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Shippers' interests take centerstage in SCMAP Perspective, written by Ed Sanchez, executive director of the Supply Chain Management Association of the Philippines. SCMAP is the association of logistics and distribution managers in the Philippines.

You are now viewing: SCMAP Perspective Archive : 2004 Q2

*Thoughts on Forecasting(June 28, 2004)

*Distribution Trends Predictions (June 14, 2004)

*Inventory and Cold Chain Inventory Holding Costs (May 31, 2004)

*New NLEX Toll Rates (May 31, 2004)

*Land Transport Headaches Highway Robbery Everywhere (May 17, 2004)

*Monopoly? (May 5, 2004)

*Monopolies (April 19, 2004)

*Update on Rate Cases (April 5, 2004)

Thoughts on Forecasting (June 28, 2004)

THE subject of forecasting is a very old subject. It is an essential part of the logistics function.
Over the years,despite huge improvements in computing capability, forecasting, particularly logistics
forecasting, remains a difficult task. The opposite problems of overstocking and shortages continue to
co-exist in many companies.

Looking over the last three to four decades, from my days at Anheuser-Busch, through Unilever,
and SMC, here are some thoughts on the subject.

1. The reason still nobody gets it right is, to be sure, logistics forecasting is very difficult. Logistics forecasting has to be per SKU per location. Although many companies still forecast per month, companies should forecast per week for logistics purposes, and in line with the quest for lower inventories.

2. Many things have not changed. Managements of many companies still tolerate multiple forecasts of demand within the company. The typical justification for this stance is that the forecasts are for different purposes, for example, for sales, for capex, for materials ordering, for manpower planning, or as commitment to the parent company. While small differences might be tolerable for certain purposes, different forecasts within the company is the best assurance towards incongruous plans, overstocking and shortages. Different departments 'hedge' or make allowances for other departments because of their varying degrees of optimism.

3. Marketing managers, remain true to form as the most optimistic people in the company. Since they are typically higher paid than their counterparts in operations planning, production and purchasing, their views tend to dominate the forecast.

4. Sales people continue to load the last week of the month or the last days of the week. Naturally this upsets logistics activities.

5. When the annual target is not being met, companies still load the year end, at the expense of the succeeding year. Or when business is good and the annual target has comfortably been exceeded, volume for this year is 'deferred' to the next year. These activities disturb logistics activities.

6. There have not been any significant changes in the major forecasting techniques to choose from. The following basic techniques were already in existence in the 1960s.

• Moving average
• Exponential smoothing
• Time series
• Regression
• Multivariate analysis

However, the availability of software packages has improved considerably, ranging from PC-based tools to ERP components.

7. Some companies have not really defined what it is they are trying to forecast. Typically companies try to forecast 'Sales'. While there seems to be nothing wrong with defining Sales to be the quantity being forecast, this could lead to problems.

8. Sales is usually defined as the quantity of products delivered to customers. If deliveries are hampered by restrictions such as production capacity, materials available, or manpower, historical data will be understated. If historical data will be used as the basis of forecasts, then the forecast will tend to be understated. This was the case with Superwheel detergent bar in the late 1970s to early 1980s. Production capacity could not catch up with the demand, so that the reported sales always understated the demand.

9. The quantity to be forecast should be Demand. To generate historical data reflecting Demand, a forecasting system must capture customer orders. This was the solution adopted for the Superwheel problem. Of course, for the near horizon, when machine capacity and materials availability restrict the deliveries, Demand should be modified to mean 'Realizable Demand' for logistics purposes.

10. Why do problems of overstocking and shortages co-exist in the same company?

• Different brands or products are under different circumstances; therefore co-existence of both problems can easily happen.
• For different pack sizes of the same brand or product, since any pack can be overstocked, then, if one gets the brand or product total right, it is but logical that the other pack or packs will be short.

11. One thing has changed, or has begun to change. It is now becoming acceptable for business partners to share information. For example, manufacturers and customers may now share demand information, and thereby improve logistics forecasts. Nowadays we hear of CPFR (Collaborative Planning, Forecasting and Replenishment).

Transport Disappointments

DMAP has been disappointed with its exclusion from activities of the PCCI Transportation Committee, now dominated by service providers. DMAP's letter to PCCI President Noemi Saludo asking for feedback on what is happening has remained unanswered. With the year halfway gone, DMAP wonders what is being cooked in the transportation industry.

