DELANEY, WILSON SAY 2002 LOGISTICS OUTLOOK IS ROBUST

DELANEY, WILSON SAY 2002 LOGISTICS OUTLOOK IS ROBUST    Increased outsourcing and lower costs have created a booming supply chain services market in which “buyers rule vendors,” according to an annual logistics study released Monday.
   In their 13th annual industry overview, presented at the National Press Club in Washington, D.C., Robert V. Delaney and Rosalyn A. Wilson said that lower inventory costs over the last year- and-a-half had spurred the robust logistics turnaround.
   In 2001, logistics costs declined to $970 million, or 9.2 percent of the nation’s nominal gross domestic product. At the same time, logistics expenditures managed by third-party providers rose 7.4 percent, to $60.8 billion.
   “We are learning that the management of finished goods inventory has become a marketing activity with strategic implications, and that is a significant change,” Delaney and Wilson said.'
   “Intuition would suggest that companies which maintain high levels of finished goods would be burdened by lower profit margins,” they said. Yet according to a new finding by Ohio State University’s Supply Chain Management Research Group, “the opposite turns out to be true,” Delaney and Wilson said.
   Some companies are holding “high levels of inventory because they can afford them. That may be counter-intuitive, but being counter-intuitive and being right is how money is made,” Delaney and Wilson said.
   Their state-of-logistics report also quoted logistics consultant Roger Urban as saying that the increase in finished goods “comes from the growing power of retailers and manufacturers over their suppliers.”
   Delaney and Wilson endorsed Urban’s conclusion that “this is a new concept: vendor-managed inventory is really vendor-owned inventory.”
   Delaney is vice president of Cass Information Systems. Wilson, now a private consultant, was previously with Booz Allen & Hamilton’s transportation group.
   Urban is the founder of Urban Wallace Associates, a business strategy-consulting firm.