Purdue News

November 14, 2006

Study: Better coordination would boost Indiana supply chains, economy

WEST LAFAYETTE, Ind. — A new study by Purdue University researchers shows that supply chains vital to Indiana's economy could be strengthened by reducing transportation costs, fostering better communication among corporations, and coordinating highway improvements and other infrastructure projects to best meet industry needs.

A brief article about the study will be published in the 2007 Indiana Logistics Directory, which will be released Tuesday (Nov. 14) during the fourth annual Indiana Logistics Summit at the Crowne Plaza Hotel & Conference Center in Indianapolis.

The conference, which is open to the public, is dedicated to transportation, distribution and logistics — or TDL — an industry critical for the movement of freight by air, rail, ships and trucks. About 250 experts from government, industry and academia are expected to attend.

The researchers developed a mathematical model that could be used to show how specific reductions in TDL-related costs could translate into improved competitiveness for Indiana industries. The Purdue report was funded by the Indiana Department of Transportation through Purdue's Joint Transportation Research Program in the university's School of Civil Engineering.

"We focused on the furniture industry in southern Indiana, but the same concept could be applied to other industries in the state," said Ananth Iyer, a professor of management in the Krannert School of Management who led the study with Svenja Sommer, an assistant professor of management, and research assistant Justina Mikals.

The study was motivated in part because state officials would like to be able to rank the value of proposed highway projects based on their potential economic impact. The researchers evaluated the supply chains for 10 furniture companies, information that is integral to selecting which projects to approve, Iyer said.

"Infrastructure improvements may take 10 or 15 years to come online, so the state would like to be able to say before even approving a project what its potential benefits would be in the future," Iyer said. "It's important to understand what industry is planning to do in the future to predict industry-related transportation demands 15 years from now."

The study represents the first time such a report had been prepared focusing on the supply chain for southern Indiana.

"One of our findings is that all of the players don't think in terms of a supply chain. The hardwood lumber people are unaware of the impact of the veneer people, who are unaware of their impact on costs to the furniture manufacturers and so on," said Iyer, the Susan Bulkeley Butler Chair in Operations Management. "Companies don't even know how much of the wood they use originated in Indiana, which is a very important supply chain consideration because shipping lumber costs a lot of money."

The logistics summit, presented by the Ports of Indiana, Purdue and the Central Indiana Corporate Partnership, brings together leaders from industry, academia, and the public policy and government arenas to discuss how to make Indiana's TDL businesses more competitive and what it will take to make the state a leader in logistics. The Logistics Directory was created by the Ports of Indiana and its partners to help promote Indiana's TDL and related resources to local, national and international markets.

Information about the summit and the directory is available online.

Writer: Emil Venere, (765) 494-4709, venere@purdue.edu

Source: Ananth Iyer, (765) 494-4514, aiyer@purdue.edu

Purdue News Service: (765) 494-2096; purduenews@purdue.edu


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