The only word from anybody connected with the PCCI Transport Committee was an invitation to a one-on-one meeting with Land Transport Sub-committee Chair Col. Rudy de Ocampo. The only agenda of said meeting with DMAP's John Guillermo was a query to DMAP - what are your concerns? Another disappointment was that soon after that meeting, CTAP announced a 20% increase in its rates. Col. De Ocampo, President of CTAP, did not even mention the increase to John Guillermo.

Basic Warehousing Seminar, July 15-16

DMAP's Basic Warehousing Seminar, scheduled at the Astoria Plaza, is conducted for DMAP by SSSR Consultants. Topics include: Intro to logistics and warehousing, warehousing procedures, layout, performance measures, materials handling concepts, intro to bar coding, and a warehouse visit and critique. A 10% discount is given for early bird payments (by June 30). Discounted fees are P6,840 for DMAP member companies and P8,550 for non-DMAP. Regular fees are P7,600 for DMAP and P9,500 for non-DMAP.

Logistics Conference & Exhibit, Sept. 16-17

DMAP will soon release its invitation to participants to its Annual Logistics Conference and Exhibit, which is scheduled at the EDSA Shangri-La Hotel. The fee is P8,230 for DMAP members and P10,300 for non-DMAP.

Meanwhile it is still inviting sponsors and souvenir program advertisers. This year's conference theme is "Supply Chain Innovation : Driving Business Growth and Profitability".

Sponsors are invited at different categories, regular sponsors (P30,000), principal sponsors (P60,000), break sponsors (P50,000), luncheon sponsors (P100,000) and a cocktails sponsor (P150,000). Break, luncheon and cocktails sponsors have the opportunity to make a presentation in addition to their exhibit, souvenir program advertisement and free participants. Advertisers in the souvenir program are also solicited. Advertising rates range from P6,600 whole page to P1,650 one-fourth page.

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph. Those interested in DMAP training and other activities are requested to send their e-mail addresses.

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Distribution Trends Predictions (June 14, 2004)

Several years ago, from 1996 to 1998, I did presentations on distribution trends at the Shipping Immersion Course and also at Johnson & Johnson. My presentations included some predictions about the local logistics scenario.

Now, six to eight years later, I have evaluated how my predictions fared. Yes means I was right, No means I was wrong.

Overall, there are enough Yeses to say 'Not bad'. But there are also several Nos.
The Nos that stand out are:

More realistic shipping rates towards 2003
Improvement in shipping & trucking services
Supply chain alliances
Decline of the DSA cartel
Customer delight as a direction
Some reversal of the trend to fewer depots
Operations: nighttime, high utilization, paperless

The first four above are affected by the situation in domestic shipping, particularly the unfinished cases and the bad relations between liners and their supposed customers. Any improvement in shipping has been achieved in the passenger sector only.

Collaboration is still mentioned in logistics circles, but remains mostly talk. Customer delight now seems to be a forgotten slogan.

Depot rationalization continues as more and more companies are realizing the high cost of warehousing and inventories. Especially if companies realize that there are other components of the total cost of holding inventory, as we outlined in our last column.

Nighttime operations in Metro Manila are deterred by the threat of hijacks and robberies. With the economy not doing well, high facilities utilization remains a goal.

Address any questions to Mr. Anthony Dizon, CCAP President, tel 641-5690, fax 643-8112, email ccap@theagalliance.com

Basic Warehousing Seminar
DMAP's Basic Warehousing Seminar will be held on July 15-16, 2004 at the Astoria Plaza. The seminar is conducted for DMAP by SSSR Consultants. Topics include: Intro to logistics and warehousing, warehousing procedures, layout, performance measures, materials handling concepts, intro to bar coding, and a warehouse visit and critique.

Call for Conference Sponsors
DMAP is still inviting sponsors and souvenir program advertisers to its Annual Logistics Conference and Exhibit, which is scheduled for Sept. 16-17 at the EDSA Shangri-La Hotel. This year's conference theme is "Supply Chain Innovation: Driving Business Growth and Profitability" Sponsors are invited at different categories, regular sponsors (P30,000), principal sponsors (P60,000), break sponsors (P50,000), luncheon sponsors (P100,000) and a cocktails sponsor (P150,000). Break, luncheon and cocktails sponsors have the opportunity to make a presentation in addition to their exhibit, souvenir program advertisement and free participants. Advertisers in the souvenir program are also solicited. Advertising rates range from P6,600 for a whole page to P1,650 for a one-fourth page.

