challenges.
MPC: Investments in
our Future
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These principles are: Goal-Driven, Right-sized, and Coordinated. Goal-Driven means investment should be based on desired policy outcomes, not narrow interests or pet projects. The best investment should be funded according to quantifiable benefitswhen compared to other spending priorities. Right-sized means that solutions should be planned and implemented at the scale of the problem. Instead of funds filtering down to individual municipalities who compete for resources and ignore regional issues, federal investment should spur shared solutions to shared problems. And finally, Coordinated and collaborative means crossing those boundariesto recognize that complex, multi-issue problems require integrated solutions. The practice of Logistics crossed the silos to become the more integrated, more holistic approach of supply chain management – And our policy planning and funding can make the same journey.
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Our journey will take us beyond highways and railways -- beyond waterways and even airways. Someday we may include the solar system in our thinking and planning. I recently had the opportunity to attend a presentation by Dr. Ellen Ochoa, a former astronaut, who is now Deputy Director of the Johnson Space Center. She spoke about the nine-days in 1993 she flew a mission aboard the Shuttle Discovery. And when asked what was most memorable about what she saw and what she learned on that journey – she said it was that – when looking down from space – what she saw was the whole planet… a world without boundaries… She saw one big system - - called Earth. (We all want to be on the right track. If we’re not on it now, we have to get on it. And we have to keep moving. We want to solve the problems – and Albert Einstein had something to say about that – and I think it’s especially relevant for our discussion today. He said: We cannot solve our problems with the same thinking we used when we created them. I’d like to leave you with that thought. Thank you.)
