6th A.T. Kearney / European Logistics Association Logistics Study 2008/2009

After many years of continuously flagging logistics costs, the trend has now turned around. European logistics costs have risen by almost 20 per cent since 2003 and are likely to continue increasing through 2013. Logistics costs have gone from 6.1 to 7.3 percent of net sales, with an unchanged industry mix. This rise is evenly distributed between transport costs, warehousing costs, and inventory costs. The current slump in transportation costs because of shrinking volumes is seen as a short term effect that will not reverse this long term trend.

These rising costs and the current challenges of the global economic crisis are clearly incompatible. Global supply chains will have to change.

In the 6th A.T. Kearney / European Logistics Association Logistics Study 2008/2009, A.T. Kearney draws on internal and external experts, plus survey responses, to provide important benchmarking information and recommend improvements:

• Consolidate in regional network structures – Important competitive advantages can be obtained through consolidation and regionalization of the supply chain. Experts anticipate the number of production and storage locations will decline markedly in the coming years and the entire supply chain footprint will be consolidated, with the production network streamlining to around 20 percent by 2013
• Enhance flexibility – In a strained economic situation such as the present one, it is inherently important that companies enhance the reaction capability of their supply chain to be able to respond quickly to fluctuating market demand. “Pull” instead of “push” is the order of the day, which means producing on a customer-specific basis instead of just for the warehouse

• Apply stringent risk management – Properly functioning supply chain risk management mitigates payment and credit risks. With only one-third of the surveyed companies operating supply chain risk management, improvements are critical
• Control net working capital – In times of economic crisis, active management of net working capital (inventories, receivables and payables) is one of the core tasks of supply chain management. Companies need to make use of every opportunity to release capital in the short term to improve their cash position

About the logistics study
Since 1982, A.T. Kearney and the European Logistics Association (ELA) have conducted the “Excellence in Logistics Study” at five-year intervals. The study combines traditional cost and performance benchmarks in supply chain management with a focus on supply chain excellence amidst the global economic crisis. Companies from a total of 18 European countries and eight branches of industry took part in the study. Contents of the study include:

• Background of the logistics study 2008/2009
• Summary of study results
• Key data, benchmarks, and supply chain management challenges
• Current trends in supply chain management
• Supply chain excellence amidst the global economic crisis
• Outlook

Contact
For more information about supply chain logistics and/or to receive the full study report please contact the authors.

Stephan Mayer, PhD, A.T. Kearney Partner
Cay Bernhard Frank, A.T. Kearney Principal
Erik Thiry, A.T. Kearney Principal