BALANCED BUDGET

U.S. companies spent about $1 trillion on domestic logistics in 2000, according to the International Warehouse Logistics Association. Transportation accounted for a hefty 58% of that amount ($580 billion); inventory carrying costs, 30% ($300 billion); warehousing, 8% ($40 billion); and logistics administration, 4% ($40 billion). An estimated $700 million of the total went to third-party service providers, whose gross revenues are estimated to reach $69 billion by the end of 2001.

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FALLING DOWN

Industries Declining Fastest	Projected Job Loss (1996-2008)
Crude petroleum, natural gas, and gas liquids	-46%
Apparel	-36%
Coal mining	-35%
Footwear, except rubber and plastic	-34%
Metal cans and shipping containers	-32%
Sources: Bureau of Labor Statistics, The New York Times

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OLD MATH

It doesn’t take a numbers genius to figure out that poor customer service subtracts revenue from a business. Work it out as shown in the example below:

1.	Annual revenue	$10,000,000
2.	Total number of customers	2,500
3.	Percentage of dissatisfied customers	25%
4.	Number of dissatisfied customers (line 2 × line 3)	625
5.	Percentage of dissatisfied customers who may switch or stop doing business with you	70%
6.	Number of dissatisfied customers who may switch or stop doing business with you (line 4 × line 5)	438
7.	Average revenue per customer (line 1 divided by line 2)	4,000
8.	Revenue lost through poor service (line 6 × line 7)	$1,752,000
Source: James T. Kenny, Ph.D., Western Illinois University

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TESTING, TESTING

1. How many dot-commers have been laid off since January 2001?
   (a) 300
   (b) 25,450
   (c) 90,000

2. How much do workplace disputes cost U.S. companies each year?
   (a) $372 million
   (b) $35.4 billion
   (c) $1.2 trillion

3. What percentage of total order cost is direct labor?
   (a) 50%
   (b) 35%
   (c) 84%

Answers: 1(c) 2(b) 3(a)

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THE LAST WORD

“If you’re not innovative, the workforce isn’t going to be there. I teach English for free in my facilities, and my employees love it. In some of the larger cities, we offer college courses.”
— William G. Pagonis
EVP of logistics, Sears, Roebuck & Co.

“Warehouses are the link in many supply chains. What we do has an effect up and down the supply chain.”
— Thomas W. Speh, Ph.D.
Professor, Miami University

“Follow the inventory. That’s where the action is, has been, will be.”
— Robert V. Delaney
VP, Cass Information Systems, Inc.

DID YOU KNOW? * Employees steal $20 billion – $40 billion worth of goods from work every year, according to the U.S. Chamber of Commerce.

* About 700,000 information technology jobs are now open, and that number will more than double in the next five years.

* The e-learning market will surge from $3.6 billion in 1999 to $25.3 billion in 2003.

* The number of business PCs with Internet access is projected to grow from 59% in 1999 to 86% in 2002.

* The average holiday shopping budget fell to $797 in 2000 from $857 in 1999.

DATA DELUGE You’re drowning in data, but you can’t stem the tide. A study by UC-Berkeley’s School of Information Management says that each year, the world churns out 1.5 exabytes of new information. An exabyte is a 1 followed by 18 zeroes. That amount of information roughly equals a stack of floppy disks two million miles high. As you might expect, the United States leads the info blitz, creating 35% of all print material, 40% of all images, and over 50% of all digital content each year. American households spend some 3,380 hours consuming information, including TV, radio, recorded music, newspapers, books, magazines, home video, video games, and the Internet, in that order.

THE PRICE IS RIGHT Top-tier warehouse management systems that once cost a million dollars or more are now affordable. If you shop carefully, you can find some fully loaded programs for less than $200,000. According to ID Systems magazine, a typical mid-sized warehouse with 30 to 40 WMS users would have spent about $5,000 a user in the past. The per-user cost would now drop to less than $2,500.