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Logistics council to help cos.
By Margaret Allen
Dallas Business Journal
Updated: 7:00 p.m. ET Nov. 7, 2004
A new advisory council of logistics experts says Dallas-Fort Worth could stop losing jobs offshore if North Texas manufacturers and distributors would learn how to manage their inventories and supply chains better.

They point as an example to Siemens Communication, which cut its excess inventory from $200 million to $17 million by improving its supply chain -- a lengthy distribution channel that originates in Asia and extends to an assembly facility in Coppell employing more than 200.

The new Logistics Capabilities Council is funded and administered by the state agency that oversees unemployment benefits for out-of-work Texans here, the North Central Texas Workforce Development Board.

That board serves 14 counties -- not including Dallas and Tarrant counties, which have their own separate boards -- and is based in Arlington at the North Central Texas Council of Governments.

The board's new logistics council is planning free or low-cost resources for businesses in the Metroplex. That will include consulting advice and a Web site with sophisticated, downloadable inventory-management software that's historically been available only to the King Kongs of supply chain management, Dell Computer and Wal-Mart.

Members of the council are "some of the world's finest minds" in the supply-chain industry, according to Jon Kirkegaard, leader of the council and president of Dynamic Cycle-time Reduction Associates in Dallas.

Kirkegaard said the advisory council will act as mentors, coaches and resources to local business owners.
Supply-chain savings are "happening today in this area, but there's not a coordinated effort by government to scale it and grow it," he said. "By applying these principals, you make your business much more competitive. As a business owner, I can figure it out in six months or six weeks, and that's better than figuring it out in six years, when I may have lost my business."

Supports 'cluster' strategy
Members of the new council are Joseph Martha, Mercer Management Consulting; John Schrock, BAX Global Logistics; Chuck Loundsbury, Ryder Logistics; Douglas Chaney, DC Logistics; Herman Stiphout, Rosettanet; Kerry Stover, iThink Inc.; John Martin, Impact Innovations; Garland Chow, logistics center, University of North Texas; Nancy Nix, Texas Christian University; Martin Hubert, FreightGate; Gaines Baty, R. Gaines Baty and Associates; Vann Cunningham, Burlington Northern Santa Fe Railway; Jack Rubarth, Bell Sports; Frank Freeman, Siemens Communication; Mike McGill, MHT Partners; and Joe Hoffman, Andrews and Kurth.

The group will meet four times a year, said Fran Means, regional coordinator at the North Central Texas Workforce Development Board, and supports Gov. Rick Perry's new economic-development initiative to retain core industries.

The Dallas Business Journal reported in July that Perry would announce a broad strategy to retain the state's core industries and help them grow. That initiative was announced by the governor in October and launched primarily through the Texas Workforce Commission.

Perry's idea is to develop "clusters" of experts in six key industries to provide government officials with input on anything needed to improve education, infrastructure and research and development in each targeted industry.

The logistics council bolsters the governor's "cluster" initiative, said Means of the workforce board. At the same time, the board serving Dallas County is creating advisory councils for the semiconductor and healthcare industries, while Tarrant County is developing an aerospace council.

"We're not just worrying about a person and getting them a job anymore," Means said. "If we don't retain and help companies that are here right now and work to retain them, we're going to lose them. ...Through this council, they're trying to educate small business. They will talk to owners of these little companies and take them through the process and educate them, before they slice and dice 50 jobs."

Interruptions a concern
For example, experts on the logistics council might educate small- and medium-sized companies about designing products so that smaller components can be efficiently manufactured and assembled in distant foreign markets, with the final, value-added product assembled in the United States -- thereby reducing inventory carrying and shipping costs.

Many larger companies are already moving toward such "postpone manufacturing," said Vann Cunningham, assistant vice president of economic development with BNSF, a member of the advisory council.

"With globalization, we see a rise in the importance of supply-chain management and services," Cunningham said. "We still have the opportunity to grow good-paying manufacturing jobs in the United States, especially where you have a high-value product or a bulky good where you don't want to ship a lot of air."

In Coppell, Siemens hired a third-party logistics provider to manage the shipment of nearly 4 million product units to Siemens customers, namely original equipment manufacturers in the telecommunications industry. The logistics provider packs and assembles modems, cables and power supplies into kits customized for each customer, then handles inventory storage, complete order fulfillment and complete reverse logistics, said Frank Freeman, Siemens senior planning manager in Dallas.

"We have to balance inventories across a very long supply chain that sometimes takes six to 10 weeks to move through," said Freeman. "We have inventory from Malaysia and it's shipped worldwide, yet the product's life cycle itself is very short. That makes it imperative to not have any excess inventory."

Kirkegaard developed a software tool that enabled Siemens to see and manage its inventory flow, Freeman said.
"Any dollar you don't have in inventory, you can use elsewhere to better pay your employees, for marketing or for research and development," Freeman said. "Every pallet of material in general inventory is a bit of a waste. If you can adequately supply your customer without it, then you're better off."

2004 Dallas Business Journal