Good night friends.

@mfb: Thanks. :) Good night. 

@SF: well, why not? ;-) Good night there !

Thanks to all of you joining us from different time zones! Great questions--a lot of smart folks joining us on EBN. See you on the message boards!

:-)

@Bolaji & @Barbara: Thanks for hosting this presentation and great work with the new way of dealing with the questions, presenater and readers. 

@Gerry: Thanks to you and Avnet for an informative and interesting presentation and discussion. 

Thanks Gerry and thanks for EBN editors for putting up this online event.

@HH & mfbertozzi: Thanks. One day we might see a big change. :)

:)

Thanks Gerry, Barbara, Bolaji & whole EBN community ;-)

Thanks Gerry for your thoughts and thanks to the editors for organizing it :)

I also thank Gerry and the wonderful folks at Avnet for their time. You can continue to follow Gerry on EBN and as Barbara noted, messages can be sent to him at avnet.logistics@avnet.com. Thanks also to all the participants on this chart. We'll be inviting you soon to another interesting session.

Thanks Gerry!

Thanks very much for the time Gerry!

Thanks Gerry , Bolaji and Barbara

thank you - great dialogue!

but it works better with the floor.... Bye to all, have a nice day or Goodnight to

Europe

@SF: I agree with you, definitely.

I really appreciate the opportunity to speak (type?) to all of you on this important topic. Barbara will be providing an e-mail address where we can answer other questions yo umay have. And as always, we would be happy to work with you to improve your overall SC network and freight costs.

Thanks for a very informative presentations!

Thanks, Gerry!

@gerry-as a way to reduce SC risks do you think near-shoring becomes more and more relevant today?

Basicaly moving production to where the market is?

@SF: I second you on that!

thanks and goodbye

 As always, we are limited by time and our ability to type at lightening speed. I'd like to thank Gerry for his time today. If he was unable to get to your questions and you would like to follow up, you can reach Gerry at avnet.logistics@avnet.com.

Thanks again all!

Gerry, I agree supply chain risks continue to be uppermost on the mind of electronics industry executives. Most people still have the tragic Japan earthquake on their minds and the uncertainty in the market is also making planning difficult.

@mfbertozzi: I do believe transportation needs to focus on trying to use alternative energies instead of oil. Transportantion is a hugh industry and could make a big change. 

Gerry, please tell us about communication and collaboration in this industry?

A lot of questions and replies .Thank you Gerry for your time, and I am sorry , I didnt realize that we had to wait until the floor opens.

Gerry--do tyou have any closing thoughts?

@Gerry-In the worst comes worst event of a Total market crash[aka 2008] how prepared is Avnet to shed inventory and move to a lower cost/smaller base low-cost platform???

I think SC risk is at the top of mind for me. I have not seen a year where world events and natural disasters have affected the supply chain as much as this year and we are looking at ways of reducing our overall SC risk.

@Anna: I agree, it is important to anticipate future challenges.

@SF: alternative solutions will be investigated anyway; for how long transportations will be in condition to be based only on crude oil ?

Gerry, A slightly tangential question. As the year draws to a close and companies make preparations for 2012 what are the key issues that you see dominating the industry next year, how will these impact the supply chain and how is Avnet preparing for these?

@TaimoorZ yes, "necessity is the mother of invention."

Our freight cost as a % is a company confidential number, but it has improved dramatically driven by Danny Stephens, our Global VP of transportation.

"We continue to focus on reducing the packaging we are using and going to lower weight packaging."

I think this puts up a challenge for packagers to develop materials that are light-weight and less bulky, yet at the same time provide necessary protection to the materials

@Barbara- Thanks. The repeats are a bit confusing. 

@Gerry: That's fine!

I am repeting the posts in my answer so the person knows I am responding to their question.

what is Avnet's freight cost % vs. sales? electronic industry.

@Flyingscot: If only govt wouldn't be so greedy and the best for the whole community, country, planet would be thought, then alternative energies would be a great solution not only for transportantion but everything else in general. I wonder if there is a solution.

@Ariella: If we see it that way, I agree.

Hi folks, sorry about the repeats. We are still working on it

I really think we need to take oil speculation away.. from a CBS 60 minutes excerpt.. "Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions," Gilligan explained.

@taimoor-When it comes to oil Prices the biggest player(who nobody mentions typically) is the US Dollar.If you line up charts of the US Dollar Index[Its a trade weighted index vs our major trading partners-Euro,Pound,Yen,Swiss Franc] vs the Price of Crude Oil;you will see its an inverse correlation for the most part[close to 95%].So all you need is to strengthen the US Dollar(and consequently less Money printing from the Federal Reserve] and automatically you will see Crude Oil prices correct.

Just got the repeated posts; it's not bad as a recap.

The repeats again!

But lower weight packaging doesn't mean danger during the delivery ?

No, it is based on new packaging materials...think of steel vs titanium...