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph. Those interested in DMAP training and other activities are requested to send their e-mail addresses.

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Inventory and Cold Chain Inventory Holding Costs (May 31, 2004)

In the US, it is generally accepted that inventory holding cost is a part of logistics cost or distribution cost.

Here in the Philippines, terminology has not yet been standardized. Moreover the composition of the total cost of holding inventory has not been examined closely.

Commonly, the cost of holding inventory is thought to be the cost of capital tied up in inventory, or the interest on money tied up in inventory. Dr. Stephen Timme, President of Finlistics Solutions and Professor at the Georgia Institute of Technology, recommends to use the company's weighted average cost of capital (WACC).

Like an interest rate, it is treated as a % of the inventory value. Dr. Timme says that a figure of 9% after tax is applicable to the average company in the US. However, this inventory capital charge is just part of the total cost of holding inventory. In addition to the inventory capital charge, there are non-capital carrying costs.

These consist of warehousing + obsolescence + pilferage + damage + insurance + taxes + administration and others. There are no reliable figures available on non-capital carrying costs, but Dr. Timme states that "our experience is that for decision-making purposes, a percentage in the range of 10% is often applied.

This percentage tends to vary by industry with a key driver being the risk of obsolescence". However the 10% figure is before tax and should not be added to the 9% WACC.

The 9% after tax WACC translates to a 15% before tax. Thus the total cost of holding inventory is 10% + 15% = 25% on a before tax basis.

We also note that in the Davis annual logistics survey, the inventory cost is calculated by multiplying the inventory value by a constant 18%. However there is a separate figure for warehousing.

The purpose of making estimates of inventory holding cost more accurate is so that the benefits of inventory reduction initiatives can be more correctly valued, leading to more optimal decisions. Cold Chain Seminar The Cold Chain Association of the Philippines will hold its second annual general membership meeting and training seminar at the new World Renaissance Hotel on June 16.

The following speakers are lined up for the event:

* Hon. Luis Lorenzo, DA Secretary, "Joint Initiative of Government & Private Sector in Cold Chain Development"

* Dan Williams, Australian Trade Commissioner, "Current State of Australian Cold Chain: Issues Face & Emerging Trends"

* Dr. Efren Nuestro, NMIC Executive Director, "Cold Chain Approach for Proper Marketing, Distribution & Preservation of Meat & Meat Products"

* Kent Valderrama, Jollibee Logistics Director, "Basic Food Handling Practices for Refrigerated Warehouses: A Food Service Industry Approach"

* Francisco Buencamino, PAMP Executive Director, "Development Thrust of Meat Processing Industry & the Need for Adequate and Responsive Support Services"

* Louie Beltran, Ayala Risk Consultant, "Contractual Liability Issues in Cold Chain Distribution"

Fees are P3,000 for CCAP members and P3,500 for non-members.

Address any questions to Mr. Anthony Dizon, CCAP President, tel 641-5690, fax 643-8112, email ccap@theagalliance.com

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New NLEX Toll Rates (May 31, 2004)

The PNCC announced a temporary postponement of the new toll rates at the NLEX in view of the ongoing review by the Toll Regulatory Board.

No announcement was made as to how long the deferment will be. The increase earlier announced was 19 centavos per kilometer.

___________________________________________________________________________________________

Call for Conference Sponsors - DMAP is still inviting sponsors and souvenir program advertisers to its Annual Logistics Conference and Exhibit, which is scheduled for Sept. 16-17 at the EDSA Shangri-La Hotel.

This year's conference theme is "Supply Chain Innovation: Driving Business Growth and Profitability".

Sponsors are invited at different categories:

Break, luncheon and cocktails sponsors have the opportunity to make a presentation in addition to their exhibit, souvenir program advertisement and free participants. Advertisers in the souvenir program are also solicited.

Advertising rates range from P6,600 whole page to P1,650 one fourth page.

