The New Logistics 4

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  • 1. Logistics Intensive Clusters
    Yossi Sheffi
    Elisha Gray II Professor of Engineering Systems, MIT
    Director, MIT Center for Transportation and Logistics
    Head, MIT Engineering Systems Division
  • 2. Clusters
    Silicon Valley
    Hollywood
    Wall Street
    Napa and Sonoma Valleys
    “Bio-Cambridge”
    2
  • 3. Literature
    Alfred Marshal, Principles of Economics (1920): “Positive externalities of co-location.”
    Knowledge sharing
    Supply base
    Labor pool
    Michael Porter,Economics of Competition, Harvard Business review (1998)
    Increased productivity
    Increased pace of innovation
    High pace of new business formation
    3
  • 4. Types of Relationships
    Customer
    Company
    Competitor
    Complement
    Supplier
    4
  • 5. Types of Relationships
    Customer
    Company
    Competitor
    Complement
    Supplier
    5
  • 6. Economists are Asking:
    Why cluster? Isn’t EDI, video-conferencing, visibility software, etc, enough for communications? (remember Tom Friedman?)
    If this is not enough, why don’t companies in a cluster acquire each other more than we see?
    6
  • 7. Why Clusters?
    Trust
    Tacit knowledge exchange
    Collaboration
    Research and education
    Supply base/customer base
    Are clusters an optimal point between slow behemoths with scale and nimble competitors with not enough resources?
    7
  • 8. Logistics Clusters
    Singapore
    Holland
    Zaragoza
    Memphis
    Louisville
    Panama
    Jolliet
    8
  • 9. Logistics Clusters Classification
    Modal orientation
    Air (Memphis, Schiphol, Changi…)
    Port (Rotterdam, LA/Long Beach, Singapore…)
    Rail/Intermodal (Chicago, Dallas, Kansas City…)
    Trucking
    Scope-based
    International
    Regional
    Urban distribution
    Functional classification
    FTZ/ Bonded/ Export processing
    Single commodity logistics parks (food, electronics, chemicals…)
    Special services (Haz Mat; Bulk distribution; Temp-controlled…)
    9
  • 10. Success factors:Operational Advantages
    Transportation:
    Economies of scope (I/B – O/B; containers)
    Economies of scale (capacity utilization; larger conveyances; direct LTL)
    Economies of density
    Economies of frequency
    Resource sharing
    Transportation capacity; warehouse space; equipment
    Changing providers
    Expansion capabilities
    10
  • 11. Example: and
    11
  • 12. Success factors:Natural Environment - Geography
    Singapore
    Holland
    Zaragoza
    Memphis
    Panama
    Chicago
    12
  • 13. Independent, business-oriented management
    Tax advantages (FTZ, tax deferments, bilateral trade agreements)
    Other investments, educational institutions, business development
    Support for cluster-wide IT applications
    Success factors:Government and Regulations
    • Exporting a 20’ container takes:
    • 14. In Kazakhastan: 93 days
    • 15. In Mali: 67 days
    • 16. In Sweden: 6 days
    • 17. A typical export transaction requires:
    • 18. In Democratic Republic of Congo: 42 approval signatures
    • 19. In Nigeria: 39 approval signatures
    • 20. In Australia, Austria, Canada: 2 approval signatures
    • 21. In Germany: 1 approval signature
    13
  • 22. Independent, business-oriented management
    Tax advantages (FTZ, tax deferments, bilateral trade agreements)
    Other investments, educational institutions, business development
    Support for cluster-wide IT applications
    Success factors:Government and Regulations
    World Bank’s Logistics Performance Index
    14
  • 23. Value Added Activities
    Postponement/customization
    Return and repair
    Outsourcing
    Medical “rental”
    Related competencies
    Logistics clusters enable new multi-company offerings and operations
    15
  • 24. Impact -
    31.2 Million ft2 of distribution space (by 2008)
    28,000 jobs were created in the park (in addition to the 1,710 construction jobs)
    63,388 indirect jobs
    total economic impact from 1990 through 2008 at $36.4 Billion
    Investment: $387 million from public sources
    Return:11% though 2008; 19% of current trends continue
    16
  • 25. ?
    Thank you
    ?
    ?
    ?
    ?
    Yossi Sheffi
    SHEFFI@MIT.EDU
    17