In a long term perspective don't you think that new models of business are required in which even the global companies will need to distribute their manufactruing and warehousing activities to optimise on the transportaion costs?

@tirlapur: good point, following question should be " why war" ? I am convinced it started in Iraq due to strong interest on its crude oil reserves, in principle, isn't it?

I am specifically looking at a apples to apples comparision by facility, by region. All companies need to do landed cost analysis to determine the best SC network for their goods based on cost and customer service.

We continue to focus on reducing the packaging we are using and going to lower weight packaging.

Well, I dont have time to take everyone throught the guns vs. butter economics lesson, but the value of any given countries currency has an impact on the competitiveness of a given company, good and bad!

The way to measure your freight cost is as a % of sales. This will make yoru comparisons apples to apples

Gerry  what are the three top actions Avnet  is taking to reduce transport costs?

1) We are working with our carriers to ensure we are getting best in class rates through continious benchmarking;

2) We are ensuring we are charging for our freight and providing value to customers through these transactions;

3) Working with our suppliers to consolidate our inbound transactions.

Gerry, how do you see the option for distributors to outsource their transportation to a transportation company versus managing the transportation themselves?

We actually do both, based on the circumstance.

Well, I am a firm believer in the SCOR model for lookign at the supply chain. I think of the supply chain in Plan. Source, Deliver and Return. The SCOR model will allow you to benchmark your SC internally and externally.

Bolaji, being a distributor means we have the leverage of having a large customer set in many regions of the world where electronic equipment SC ecosystem partners can leverage our scale and scope in areas like freight management.

Our freight spend at Avnet is well over $100M per annum and that gives us prefered pricing and access to freight lanes that people who are not using us today can certainly leverage.

Oil and Gas prices impact every area of the supply chain from raw materials to final delivery to the end customer.  Inbound delivery, outbound delivery and production process are all a part of the impact of higher prices. And with more manufacturing moving across borders or offshore this impact will continue. A huge component of most companies landed cost is fuel cost. How companies manage everything from their manufacturing locations to their transportation network affect their overall costs.

Hello Barbara, Gerry Fay is on

@Ashish: That's right!  

We use truck, air and ocean, depending on the goods and our ability to predict lead times accurately.

@Tech4people Yes!

Gerry  How many of the companies you serve have transportation goals and metrics (real ones like they have for new product launches etc) vs those where it is an afterthought

But lower weight packaging doesn't mean danger during the delivery ?

I am specifically looking at a apples to apples comparision by facility, by region. All companies need to do landed cost analysis to determine the best SC network for their goods based on cost and customer service.

@Flying Scot-I agree,when Govt loses revenue they raise taxes;thereby causing a deathspiral in the economy-As more businesses shut down or move elsewhere to avoid higher taxes,Its typical Govt behavior.When the problem is usually that the Govt needs to get more efficent how they use existing revenue.

@FLYINGSCOT: well, you are right; believe it or not, for Govs in confusional status, it is simple way for trying to solve financial crisis, unfortunately is a short term approach without strategic view.

@Gerry, is the shipment always through flights? Or sea route is also preferred ?

"The % of sales calculation is a function of your industry." Although this is a logical approach, you also need to take other factors in to consideration that can drive up your transportation costs.  Perhaps you used to manufacture in US but now manufacture in China.  By only looking at the sales, you are not factoring in other savings such as perhaps tax savings, labor savings etc.  Need to factor in COGS as well.  Anything else?

I do agree OPEC has a significant role in oil prices. The biggest tool they have on their hand is to control the supply and restrict it when they want to push prices up. But of course speculators also play their role.

@mfbertozzi, thank you. It's nice of you to say that.

Actual popcorn for shipping packaging sounds delicious! Or maybe I just think this due to skipping lunch..

We continue to focus on reducing the packaging we are using and going to lower weight packaging.

@susan   when govt loses revenue it raises taxes.  That is why diesel in UK is more expensive than gasoline yet easier to produce

@Barbara, that's an intersesting idea. It gives people more motivation to unpack if they can snack along the way.

@Ariella: really appreciated your post (as usual, trust me). You are very fair and in my opinion very professional.

@prabhakar - Banks, mostly, and speculators. OPEC does it indirectly by controlling production. Oil used to be classified as a commodity, which means it was off limits to speculators (like food and produce) - to keep this exact thing from happening; artificially raising the price rather than relying on supply and demand

Gerry--Avnet has taken other measures to reduce costs associated with logistics and freight separate from oil and gas prices. One famous example I can remember is using actual popcorn instead of styrofoam peanuts (a long time ago). Can you share a few recent examples?

@tech4people: Thanks again. Need to do my own research a bit on these major pipe-lines!

@Flyingscot: would it be logical for Gov. to raise tax on alternative fuels if it's a benefit for everyone?

Barbara yes thank you , so maybe we can apply the same solution to the oil problem or not ?