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph.

Those interested in DMAP training and other activities are requested to send their e-mail addresses.

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Land Transport Headaches Highway Robbery Everywhere (May 17, 2004)

One of the side effects of a growing economy is that more product than ever before is being shipped to warehouses, stores and consumers by truck.

As a result, criminals have now found that there is a fortune to be made by stealing these "warehouses on wheels." Once the exclusive domain of the established organized crime families, dozens of new cargo theft rings have sprung up across the country in recent times.

Due to budget limitations and a redeployment of personnel to homeland security issues, task forces are constantly playing catch-up. When they do successfully apprehend the culprits, lenient criminal penalties oftentimes allow the perpetrators to be back on the street in a few months.

With the large number of trucks on the road, the lax security controls utilized by many firms, the low probability of being caught, as well as the high resale value of the goods, cargo theft has become a multi-billion industry. This has created a major security headache for transportation and distribution companies throughout the country.

Among the most sought-after products being targeted are electronics, cosmetics, computers, fragrances, designer clothing, home entertainment equipment, tobacco products, jewelry, pharmaceuticals, wine, liquor and food." The above four paragraphs might sound familiar to you, and you might ask "So, what's new?"

But it might surprise you that the paragraphs are not about the Philippines, but the United States. I have copied, almost word for word, the first four paragraphs of an article entitled "Cargo Theft: A Growing Epidemic" by Barry Brandman, published in the CLM Logistics Comment, March-April 2004.

This is a publication of the Council of Logistics Management. I only made four deletions/additions so that it would not be obviously about the USA.

The local picture looks the same, except that it is on a smaller scale. The target products are similar, high value easy-to-dispose products.

Companies like Nestle and Procter & Gamble are always at risk. Per CTAP head Col. Rudy de Ocampo, the multi-sectoral MOA (PNP, DTI, BOI, PEZA, PADPAO, Japanese Chamber, CTAP, etc.) signed last year, continues to be in effect.

Data gathered prior to the MOA mentioned the following figures on incidents of hijacking.

So far there has been no report on the incidence in 2003 and if the MOA has had any effect. At the North Harbor, INHTA President Teddy Gervacio said that hijacks average one a month.

Pilferage continues using the same 'technology' of boring the rivet and replacing it after the pilferage. Pilferage on exports has been reduced somewhat.

New NLEX Toll Rates - adding to trucking 'headaches' are the new rates for the North Luzon Expressway, scheduled to be in effect on May 15.

The new rates are said to represent an increase of 64%.

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Call for Conference Sponsors - DMAP is inviting sponsors and souvenir program advertisers to its Annual Logistics Conference and Exhibit, which is scheduled for Sept. 16-17. The theme for this year's Logistics Conference is "Supply Chain Innovation : Driving Business Growth and Profitability".

Sponsors are invited at different categories:

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph.

Those interested in DMAP training and other activities are requested to send their e-mail addresses.

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Monopoly? (May 5, 2004)

As an observer on the domestic logistics industry, I cannot help but surmise that some recent events are all interconnected in some way.

They also seem to tie up with our topic on monopolies in our last column.

* The financial problems of Negros Navigation and the suspension of its sailings.

* The Tsuneishi and Negros Navigation row and the newspaper announcements.

* The Aboitiz announcement of its new corporate name.

* The recent invitation by Aboitiz to the Marina Board.

* Aboitiz negotiations with the San Miguel Group.

* DMAP invitations to PCCI Transport meetings.

* The DMAP cases.

The first three items above were the subject of news items and paid advertisements in the newspapers. Negros Navigation's problems are, of course, not new.

Last week they were stopped by the Marina pending an investigation of its finances. From the industry we hear that they have now been allowed to resume.

The problem with Tsuneishi, a ship builder and repairer to whom Negros Navigation had owed P130 million, fuelled speculation that Aboitiz was out to bring down Negros. An article was published in the Manila Times in March entitled "Nenaco hits seizure of ship by rival Aboitiz".

Aboitiz Transport System Corp. (ATSC) tried to clarify in a paid advertisement just over a week ago that it does not own and has never owned Tsuneishi Heavy Industries. Aboitiz & Co., not Aboitiz Transport System Corp., owns 20% of Tsuneishi.

