Oil. It's the driving force behind the the globalised economy - countries have gone to war for it and without it, almost all industries grind to a frictioned halt. But at over $150 a barrel, no other organisations are quite as anxious about the rise in fuel prices as those in the road transportation industry.

"Continued rising prices of fuel are forcing transportation / logistics companies to either find their own solutions or find ways to pass the costs up/down the supply chain" says Gary Holderby, President of MobileData and Chairman of the forthcoming Logistics & Fleet Management Systems USA Conference & Exhibition (October 23-24th 2008, Atlanta G.A)

Cost optimisation is not a new goal - but it has never been as critical as it is right now. Most companies operating in the supply chain 'pseudo-industry' have been looking at how to reduce costs as a trade-off to fuel costs, for example reduced weight, packaging optimisation, reducing shipments. But this is happening at a time when all industries that involve transportation in their supply chain demand reduced order lead times and smaller but more frequent shipments.

But to what extent do cost optimization initiatives in the supply chain cancel out the growing consumption of increasingly expensive fuel. What's more, is the price of fuel now the main driver of supply chain strategy?

Simon Ellis from Manufacturing Insights seems to think so, outlining 5 possible implications of the rise in fuel costs to industry:

1. A return to less expensive transportation modes, like intermodal, that were largely abandoned for customer shipments due to extended and unreliable lead-time performance.
2. Extended customer delivery windows to allow higher levels of order consolidation and truckload shipments.
3. A re-evaluation of customer and order prioritisation to more significantly incorporate shipping cost.
4. A reinvigoration of the ES3 shared-manufacturer warehouse model.
5. Further pressure on SKU proliferation, particularly packs performing on the margin.

How technology is bearing the rise in fuel costs is one of the key topic at the 7th Annual Logistics & Fleet Management Systems Conference & Exhibition - download the brochure for more details on getting involved.

(More details on how fuel costs are impacting supply chain strategy here)