Just wondering if "War on Iraq" and "War on Afghanistan" pushed the prices of the oil higher ?

@Gerry a very practical approach to analytics!

I guess OPEC controls the oil prices....

@anandvy: I will leave to Gerry answer about AVNET sales; honestly speaking, current financial crisis started at the end of 2008, exactly when initial up & down trend of crude oil started and in the Gulf, Emirates slow down several business.

Who manipulates the oil prices ?

The % of sales calculation is a function of your industry. The key is to start to measure it , take actions, and look for positive results!

@UDARA-The two pipelines I was referring to are called Keystone XL and Northern Gateway.Together these two pipelines give Alberta a Security of Customers[Assured Buyers US and China-the two biggest consumers of Oil in the world]

@mfbertozzi, you make a good point. I was being very US-centric. In other parts of the world gas costs more, which may explain why they often do more to find alternatives.

Nemos--I think exchange rates are accounted for in all aspects of operations; in other words, when compnaies report their results the exchnage rates are factored in. Does that help?

@cyang: good question, should change from industry to industry though.

Well, I dont have time to take everyone throught the guns vs. butter economics lesson, but the value of any given countries currency has an impact on the competitiveness of a given company, good and bad!

alternative fuels are maybe cheaper for now but once their use becomes significant government will raise tax on them and we are back to square one

@Ariella: I agree with you, even the trend is maybe different region-by-region. In Southern America especially in Brasil, biomass fuel is cheaper and preferred way for transportation also for personal cars.

what is industral standard for  freight cost is as a % of sales?

I woudl agree - improving efficiencies is probably the best approach in the short term to control costs.

I want also to ask how the exchange rate of dollar is also affects the supply chain. Have in mind what happened to the dollar when oil prices go up.

@TaimoorZ, I'd tend to agree with you: it will be a very long time before those alternative sources make an impact beyond consumer transport.

@gerry: For industrial capitol goods, how does the transportation costs compare against the customs/boarder-crossing taxes when imported to North America?

@Gerry, good point, we need to keep it consistent.

How much of technology is used in optimizing the transportatio methods ? For example recently there was an article in http://www.businessweek.com/lifestyle/travelers_check/archives/2011/09/how_to_board_an_airplane_faster.html which suggests fastest way to board an ariplane

I dont know if there will be anything radical in the methods (truck, plane, rail or ocean) but I do think we can expect these modes to continue to improve their efficiency.

fuel surcharge charged by LTL carriers are hard to manage, everyone is different from range 10%-45%, how do you control that?

@Gerry, Thank you for that answer. Since Avnet is in the business of moving millions of products worldwide are there packaging decisions/strategies that influence your operations and help you reduce total cost? I have seen in recent months new innovations in packaging techniques that I believe companies can benefit from.

what radical things can we expect in future wrt how goods are moved around the world (if indeed they are moved at all)

The way to measure your freight cost is as a % of sales. This will make yoru comparisons apples to apples

@mfbertozzi. the alternative energies are usually not cheaper yet, though every time gas prices go up, people get more inclined to looking into them.

Ariella is right...relative price is not that high today

how to get your freight benchmarking? any public site you would like to share with us?

do you have benchmarking freight cost from origin A to destination B by kg weight?

@prabhakar: I think there's a long way to go before alternate sources such as EVs and solar energy can really make any commercial impact and more importantly be effective in cutting down costs.

@SF: That's is what I would expect. The road to that seems to be very hard and difficult. But we will not have other choices in the future as the oil reserve will go down.

I think there is no way to reduce the surcharges paid on each transaction by businessess, what we can control is reducing the number of transactions we have to pay surcharges on.

@ tech4people: Thanks, I understand.

@TaimoorZ, no, the real crisis then was in terms of supply; the prices did not skyrocket, but people had to line up for gas. I mean I heard compared to what gas cost, say in the 1950s, what it costs today is comparable in terms of dollar valuation.

can Avnet negotiate long term transport contracts like gas providers do to offer customers long term pricing deals

Gerry  what are the three top actions Avnet  is taking to reduce transport costs?

1) We are working with our carriers to ensure we are getting best in class rates through continious benchmarking;

2) We are ensuring we are charging for our freight and providing value to customers through these transactions;

3) Working with our suppliers to consolidate our inbound transactions.

Gerry, how do you see the option for distributors to outsource their transportation to a transportation company versus managing the transportation themselves?

We actually do both, based on the circumstance.

Based on the overall cost of fuel, are more companies looking to move freight in the U.S. by railcars instead of semis? Trains do get better mileage on fuel per ton of cargo.

Based on our parcel size, rail doesnt make sense for us so I am not really the right one to ask. Sorry

Well, I am a firm believer in the SCOR model for lookign at the supply chain. I think of the supply chain in Plan. Source, Deliver and Return. The SCOR model will allow you to benchmark your SC internally and externally.