The ATSC advertisement also stated that no one operator has more than 20% of the entire market. ATSC has defined the market to be the local transport market, consisting of air, sea and land.

In our column last month, we mentioned the work of Dr. Austria of De La Salle University that talked about the domestic shipping market, and even broke the analysis to routes. We repeat some of the things we said last time.

Dr. Austria identified the five largest operators in passenger service as WG&A, Negros Navigation, Sulpicio Lines, Philippine Fast Ferry and Cebu Ferries Corp. These five players dominate the primary and secondary routes in the country.

There were 98 routes in 1998. She further stated, "Only mild competition exists in routes common to the top five players".

Most of the routes originating from Manila or Cebu have only one operator or only mild competition. Our speaker at the Basic Shipping Course stated that for cargo services, the five largest operators together carried 91% of the total revenue.

The five major players in the cargo service are WG&A, Sulpicio Lines, Lorenzo Shipping, Solid Shipping and Negros Navigation. There are only three routes where the top five companies operate together.

While two thirds of the primary and secondary routes had at least two operators, 76% of tertiary routes are monopolized.

The formation of ATSC and the announcement of Aboitiz Logistics, Inc. just over a month ago underscore the formal removal of William and Gothong from the WG&A group. The so-called invitation by Aboitiz to the Marina Board was published in the column Postscript of Federico Pascual, Jr. in the Philippine Star last week.

Mr. Pascual wrote, "The Aboitizes then invited the Marina Board to hold its meeting in the luxury of one of its best SuperFerries to discuss the fire incident and other problems. And the Marine board secretary proceeded to coordinate preparation for the seaborne meeting.

Imagine Marina officials getting the VIP treatment on board an Aboitiz SuperFerry and consorting with persons who could be the subject of its investigation and regulatory actions. "Where has delicadeza gone?"

The Aboitiz negotiations with the San Miguel Group are from industry sources. It seems that the San Miguel Group, including Ginebra San Miguel and Pure Foods-Hormel, will have a tie up with a selected sea transport partner.

The name of the partner would not be difficult to guess. It is said that two smaller shipping lines will be tapped as backup provider. San Miguel has also announced the opening of its Manila Harbor Distribution Center.

We still have to find out details of this. The item about DMAP invitations to PCCI Transport Committee meetings should really be called Non-Invitation.

To date DMAP has not received any such invitation. We hear that DMAP is not included in the 15-man Transport body, which has met once in March and is scheduled to meet this week.

DMAP has also not received any invitation from the Sub-Committees. This at a time when only one third of the year has passed.

The DMAP cases are ongoing. They have involved 5 shipping lines, namely WG&A, Sulpicio, Lorenzo, Negros and Solid. Lately, Negros and Solid have been excluded in the legal papers being submitted by the respondents.

Last time we said that the shipping lines had filed their Opposition with Motion to Strike Out Notice of Appeal.

Since then, three actions have been taken. DMAP has filed a reply, the shipping lines have filed a rejoinder, and DMAP has filed a sur-rejoinder.

That is all legal talk and we will just await the results of all this. What DMAP cannot understand is why the shipping lines appear bent on denying legal remedies to DMAP.

In a case where the rate of return is estimated to reach an indecent 53%. Why are the shipping lines using one lawyer and identical arguments, whereas their financial performances are different (ROIs very different from each other) and where they applied individually for rate increases?

So, is there some kind of picture emerging from all the above? Yes, and that picture is the picture of a monopoly rising in the distance.

What distance?

___________________________________________________________________________________________

Conference Theme and Call for Sponsor - DMAP is inviting sponsors and souvenir program advertisers to its Annual Logistics Conference and Exhibit, which is scheduled for Sept. 16-17.

The theme for this year's Logistics Conference is "Supply Chain Innovation: Driving Business Growth and Profitability".

Sponsors are invited at different categories:

Advertisers in the souvenir program are also solicited.

___________________________________________________________________________________________

Shipping Immersion Course - Meanwhile this year's Shipping Immersion Course has been cancelled, due to delays and a very tight schedule.

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email dmap@i-manila.com.ph.

Those interested in DMAP training and other activities are requested to send their e-mail addresses.

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Monopolies (April 19, 2004)

THE last two months represent a curious period as far as I am concerned.

