If North American-based corporate asset managers do not upgrade their logistics operations now, says Eleuteri, they will soon be left behind by state-of-the-art facilities in China, India and elsewhere in the developing world.
“In Asia alone, the automated business-to-business trade of goods via the Internet will surpass US$500 billion a year by 2004,” Eleuteri says. “Digital trade and transportation networks have reached Asia.”
Modern logistics hubs in Dubai and Mumbai, India are taking business away from previously dominant Western hubs. “Dubai (United Arab Emirates) is the new logistics center of the Middle East,” Eleuteri notes. “And the Navi Mumbai Special Economic Zone in India represents the new frontier of logistics hubs. They are creating a 10,000-hectare [24,710-acre] project that will be the largest special economic zone in the world.”
Why are these countries modernizing their infrastructure? The answer is simple. As more manufacturing operations shift to Asia, they are creating demand for updated logistics hubs to expedite the supply chain and order-delivery process.
“The keys to effective transportation networks in the 21st century are physical connectivity and cyber-connectivity between all modes of transport – road, rail, sea and air,” says Eleuteri, who has worked with major corporations worldwide for more than 25 years. “What we in the West must realize is that we are either using the developing nations as logistics hubs or we are competing against them.”
Eleuteri advises corporate asset managers not just to look at labor costs when evaluating logistics sites in the developing world. “Labor is just a small component of your overall costs,” he contends. “The costs of going from raw materials through assembly and transport to the end user must be considered.”
To maximize efficiencies, facilities directors must implement “value-added logistics” at all of their distribution centers and look for opportunities to customize deliveries and fulfill made-to-order requests.
“The top goals for your supply-chain coordination should be reducing your manufacturing costs and reducing your order-to-delivery time,” he points out. “To effectively accomplish this, you must move toward the virtual marketplace for procurement and trading.”