Bolaji, great question. We actually have 100's of thousands of customers. As you know, with scale comes preferred pricing. We can actually help companies reduce their freight cost as our rates are better then theirs, so there is no additional cost to us. The customer pays for freight through us.

Bolaji, being a distributor means we have the leverage of having a large customer set in many regions of the world where electronic equipment SC ecosystem partners can leverage our scale and scope in areas like freight management.

Our freight spend at Avnet is well over $100M per annum and that gives us prefered pricing and access to freight lanes that people who are not using us today can certainly leverage.

Yes, everyone needs to remember that crude oil and gasoline prices will continue to fluctuate for the rest of our lives. Prices will move up and down but the baseline prices will continue to move upward, so oil and gasoline prices will continue to impact our supply chain always trending upward. To offset the impact, everyone throughout the supply chain, needs to work closely together to develop better ways to move products.

It seems to me the subject of energy and logistics costs being considered central to electronics manufacturing is really based on the T & Cs companies have in place with their SC ecosystem partners. A SC where the manufacturer pushes these cost back into their supply chain partners puts their SC at risk as the partners will reduce inventories to offset these costs.

SCs where costs are transparent and shared have less risk and overall less cost.

Barbara, consolidating orders is one method to lower the effects of fuel costs by reduced freight. I think that it is more of a question of building in the appropriate lead times into which ever SC solution you are using. If you are a BTO customer, that would indicate high volitility, which would be met through using SC partners that would guarantee you a specific lead time. This is a common practice for distributors where we pool inventories for our thousands of customers.

Bolaji, I think that small to medium sized customers have opportunities to leverage what I discussed by working with their distribution partners and their supply chain network to leverage their scale and scope. The most effective supply chains are the ones where collaboration and sharing of SC costs occur.

Well Barbara, Crude oil was trading at $90.24 a barrel at 10:32 EDT up slightly from Monday. This is down from the high of $113.93 in April of this year. Crude oil fell from an average of $97 a barrel in July to an average of $87 in August. Regular grade gasoline ended August at $3.71 per gallon down from a high of $3.97 in May of this year.

Hello Barbara, Gerry Fay is on

@Gerry: Has Avnet considered using alternative energies at some point?

@Anna, that's a good question!

nice question prabhakar " EVs and solar energy will reduce the depenedance and hence the impact of oil price fluctuations in the coming years?"

@Ariella: What about biomass fuel? It seems technology did considerable steps ahead especially for transportation made by trucks or long-distance trains. After all, they represent a quite high percentage of total transportation, not only in Europe.

@SF: That's is waht I would expect. But the road to that seems to be very hard and difficult. But we will not have other choices in the future as the oil reserve will go down.

@Udara-Alberta has a tie up with a number of Us based refiners who buy the Heavy Oil.Most of these contracts are long-term in nature and now the major pipelines are getting extended further with Chinese funding and backing.So No,Most Crude Oil fluctuations will not have much impact on Alberta

Will the advent of alternate sources of energy - EVs and solar energy will reduce the depenedance and hence the impact of oil price fluctuations in the coming years?

@Ariella: Are you referring to the oil crisis in early 1970's?

What was the impact of Arab uprising on supply chain? Did it impact Avnets sales ?

Gerry, You mentioned fuel surchages as a factor in a previous commentary on EBN. In Europe, this is a factor in the price of petrol. Aside from keeping an eye on this cost, what else can companies do to reduce the surchages paid by consumers and businesses or is this an area companies have no influence?

Gerry  what are the three top actions Avnet  is taking to reduce transport costs?

1) We are working with our carriers to ensure we are getting best in class rates through continious benchmarking;

2) We are ensuring we are charging for our freight and providing value to customers through these transactions;

3) Working with our suppliers to consolidate our inbound transactions.

@HH: As Gerry mentioned that crude oil and gasoline prices will continue to fluctuate for the rest of our lives, as was thinking, as you did, about the need to start developing more alternative energies. Do you think at some point this will help in lowering prices in transportaion and therefore help supply chain lowering product prices?

@Gerry, More specifically, how would North American oil and gas industry be affected from logistical point of view,  by rapidly fluctuation oil and gas prices?

I remember reading somewhere that -- adjusted for inflation -- the gas price of today are not so high when compared to what they were decades ago. I suppose it takes some number crunching to ascertain that.

Based on Avnet's high volume of sales, do they have a contract with a particular company for shipping? (UPS, Fedex)

@tech: Unless, there is a huge oil reserve discovery in almost every country

@DennisQ, good move!

I would like to report today event on my job: an hw appliance has crossed the globe from Australia to Europe; high costs for long trip shipment have been compensated by a profitable procurement process (same hw from AU was cheaper then from EU). For how long benefits from Internet e-commerce ( a buyer could find best price basically surfing via browser) will compensate transportation costs?