In the last two months, I have come across two unrelated items in the Inquirer dealing with monopoly in domestic shipping. And also in our Basic Shipping Course last month, one of the speakers touched on this very topic, among other topics, which I did not expect him to do.

As if these coincidences, or near coincidences, were not enough, the MARINA resolution of the different DMAP cases came out in the same period. In his "No Free Lunch" column in the Inquirer in late March, entitled "Monopolies and the economy", former NEDA head Cielito Habito discussed monopolies and cartels on a general basis, mentioning domestic shipping as one of the key sectors of the economy where they exist.

He did mention the dramatic improvement in the quality and availability of passenger shipping services, but he was silent on freight services. He also mentioned the failed attempt of Erap to mandate a monopoly in port handling services throughout the country, via the infamous EO59.

A February news item in the Inquirer bore the title "Study says 5 firms control RP shipping". The study referred to is a study by Dr. Myrna Austria, director of the Center for Business and Economic Research and Development of De La Salle University.

Dr. Austria said that 72.94% of the market is being serviced by the top three firms, and that only five firms account for 91% of the total passenger service market. While this refers to passenger service, it is our understanding that the figure for freight service is 90%.

Dr. Austria identified the five largest operators in passenger service as WG&A, Negros Navigation, Sulpicio Lines, Philippine Fast Ferry and Cebu Ferries Corp. These five players dominate the primary and secondary routes in the country.

There were 98 routes in 1998. She further stated "Only mild competition exists in routes common to the top five players". Most of the routes originating from Manila or Cebu have only one operator or only mild competition.

Our speaker at the Basic Shipping Course may have been quoting from the above mentioned study. In his discussion on Market Structure, he said "The domestic shipping industry is highly concentrated.

The five largest operators accounted for as much as 90% of the total passengers. Out of the 37 operators plying the primary and secondary routes, less than 5 are effectively competing".

He stated that for cargo services, the five largest operators together carried 91% of the total revenue. The five major players in the cargo service are WG&A, Sulpicio Lines, Lorenzo Shipping, Solid Shipping and Negros Navigation.

There are only three routes where the top five companies operate together. While two thirds of the primary and secondary routes had at least two operators, 76% of tertiary routes are monopolized.

So, what's wrong with monopolies? Dr. Habito said "The problem with monopolies, from consumers' point of view, is that we end up with higher prices and more restricted supplies of the product than would prevail under a competitive market."

What should be done? Dr. Habito wrote "It should be government policy to promote greater competition in the productive sectors of the economy.

The United States and Europe have strong legal frameworks that prohibit monopoly and unfair trade practices that would lead to monopoly powers. A similar legal framework has been long overdue in the Philippines."

Our seminar speaker ended his paper with "The result is a lesser number of companies or sellers in the market. This will lead back to an oligopolistic structure of the market with its tendency for collusion/cartelization, and subsequently, monopolistic pricing.

Anti-trust policy is needed to control this tendency."

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MARINA Resolution - The MARINA resolution appears to support, or at least tolerate,
the monopolistic temper of the shipping lines, where the resolution consolidated the various
cases of the different shipping lines into one case.

Even if we grant that issues may be the same, the facts clearly are not.

The use by the shipping lines of one lawyer and identical arguments, whereas their financial
performances are different (ROIs very different from each other) and where they applied
individually for rate increases, raises questions in the DMAP customers' minds.

As we mentioned in the previous issue, DMAP has continued its path along the legal process
when it filed a Notice of Appeal with the DOTC.

Immediately the shipping lines filed its Opposition with Motion to Strike Out Notice of Appeal.

Forum : Measuring Logistics Performance, Last Call - Only a few spots are left. Last chance
for logistics practitioners and managers to attend this half-day forum on what are the local practices:

* What performance measures are important, overall measures, warehousing, transport, inventory management, customer service, etc.

* How do you measure service providers?

* What do top Philippine companies do?

Our panel of well-experienced practitioners and consultants from the logistics industry
will discuss logistics measures at the companies they have worked in or are still working in.
They are:

* Ike Castillo, from James Hardie (formerly from Zuellig Pharma, Nestle)

* Cora Curay, from XVC Logistics (formerly from Coca-Cola Bottlers)

* Eric Perdigon, consultant (formerly from LíOreal, Coca Cola Export, Colgate)

* Malou Santos, consultant for J&J Asia and Pacific.

