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Dr. Dale S. Rogers Professor, Logistics & Supply Chain Management Co-Director, Center for Supply Chain Management Rutgers University Nevada Logistics Institute August 16, 2011 Reno, NV Megatrends

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The Future of the Global Supply Chain Megatrends Introduction Sustainable Supply Chain Complexity & Consolidation Fuel Costs Logistics and Transportation Work Patterns Systems Evolution

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The Future of the Global Supply Chain Introduction

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The Future of the Global Supply Chain Historical Milestones In Conceptualization Shifts in Logistical Thinking Transportation Efficiency3000 BC Total Cost Awareness1950 AD Customer Service1955 Comprehensive Outsourcing1965 Operational Integration and Quality (Six Sigma)1975 Financial Positioning and Operational Excellence1985 Globalization1990 Customer Relationships and Enterprise Extension1995 Supply Chain Integrative Management2000 Responsive Supply Chain Management2005+ Source: Dr. Donald J. Bowersox, FedEx Summit, February 2008, February 2008

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The Future of the Global Supply Chain Cash Conversion Cycle Q1 or Q2 2011 FirmDays Apple-41 Dell-15 Logitech41 Panasonic44 Verizon47 Colgate Palmolive48 Home Depot60 AstraZenaca109 Novartis112 Johnson & Johnson146 Estee Lauder148 Becton Dickinson181 Merck196 Pfizer198

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The Future of the Global Supply Chain The Sustainable Supply Chain

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The Future of the Global Supply Chain

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Environmental Economic Social Responsibility The Sustainable Supply Chain Good Better Best Better Strategy Sustainability as part of an integrated strategy Long-term view Doing more with less Organizational Culture Deeply ingrained Organizational citizenship Values and ethics Quality cultu re Transparency Stakeholder Management Supplier Operations RFP/RFQ Process Financial Reporting (SOX) Leadtimes Visibility Risk Management Contingency Planning Supply Disruptions Supply Risk Headline Risk Agility

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The Future of the Global Supply Chain Zero Waste

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The Future of the Global Supply Chain Product Responsibility Curve Product Life Cycle Product Responsibility Curve Birth End of Life End of Responsibility

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The Future of the Global Supply Chain Secondary Markets Secondary markets are effective in diverting a large number of products from landfills, creating numerous jobs, resulting in substantial economic value in the process. Although not reflected in current government metrics, a conservative estimate is that the secondary market represents 2.28 percent of the 2008 U.S. Gross Domestic Product.

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The Future of the Global Supply Chain Secondary Markets

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The Future of the Global Supply Chain Logistics & Transportation

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The Future of the Global Supply Chain U.S. Logistics Costs 2003-2010 20102009200820072006200520042003 Percent of GDP8.30%9.40% 9.9% 9.5%8.6%8.5% Carrying Costs 2.064 Trillion 1.851 Trillion1.965 Trillion 2.026 Trillion 1.857 Trillion 1.763 Trillion 1.493 Trillion Interest $4 $5 $47 $103 $93 $58 $23 $17 Taxes, Obsolescence, Depreciation, Insurance $280 $233 $252 $273 $252 $245 $227 $205 Warehousing $112 $119 $122 $111 $101 $90 $82 $78 Subtotal $396 $357 $421 $487 $446 $393 $332 $300 Transportation Costs Motor Carriers Truck - Intercity $403 $368 $460 $455 $432 $394 $335 $315 Truck - Local $189 $174 $220 $216 $203 $189 $174 $167 Subtotal $592 $542 $680 $671 $635 $583 $509 $482 Other Carriers Railroads $60 $50 $63 $58 $54 $48 $42 $38 Water $33 $29 $39 $38 $37 $34 $27 $26 Oil Pipelines $10 $9 Air $33 $29 $40 $41 $38 $40 $31 $28 Forwarders $32 $28 $32 $30 $27 $22 $18 $10 Subtotal $168 $146 $184 $177 $166 $153 $127 $111 Shipper Related Costs $9 $8 $7 Logistics Administration $47 $42 $52 $54 $50 $46 $39 $36 Subtotal $56 $51 $60 $62 $58 $54 $47 $43 Total $1,212 $1,096 $1,345 $1,397 $1,305 $1,183 $1,015 $936

