Dive Brief:
- Five universities and the Council of Supply Chain Management Professionals are developing the Logistics Manager's Index (LMI), which would measure national warehouse capacity, utilization and prices; inventory levels and costs; transportation capacity and utilization; and pricing trends.
- The new index proposes logistics managers may be best suited for predicting the state of the economy, according to a recent report in CSCMP's Supply Chain Quarterly. CSCMP notes the Great Recession in 2008 was preceded by a shrinkage in transportation and logistics in 2007.
- Like the Institute for Supply Management's Purchasing Managers Index (PMI), the LMI would survey various logistics professionals on a monthly basis to compile the index. The index's coordinators are still looking for logistics managers to participate in the project.
Dive Insight:
Are logistics measures a better indicator of the health of the economy than manufacturing?
CSCMP seems to think so. After all, logistics involves storing and transporting, which it need not do when either manufacturers stop producing or consumers stop purchasing. A lag in the chain or decreased utilization is an indication of a drop somewhere along the line, which can allow us to examine the causes behind diminished demand.
However, the fractured nature of the logistics industry could mislead the index. A drop in trucking rates may not be as indicative of a shift in the economy than a preference for one mode over the other (think air or rail, for example). Month-by-month analysis of shifts would clarify the reasons for the shifts over time, however, backed by the unstructured data based on comments from surveyed professionals.
When compared with other major indices, like the Cass Freight Transportation Index and the PMI, the LMI promises to add a pivotal piece of insight to the statistical puzzle of the national economy, by way of the supply chains that run it.
