Like many a father, Dale Rogers had a well-worn topic that he regularly expounded upon at the family dinner table. But his complaint had nothing to do with politics, gas prices, or the local sports team. Instead, the Arizona State University professor’s rant went something like this: Gross domestic product is not a very good predictor of where the economy is headed. It only tells us what happened in the past. What we need is an early warning system—something that will tell us what’s likely to happen in the near future.
Logistics managers, he would tell his family, have a bird’s eye view of what’s actually happening in the industrial economy because every single product has been on a truck or a plane or a ship at some point, or has been in a warehouse or in inventory somewhere. If you could tap into that knowledge, you could have a bead on where the overall economy is heading.
Turns out his oldest son, Zac, was listening. When Zac graduated from Arizona State University with a Ph.D. in supply chain management, he said to Dale, “Dad, you know that thing you’ve been talking about my whole life? I’ll do that with you.”
With the help of colleagues at Rutgers University, the University of Nevada-Reno, and Florida Atlantic University, Zac (now at Colorado State University) and Dale launched the Logistics Managers Index (LMI) in 2016 to see if Dale was right.
According to Dale, the answer is yes. The index has proved to be “incredibly accurate” except for one month in 2020. “Even logistics managers didn’t see Covid coming,” he quips.
Today, the monthly index reports are scrutinized by economists and analysts and used in industry research like the Council of Supply Chain Management Professionals’ “Annual State of Logistics Report.” Many companies use the reports in their strategic planning as well.
Rogers says the LMI has provided unexpected insights. For example, last year, the data revealed that inventory was being managed very differently upstream in the supply chain than it was downstream. Basically, inventory upstream was growing, while downstream, it was contracting—possibly because retailers were reverting to just-in-time strategies.
WE NEED YOU
The value of this logistics soothsaying, however, depends on people like you: logistics and supply chain executives, directors, and managers who have direct knowledge of their companies’ transportation, warehousing, and inventory management activities.
According to Dale, researchers need to get at least 100 good responses to the monthly survey for the index to be truly indicative of what is happening. And that can be challenging in this day and age of survey fatigue.
To be sure, it’s hard to muster much enthusiasm for filling out yet another survey—especially at a time when you can barely pick up a pack of gum without being badgered to rate your in-store experience. But in this case, you know that someone is truly listening and values your insights.
Furthermore, the lift for respondents is not too onerous. The LMI tracks eight metrics, including inventory levels, warehousing capacity, and transportation prices. Respondents simply have to indicate whether these levels, prices, and so forth are currently declining, increasing, or have remained unchanged—basically, to give a thumbs up, down, or something in the middle. Participants are then asked to project whether these numbers will rise, fall, or stay the same in the next 12 months.
By taking five minutes a month, respondents can help the team provide this valuable service to the industry (and save Dale’s family from having to hear the same complaint every night). It’s rare that such a small effort can have such a significant result.
Interested in adding your voice? Check out the Logistics Managers Index website at https://www.the-lmi.com/. No need to bring your crystal ball, tarot cards, or Excel spreadsheets; you just need your thumb.