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The Future of the Global Supply Chain U.S. Logistics Flows

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The Future of the Global Supply Chain BNSF Rail System Map

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The Future of the Global Supply Chain Union Pacific Rail System Map

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The Future of the Global Supply Chain 2009 Top 50 World Container Ports 1.Singapore (Singapore) 2.Shanghai (China) 3.Hong Kong (China) 4.Shenzhen (China) 5.Busan (Korea) 6.Dubai (UAE) 7.Ningbo-Zhoushan (China) 8.Guangzhou Harbor (China) 9.Rotterdam (Netherlands) 10.Qingdao (China) 11.Hamburg (Germany) 12.Kaohsiung (Taiwan) 13.Antwerp (Belgium 14.Tianjin (China) 15.Port Kalang (Malaysia) 16.Los Angeles (USA) 17.Long Beach (USA) 18.Tanjung Pelepas (Malaysia) 19.Bremen-Bremerhaven (Germany) 20.New York-New Jersey (USA) 21.Laem Chabang (Thailand) 22.Xiamen (China) 23.Guangzhou Harbor (China) 24.Tanjung Priok (Indonesia) 25.Jawaharial Nehru (India) 26.Hanshin (Japan) 27.Tokyo (Japan) 28.Colombo (Sri Lanka) 29.Valencia (Spain) 30.Yokohama (Japan) 31.Gioia Tauro (Italy) 32.Ho Chi Minh (Vietnam) 33.Felixstowe (UK) 34.Algeciras bay (Spain) 35.Jeddah (Saudi Arabia) 36.Port Said (Egypt) 37.Salalah (Oman) 38.Lianyungung (China) 39.Manila (Phillipines) 40.Nagoya (Japan) 41.Santos (Brazil) 42.Durban (South Africa) 43.Georgia Ports (USA) 44.Barcelona (Spain) 45.Sharjah (United Arab Emirates) 46.Le Havre (France) 47.Port Metro Vancouver, British Columbia (Canada) 48.Melbourne (Australia) 49.Marsaxlokk (Malta) 50.Ambarli (Turkey) Source: The Journal of Commerce, August 3, 2009 edition.

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The Future of the Global Supply Chain World Logistics Flows

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The Future of the Global Supply Chain Clean Trucks Initiative

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The Future of the Global Supply Chain

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Hours of Service

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The Future of the Global Supply Chain CSA 2010

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The Future of the Global Supply Chain Diesel Prices

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The Future of the Global Supply Chain 2009 U.S. Petroleum Usage

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The Future of the Global Supply Chain

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Impact of Large Fuel Cost Increase on Logistics Infrastructure

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The Future of the Global Supply Chain Impact of Large Fuel Cost Increase on Logistics Infrastructure

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The Future of the Global Supply Chain 7 Facilities - $2.50 per Gallon

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The Future of the Global Supply Chain 10 Facilities - $3.50 per Gallon

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The Future of the Global Supply Chain 11 Facilities - $7.50 per Gallon

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The Future of the Global Supply Chain 12 Facilities - $7.75 per Gallon

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2002 Annual Average Daily Truck Traffic

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2035 Annual Average Daily Truck Traffic

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The Future of the Global Supply Chain Work Patterns

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The Future of the Global Supply Chain

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Systems Evolution

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The Future of the Global Supply Chain Logistics Analytics Prescriptive Analytics Prescriptive Analytics Predictive Analytics Predictive Analytics

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The Future of the Global Supply Chain Mobile Technologies

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The Future of the Global Supply Chain App Store?

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The Future of the Global Supply Chain The Network is the Computer

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The Future of the Global Supply Chain 19 th Century Electricity Generator

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The Future of the Global Supply Chain Computing as a Utility

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The Future of the Global Supply Chain 2/10 Rule 2 years of excited buzz 10 years before technology blossoms 2 Years 10 Years

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The Future of the Global Supply Chain Complexity & Consolidation

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The Future of the Global Supply Chain Business Life Cycles

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The Future of the Global Supply Chain Complexity & Consolidation Focal Firm