The $2 usa gallon is gone forever I fear

Gerry, in your opinion, what is the most common mistake that you see small-to-medium-sized businesses making when it comes to their transportation costs? Obviously it seems like the biggest mistake is that they could be getting better rates if they worked with a company like Avnet, but what is the most common overall strategic error, do you think?

Well Barbara, Crude oil was trading at $90.24 a barrel at 10:32 EDT up slightly from Monday. This is down from the high of $113.93 in April of this year. Crude oil fell from an average of $97 a barrel in July to an average of $87 in August. Regular grade gasoline ended August at $3.71 per gallon down from a high of $3.97 in May of this year.

No. We can be smarter throughout the supply chain, Consolidating orders, increasing order size, better planning/forecasting and ensuring we use the cheapest methods in moving product throughout the supply chain. Better planning = lower freight spend.

Bolaji, I think that small to medium sized customers have opportunities to leverage what I discussed by working with their distribution partners and their supply chain network to leverage their scale and scope. The most effective supply chains are the ones where collaboration and sharing of SC costs occur.

Oil and Gas prices impact every area of the supply chain from raw materials to final delivery to the end customer.  Inbound delivery, outbound delivery and production process are all a part of the impact of higher prices. And with more manufacturing moving across borders or offshore this impact will continue. A huge component of most companies landed cost is fuel cost. How companies manage everything from their manufacturing locations to their transportation network affect their overall costs.

@Ariella, I know... that's why I made the "without commenting on the woman herself" comment! :)

Gerry  what are the three top actions Avnet  is taking to reduce transport costs?

@DennisQ-There is a way for Gasoline to come back down to $2/Gallon,Its quite simple.All it would need is for the US Dollar to strengthen vs Other commodties(like Oil)-Which is typically what happens in a recession.Remember 2008? And Bachman would take ZERO credit for normal Business cycles

Gerry, how do you see the option for distributors to outsource their transportation to a transportation company versus managing the transportation themselves?

We actually do both, based on the circumstance.

@prabhakar_deosthali, but cooling oil prices is always good news because it will reduce the transportation cost.

@Nemos, Electronics manufacturers often worry more about getting their products from A to B at a fair price than the benefits that come from better energy prices. I suspect, though, as Gerry pointed out that supply chain partners like Avnet are likely to be in a better position to pass on savings to their own customers.

Gerry, how does rapid fluctuations in oil-prices impact the oil and gas industry in Alberta, Canada?

Based on the overall cost of fuel, are more companies looking to move freight in the U.S. by railcars instead of semis? Trains do get better mileage on fuel per ton of cargo.

Based on our parcel size, rail doesnt make sense for us so I am not really the right one to ask. Sorry

Bolaji, great question. We actually have 100's of thousands of customers. As you know, with scale comes preferred pricing. We can actually help companies reduce their freight cost as our rates are better then theirs, so there is no additional cost to us. The customer pays for freight through us.

Bolaji, being a distributor means we have the leverage of having a large customer set in many regions of the world where electronic equipment SC ecosystem partners can leverage our scale and scope in areas like freight management.

Our freight spend at Avnet is well over $100M per annum and that gives us prefered pricing and access to freight lanes that people who are not using us today can certainly leverage.

Yes, everyone needs to remember that crude oil and gasoline prices will continue to fluctuate for the rest of our lives. Prices will move up and down but the baseline prices will continue to move upward, so oil and gasoline prices will continue to impact our supply chain always trending upward. To offset the impact, everyone throughout the supply chain, needs to work closely together to develop better ways to move products.

Barbara, consolidating orders is one method to lower the effects of fuel costs by reduced freight. I think that it is more of a question of building in the appropriate lead times into which ever SC solution you are using. If you are a BTO customer, that would indicate high volitility, which would be met through using SC partners that would guarantee you a specific lead time. This is a common practice for distributors where we pool inventories for our thousands of customers.

No. We can be smarter throughout the supply chain, Consolidating orders, increasing order size, better planning/forecasting and ensuring we use the cheapest methods in moving product throughout the supply chain. Better planning = lower freight spend.

Bolaji, I think that small to medium sized customers have opportunities to leverage what I discussed by working with their distribution partners and their supply chain network to leverage their scale and scope. The most effective supply chains are the ones where collaboration and sharing of SC costs occur.

Hello Barbara, Gerry Fay is on

Well Barbara, Crude oil was trading at $90.24 a barrel at 10:32 EDT up slightly from Monday. This is down from the high of $113.93 in April of this year. Crude oil fell from an average of $97 a barrel in July to an average of $87 in August. Regular grade gasoline ended August at $3.71 per gallon down from a high of $3.97 in May of this year.

Prices of oil move up and down. I want to ask that in case of having prices moving down, the supply chain gets the advantage of it or has to cover losses from older high price in oil.

Gerry, how do you see the option for distributors to outsource their transportation to a transportation company versus managing the transportation themselves?