Fees are P2,000 for each participant from a DMAP member company, P2,500 for non-DMAP.

___________________________________________________________________________________________

Conference Theme and Call for Sponsors - DMAP announced its theme for this year's
Logistics Conference and Exhibit, namely "Supply Chain Innovation:
Driving Business Growth and Profitability".

DMAP has also released its invitation for sponsors and souvenir program advertisers.

Advertisers in the souvenir program are also solicited.

___________________________________________________________________________________________

Shipping Immersion Course - Meanwhile the Shipping Immersion Course, scheduled for
May 14-17, has been postponed. The new dates will be announced later in this column,
and sent to all those on our email list.

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689,
or email dmap@i-manila.com.ph.

Those interested in DMAP training and other activities are requested to send their e-mail addresses.

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Update on Rate Cases (April 5, 2004)

MARINA Resolution - Although it might be considered by some to be a foregone conclusion,
DMAP still seemed caught by surprise by MARINA's Resolution concerning the
WGA rate increase case.

The end portion of the resolution read: "Be that as it may, in the computation of the
Return on Investment (ROI) of WG&A for the year 2002 (based on the submitted Annual Report), it
is indicated that the result is within the allowable 12% ROI.

"Since the resulting ROIs did not exceed the 12% allowable ROI, the implementation
of the subject GRIs/AFRA cannot be considered an operative violation of the Public Service Act
and the controlling jurisprudence on the matter.

This Authority was not thereby given, and does not find any cogent reason to use its power
to intervene pursuant to Section IX of MC 153. "WHEREFORE, the foregoing premises considered, Complainant's Motion for Reconsideration is hereby ordered DENIED.

The Resolution dated 28 November 2003 (dismissing Complainant's Complaint with Preliminary
Injunction and Urgent Prayer for Issuance of Temporary Restraining Order)
is hereby ordered AFFIRMED."

What DMAP officials cannot understand are:

1. Why it is considered that there is no violation of the 12% maximum allowable rate, when the
6% GRI of November 2002, the AFRA of March 2003 and the 7.5% GRI of October 2003 are
definitely NOT in the calculated ROI for 2002.

2. Why the various cases on the different rate increases and the different shipping lines have been consolidated into one, when shipping lines applied individually to raise rates, and their
financial performances and ROIs are different.

At any rate DMAP has continued its path along the legal process by filing a Notice of Appeal
with the DOTC.

Forum: Measuring Logistics Performance, April 23 - Logistics practitioners and managers are
invited to attend this half day forum to hear what are the local practices on:

* What performance measures are important, overall measures, warehousing, transport, inventory management, customer service, etc.

* How do you measure service providers?

* What do top Philippine companies do?

A panel of well-experienced practitioners and consultants from the logistics industry will discuss
logistics measures at the companies they have worked in or are still working in. The speakers are:

* Ike Castillo, from James Hardie (formerly from Zuellig Pharma, Nestle)

* Cora Curay, from XVC Logistics (formerly from Coca-Cola Bottlers)

* Eric Perdigon, consultant (formerly from L'Oreal, Coca Cola Export, Colgate)

* Tentatively, Lorie Cinco, from Pure Foods-Hormel

Fees are P2,000 for each participant from a DMAP member company, P2,500 for non-DMAP. A
10% discount will be given if paid on or before April 15.

Upcoming Activities

* Shipping Immersion Course, May 14-17. This is a seminar on shipping issues on board a vessel.
This annual training activity reaches different destinations every year. This year it will be a
Sulpicio Lines vessel on its Manila-Cebu-Manila route. Speakers are expected to come from Marina,
PPA, PSB, shipping lines, the academe, and cargo owners.

* Basic Warehousing Seminar, July 15-16. This discusses principles and basic practices, including
bar coding; it also includes a warehouse visit

* Annual Logistics Conference and Exhibit Sept. 16-17.

DMAP will soon release the theme for the 2004 Logistics Conference and Exhibit. As usual speakers
will be from both local and foreign organizations.

Sponsors are invited at different categories:

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689,
or email dmap@i-manila.com.ph.

Those interested in DMAP training and other activities are requested to send their e-mail addresses.