Going for seamless execution

The object of business is to make a profit.  Few organisations that lose money will be around long enough to serve or delight customers. From a logistic standpoint, this profit objective is best achieved by providing on-time, error-free and cost-effective services that meet the customer’s inbound and outbound requirements.

The Council of Logistics Management defines logistics as “that part of the supply chain process than plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements.” To make this happen, retailers, transportation, distribution, warehousing and order management organisations must execute together seamlessly.  It is estimated that companies are spending more than $730 billion annually on the logistics management process and that this figure can represent anywhere from 20 - 30 percent of the overall cost of doing business and as much as 30 percent of the cost of one shipment depending on the industry.

Changing View of Logistics

There are perhaps four (4) conditions that one can point to that are changing the way we are thinking about the logistics operation:
* The Internet B2B Economy.  A dramatic transformation in the use of the Internet for business transactions between retailers, suppliers and distributors.
* Reverse Logistics.  The management of returned products to distributors, manufacturers or retailers.
* Real-time Logistics Event Management.  The need for accurate and timely management of information in order to maintain on-time deliveries.
* Ensure that the right product is in the right place at the right time.
* Logistics Technology Solutions.  New logistics event management technologies provide real-time visibility into logistics operations; ensure a more accurate, efficient and effective flow of goods; reduce costs and increase customer satisfaction.
The conditions outlined above have significantly changed the role and expectations of the logistician.  Companies must radically adapt their logistics management strategy in order to compete in today’s tumultuous marketplace, marked with ever-decreasing turnaround times, increased competition and lower profit margins.
Getting Value from Logistics

Logistics Management has arrived at the forefront of boardroom talks.  Yet, while there is little question that Logistics Management has the potential to deliver significant savings, there is still considerable confusion over how to effectively define, achieve and measure the results: integrate Logistics into the overall strategy of the firm to reap potential benefits. The project methodology should include scheduled audits of actual results and reviews of the process and software configuration. This greatly increases the likelihood of catching any problems early in the “go-live” cycle and getting the results back on track. Regular audits should continue throughout the useful life of the program or technology. This will ensure that results do not deteriorate as business processes and customer requirements change over time.

Meeting objectives 

Outlined below  is a five (5)-step approach, which can be adopted to greatly increase the likelihood of achieving the results and value expected from Logistics Management deployment:

Step No. 1:
Clearly link supply chain strategies to corporate objectives.
Too many companies have not linked their supply chain strategies to overall corporate objectives through quantifiable metrics. That failure limits the strategies’ ability to contribute to corporate goal attainment or to be recognised for the important role of logistics in company success. To achieve this linkage, tie logistics strategies and initiatives to specific corporate objectives, and then define the operational metrics that need to be improved to achieve supply chain goals and support these high-level objectives. Document the goals and metrics for later measurement.

Step No. 2:
Quantify Logistics Value
Many companies have difficulty quantifying the value of potential logistics solutions due to lack of expertise in value analysis, time limitations and lack of outside reference points. Without sound value analysis, projects with high ROI often are not funded and areas of potentially strong savings are overlooked. Quantifiable logistics value can be found in traditional sources, such as operating cost reduction, lower working capital requirements and improved return on assets, as well as in emerging sources such as increased opportunities for top-line growth, enhanced operational flexibility and increased supply chain velocity. New approaches can quickly define this value within reasonable ranges to produce ROI analysis that supports budget approval for desired initiatives.

Step No. 3:
Clearly Define and Measure Expected Results.
Logistics score-carding and performance measurement are essential to continuous improvement and supply chain leadership. Once logistics value is quantified, specific operational results must be defined and appropriate measurement processes/technology put in place to ensure project goals are attained.

Step No. 4:
Maintain Results-Focused Technology Deployment.
Despite best efforts to quantify value and define expected results, companies often fail to achieve measurable results because those charged with technology deployment are not aware of or do not have the incentive to maintain this focus on results. It is critical that implementation teams-both internal and from vendors and consultants-begin their work with a clear grounding in the expected results that have been defined as the basis for the project. The results expectations must be kept front and center during the implementation and should be the filter through which all-important decisions must pass. Management must ensure that the focus on results is maintained even when project schedules tighten and operational pressures rise. Companies will greatly improve their chances of delivering the value initially promised when they demand a laser-like focus by all parties on expected operational results throughout the implementation cycle.

Step No. 5:
Continuously Audit Results.
It is essential that companies measure the results being achieved from logistics improvement projects at regular intervals and perform root cause analyses if expected results are not being achieved. While the need for this type of approach to a major technology implementation seems obvious, few companies do a rigorous job of measuring the actual results of projects and taking appropriate corrective action if results are not meeting expectations.

Conclusion

While our firms globalise and restructure, the demand for time-sensitive deliveries has risen.  Companies and exporters are less sensitive to the cost side of distribution than to the time side.  Our customers are becoming more service conscious. The overall trend is for us to do more with less.  We have to be ingenious; always on a continuous improvement track.  By understanding both the long-term goals of the company and integrating Logistics Management into the overall fabric of the company’s strategy, companies can position themselves to remain relevant to their customers and ensure their sustainability and competitive advantage.