Based on the overall cost of fuel, are more companies looking to move freight in the U.S. by railcars instead of semis? Trains do get better mileage on fuel per ton of cargo.

Based on our parcel size, rail doesnt make sense for us so I am not really the right one to ask. Sorry

With the oil price coming down comes also the recession . So there is a double impact on the supply chain!

@DennisQ I think it's absurd to make such predictions. Anyway, she just lost a lot of credibility with me b/c she espouses the vaccine theory that has no scientific proof. See http://www.theatlanticwire.com/politics/2011/09/bachmanns-vaccine-theory-pulls-gop-jenny-mccarthy-territory/42410/

Hi Everyone, This is a Live Chat and we cannot expect Gerry to answer all of the questions you have. Please feel free to pose comments, observations or questions to other members of the discussion. Gerry will be answering only a few set of questions as our time is limited. He might also be able to provide additional information through Avnet marketing offline.

DennisQ--I think if Gerry could answer that, he'd be in charge of US energy policy...

@DennisQ, based on all the reports I've read about oil and fuel recently, all analysts say there is no way she can accomplish this.

Well, I am a firm believer in the SCOR model for lookign at the supply chain. I think of the supply chain in Plan. Source, Deliver and Return. The SCOR model will allow you to benchmark your SC internally and externally.

Bolaji, great question. We actually have 100's of thousands of customers. As you know, with scale comes preferred pricing. We can actually help companies reduce their freight cost as our rates are better then theirs, so there is no additional cost to us. The customer pays for freight through us.

Bolaji, being a distributor means we have the leverage of having a large customer set in many regions of the world where electronic equipment SC ecosystem partners can leverage our scale and scope in areas like freight management.

Our freight spend at Avnet is well over $100M per annum and that gives us prefered pricing and access to freight lanes that people who are not using us today can certainly leverage.

Yes, everyone needs to remember that crude oil and gasoline prices will continue to fluctuate for the rest of our lives. Prices will move up and down but the baseline prices will continue to move upward, so oil and gasoline prices will continue to impact our supply chain always trending upward. To offset the impact, everyone throughout the supply chain, needs to work closely together to develop better ways to move products.

Barbara, consolidating orders is one method to lower the effects of fuel costs by reduced freight. I think that it is more of a question of building in the appropriate lead times into which ever SC solution you are using. If you are a BTO customer, that would indicate high volitility, which would be met through using SC partners that would guarantee you a specific lead time. This is a common practice for distributors where we pool inventories for our thousands of customers.

Bolaji, I think that small to medium sized customers have opportunities to leverage what I discussed by working with their distribution partners and their supply chain network to leverage their scale and scope. The most effective supply chains are the ones where collaboration and sharing of SC costs occur.

No. We can be smarter throughout the supply chain, Consolidating orders, increasing order size, better planning/forecasting and ensuring we use the cheapest methods in moving product throughout the supply chain. Better planning = lower freight spend.

The U.S. Energy Information Administration (EIA) projects gasoline to average $3.47 per gallon in the 4^th quarter.  The EIA has projected crude oil paths downward for 2011 and 2012. The EIA expects Crude Oil to average $103 per barrel in 2012 up slightly from an average of $100 in 2011. The forecast is trending downward due to US GDP forecast falling from 2.4% to 1.5% in 2011 and from 2.6% to 1.9% in 2012. With lower economic growth projected Crude Oil and Gas prices should stabilize through 2012. However please understand this forecast is fluid and can change up or down at any moment and as we all know, will rise again in the future.

Oil and Gas prices impact every area of the supply chain from raw materials to final delivery to the end customer.  Inbound delivery, outbound delivery and production process are all a part of the impact of higher prices. And with more manufacturing moving across borders or offshore this impact will continue. A huge component of most companies landed cost is fuel cost. How companies manage everything from their manufacturing locations to their transportation network affect their overall costs.

Well Barbara, Crude oil was trading at $90.24 a barrel at 10:32 EDT up slightly from Monday. This is down from the high of $113.93 in April of this year. Crude oil fell from an average of $97 a barrel in July to an average of $87 in August. Regular grade gasoline ended August at $3.71 per gallon down from a high of $3.97 in May of this year.

@DennisQ: I would say NO!

Well, I am a firm believer in the SCOR model for lookign at the supply chain. I think of the supply chain in Plan. Source, Deliver and Return. The SCOR model will allow you to benchmark your SC internally and externally.

Gerry do you have any preferred Frieght suppliers/specialists or do you outsource it to the lowest cost bidder (through open tenders)?

Regards

Ashish.

Gerry, I hate to bring this up, but without getting too political... Michele Bachmann recently said, "Under President Bachmann you will see gasoline come down below $2 a gallon again. That will happen." Putting opinion of the woman herself aside, is there *ANY* realistic scenario where $2 a gallon could be possible within the next, say, 2 to 3 years? Certainly, many of our jobs would be much easier if $2 gas made a comeback!

@Gerry: RE: "Yes, everyone needs to remember that crude oil and gasoline prices will continue to fluctuate for the rest of our lives." that's true. Thus the need to depelop (research on) alternative sources of energy. 

The fluctuating crude oil prices are  affecting the sunrise industry - Electric vehicles in a big way- as soon as the crude prices fall the customers who are inclined to buy EVs suddenly stall their decisions as the gasolene is cheap. The electronics supply chain of this industry is the  worst hit by the wide fluctuations in oil prices. What is your experience?

Gerry,Do you recommend most SMBs go in for fuel Price hedging ? And at what rates? for instance if Fuel costs make up more than a particular percentage of operating costs??[Say for example 25%].

Regards

Ashish.

Based on the overall cost of fuel, are more companies looking to move freight in the U.S. by railcars instead of semis? Trains do get better mileage on fuel per ton of cargo.

Gerry: Logistics seems very complicated because it touches many aspects. Is there a good methodology/ approach to evaluate the holistic supply chain in one big framework?

Thanks Gerry, and thanks readers for your patience! I'd now like to open the floor to our readers. Take it away folks!

Bolaji, great question. We actually have 100's of thousands of customers. As you know, with scale comes preferred pricing. We can actually help companies reduce their freight cost as our rates are better then theirs, so there is no additional cost to us. The customer pays for freight through us.

Gerry, I have just one more question before we open up the discussion to our readers. Avnet is a large company with customers numbering in the tens of thousands. The additional cost of supporting customers with advice or strategic initiatives in their transportation needs could be overwhelming. How is the company handling this and making sure it's margins are not negatively impacted?

Bolaji, being a distributor means we have the leverage of having a large customer set in many regions of the world where electronic equipment SC ecosystem partners can leverage our scale and scope in areas like freight management.

Our freight spend at Avnet is well over $100M per annum and that gives us prefered pricing and access to freight lanes that people who are not using us today can certainly leverage.

Gerry, I'm aware Avnet has capabilities in place to help customers manage through these situations. Could you address specifically what Avnet offers here and whether or not these are global services?

Yes, everyone needs to remember that crude oil and gasoline prices will continue to fluctuate for the rest of our lives. Prices will move up and down but the baseline prices will continue to move upward, so oil and gasoline prices will continue to impact our supply chain always trending upward. To offset the impact, everyone throughout the supply chain, needs to work closely together to develop better ways to move products.

bad typos...I mean thanks Gerry

It seems to me the subject of energy and logistics costs being considered central to electronics manufacturing is really based on the T & Cs companies have in place with their SC ecosystem partners. A SC where the manufacturer pushes these cost back into their supply chain partners puts their SC at risk as the partners will reduce inventories to offset these costs.

SCs where costs are transparent and shared have less risk and overall less cost.

Please ignore the repeats...a technical glitch we will take care of

Thanks Greey. Before we open the floor to our readers, is there anything you'd like to add to set the stage for this discussion?

The U.S. Energy Information Administration (EIA) projects gasoline to average $3.47 per gallon in the 4^th quarter.  The EIA has projected crude oil paths downward for 2011 and 2012. The EIA expects Crude Oil to average $103 per barrel in 2012 up slightly from an average of $100 in 2011. The forecast is trending downward due to US GDP forecast falling from 2.4% to 1.5% in 2011 and from 2.6% to 1.9% in 2012. With lower economic growth projected Crude Oil and Gas prices should stabilize through 2012. However please understand this forecast is fluid and can change up or down at any moment and as we all know, will rise again in the future.

Bolaji, I think that small to medium sized customers have opportunities to leverage what I discussed by working with their distribution partners and their supply chain network to leverage their scale and scope. The most effective supply chains are the ones where collaboration and sharing of SC costs occur.

Oil and Gas prices impact every area of the supply chain from raw materials to final delivery to the end customer.  Inbound delivery, outbound delivery and production process are all a part of the impact of higher prices. And with more manufacturing moving across borders or offshore this impact will continue. A huge component of most companies landed cost is fuel cost. How companies manage everything from their manufacturing locations to their transportation network affect their overall costs.

No. We can be smarter throughout the supply chain, Consolidating orders, increasing order size, better planning/forecasting and ensuring we use the cheapest methods in moving product throughout the supply chain. Better planning = lower freight spend.

Hello Barbara, Gerry Fay is on

Barbara, consolidating orders is one method to lower the effects of fuel costs by reduced freight. I think that it is more of a question of building in the appropriate lead times into which ever SC solution you are using. If you are a BTO customer, that would indicate high volitility, which would be met through using SC partners that would guarantee you a specific lead time. This is a common practice for distributors where we pool inventories for our thousands of customers.

It seems to me the subject of energy and logistics costs is not considered central to electronics manufacturing. Is this the impression in the industry and what needs to happen for people to realize the savings they can make from better management of transportation resources?

Bolaji, I think that small to medium sized customers have opportunities to leverage what I discussed by working with their distribution partners and their supply chain network to leverage their scale and scope. The most effective supply chains are the ones where collaboration and sharing of SC costs occur.

hi everyone...I'm here

By consolidating orders, how does this change custoemrs' risk management scenario regarding JIT and BTO?

no problem, Nemos.

Gerry, The steps you outlined can be difficult for a single company or a small to medium size company. Are there resources out there that can facilitate this?

ok sorry, cool down Hospice I didnt know.

@cyang, You are on. You can post comments later once we open the floor for questions in about 15 minutes.
Thank you.

No. We can be smarter throughout the supply chain, Consolidating orders, increasing order size, better planning/forecasting and ensuring we use the cheapest methods in moving product throughout the supply chain. Better planning = lower freight spend.

Hi Nemos, Gerry will get to your questions and all other comments later on. Please hold this until Barbara wraps up preliminary questions.

cyang--you are set -- no dial in, just dialog

The floor is not open YET!

how this thing work? where and how to dial in?

Gerry also Why we have a high exchanged price in dollars when the prices of oil goes down and vice versa ?

Customers often feel helpless when something such as transportation prices increase and feel they can do nothing about it.  Is it true there's nothing they can do?

Oil and Gas prices impact every area of the supply chain from raw materials to final delivery to the end customer.  Inbound delivery, outbound delivery and production process are all a part of the impact of higher prices. And with more manufacturing moving across borders or offshore this impact will continue. A huge component of most companies landed cost is fuel cost. How companies manage everything from their manufacturing locations to their transportation network affect their overall costs.

Hi everyone..

Gerry, could you outline for our readers how a macro issue such as oil and gas prices impacts every single order they place in the supply chain?

The U.S. Energy Information Administration (EIA) projects gasoline to average $3.47 per gallon in the 4^th quarter.  The EIA has projected crude oil paths downward for 2011 and 2012. The EIA expects Crude Oil to average $103 per barrel in 2012 up slightly from an average of $100 in 2011. The forecast is trending downward due to US GDP forecast falling from 2.4% to 1.5% in 2011 and from 2.6% to 1.9% in 2012. With lower economic growth projected Crude Oil and Gas prices should stabilize through 2012. However please understand this forecast is fluid and can change up or down at any moment and as we all know, will rise again in the future.

It is paranoid considering the close connection that have the "bad things" and the price of Oil !!!!!!!!

Hello EBN, everyone!

Where do you think they are headed over the next few weeks?

Well Barbara, Crude oil was trading at $90.24 a barrel at 10:32 EDT up slightly from Monday. This is down from the high of $113.93 in April of this year. Crude oil fell from an average of $97 a barrel in July to an average of $87 in August. Regular grade gasoline ended August at $3.71 per gallon down from a high of $3.97 in May of this year.

Hello everyone.

Hello, everybody!

Hi everyone, This is Bolaji. As Barbara pointed out, please hold your questions for Gerry and other comments until we open up the floor to all participants.

Hello everyone...

Good afternoon everyone and thank you for joining us. I am extremely pleased to introduce you to Gerry Fay,  Avnet’s Chief Global Logistics and Operations Officer. As you know, Avnet is a global electronics distributor and in a very good position to discuss transportation expenses and how they impact every link in the supply chain. For the first portion of our chat, Gerry and I will be setting the stage for our discussion and then opening the floor to questions from our  readers. Please wait to post your questions to Gerry until then.

Gerry, since we first planned this chat, a number of other economic issues has put oil and gas prices on the back burner for the moment. Can you quickly update us on the status of oil and gas prices?

Good afternoon from NC

hello everyone

@Ashish, Hello, well, it does have its advantages. But we pay a pretty high cost -- in very literal terms -- for them.

Looking forward to this, thank you EBN for organizing!

Thanks nemos...:)

Ariella,

Please don't brag!!!New York rules ok.

Ashish.

Hello people!!This for sure is going to be a great presentation.Companies need to manage Fuel price volatility not just on the upside but also on the down side..

Ashish.

Good afternoon everyone, Udara here.

Hi, Nemos!

Hi all,

We'll begin in a few minutes

It's an advantage of living in NY that most of these things are set to on the clock with out time! ;D

welcome Ariella :)

Good afternoon, everyone!

Anandy i have a tip to propose you ( I am using the same also) add the event to your calander and open from there to see when it starts in your local time.

Hello from Kristianstad , I think also we will better if we are using the GMT time insteed of EDT. Or both of them.

Hi Everybody Good Afternoon

Hi all

Hi Gerry!

Hello Barbara, Gerry Fay is on

Hi all and welcome!

Maybe we should based these on GMT from now on :-)

We will begin in about 15 minutes

Hello to Gerry, EBN editors and everyone.

@Barbara EDT time always confuses me :)...

Hi Anandy..you are a little early...

Hello everyone...