For any company that is in the business of providing a variety of products and services to costumers, it is of crucial importance to the health of that business to implement a logistics strategy that will help keep service levels at their highest at all times, no matter what changes might be happening in other areas of the business organization. This is an even bigger imperative for companies that are more complex in structure, or that may have a very fluid or fluctuating supply chain, or that have specific product lines, specific countries or specific customers to cater to.
But what exactly should logistics professionals focus on to improve their business’ effectiveness? Should you spend more time identifying structural improvements to increase speed of production? Should you focus primarily on minimizing logistics costs? Or should you first spend more of your focus on identifying the best high-level organizational objectives and determine whether your overall logistics strategy contributes to that objective? Which tactic is right for your business and in what circumstances?
To help you evaluate your choices and even come up with some new ideas, we’ve asked a panel of logistics strategy experts the following question:
“What’s your top tip or idea for a new business (or even an established organization) looking to create or improve their logistics strategy to make it more effective?”
We’ve collected and compiled their expert advice into this comprehensive guide to effective logistics management strategy. We hope it will help you maximize your company’s logistic resources and ultimately take your logistics strategy to the next level.
Meet Our Panel of Logistics Strategy Experts:
Shawn Casemore is the Founder and President of Casemore and Co, Inc. Shawn has spent nearly two decades leading, managing and motivating teams across a vast array of industries and sectors. He has worked with dozens of dynamic and diverse organizations including Magna International, Arvin Meritor and Bruce Power LP. Shawn is recognized as a thought leader in the area of operational excellence and his views are frequently published in industry publications including the Globe and Mail, CFO Magazine, Enterprise Apps today, purchasing B2B and many others. Shawn has also been a visiting faculty member at the Humber College Institute of Technology and Advanced Learning for the past two years.
My top logistics strategy tip is…
Leverage your predicted volumes to reduce price.
I have worked with numerous organizations to develop a logistics network (FTL, LTL, courier) during business launch. Finding providers who will offer the service levels required at a competitive price is challenging when you don’t have historic volume to rely on. This is when predicted volumes become essential. What are your predicted logistics volumes in LTL or courier in your first year? Positioning this correctly can yield significant discounts in freight costs, the outcome of which help improve bottom line cash and competitive advantage.
I helped one very small ceramic tile distributor negotiate their courier rates. We ended up using the top ranked international courier with a significant discount. My client was pleased, but was never able to validate the discount rate until one day their supplier (a larger national manufacturer of tile) suggested they ship using their own account (with the same courier). I compared their rate to that of the negotiated rate of my client to find a 20% difference (in favor of my client).
In logistics network strategy, identifying partners is all about leverage, real or predicted.
As the publisher of Inbound Logistics Magazine – a multi-media publication serving the informational needs of business logistics and supply chain managers globally since 1981 – Keith Biondo is considered a supply chain visionary. Early in his career, Biondo recognized the importance of helping U.S. manufacturers better match demand to supply, and his passion for that idea fuels many of Inbound Logistics’ accomplishments. Under Biondo’s leadership, Inbound Logistics helped grow the third-party logistics segment and taught shippers the importance of evaluating their 3PL providers. He also championed the concept of applying logistics technology to all aspects of supply chain management, from the largest ERP systems to the smallest SaaS solutions. Biondo currently serves as a board advisor to the American Society of Transportation and Logistics. Biondo holds a BA degree in History and English from St. John’s University, New York.
When it comes to an effective logistics strategy…
My one tip is to start practicing demand-driven logistics if you have not already done so.
The importance of better matching demand for your products to your supply goes far beyond reducing your transport spend.
When a company begins practicing inbound logistics or demand-driven logistics, transportation costs are reduced but the savings of replacing inventory with information, and providing better customer service to your customers, is even more important.
Beyond that important result, aligning your business to practice demand-driven logistics moves logistics management out of the functional silo and provides strategic benefits to the entire enterprise.
Subscribe to Inbound Logistics Magazine for examples, case histories, and best practices to help and support you as you embark upon your demand-driven logistics journey.
Steve Murray holds the unique role of both a Principal Consultant and as Chief Researcher for Supply Chain Visions. As the head of research at Supply Chain Visions, Steve is constantly monitoring the pulse of the supply chain industry for leading edge trends and best practices that Supply Chain Visions can bring to their clients.
Steve maintains the SC Visions “Catalog of Processes and Best Practices” – which is the foundation for both the Council of Supply Chain Management’s Supply Chain Management Process Standards guides and the Warehousing Education and Research Council’s Best Practice Guides, and he manages the SC Visions / CSCMP Glossary of Supply Chain Management and Logistics terms. Steve is also a member of the team which performs the annual WERC / DC Velocity Study of DC Metrics, and is a frequent speaker on the subjects of process improvement and the use of metrics.
The most important tip I can share with business professionals looking to create an effective logistics strategy…
Comes from many years working as a consultant to companies in the warehousing and supply chain areas. It is a rather simple, and extremely effective approach that is way too frequently overlooked, misunderstood, or simply not well executed.
New and existing companies should take time to understand the essence of Sales and Operations Planning or S&OP. Many times I see companies who “think” they know S&OP, and some who practices a form of S&OP without actually naming it. But I don’t see a lot of companies practicing it effectively.
S&OP simply defined is a strategy where all of the primary functions (Sales, Marketing, Product Management, Manufacturing, Warehousing, Procurement, Finance, Transportation) of the business come together as a team (face to face or via a communications link) to review, discuss and plan business activities. Note here that it does not simply include Sales and Operations, but must include all parties who impact, or are impacted by, the regular activities of the business.
This session must be viewed as a “team” effort, with all understanding a common set of goals (customer satisfaction, profitability, improved sales, etc.), and agreeing to work together to achieve those goals. The meeting should be held as frequently as practical, and the team should have a set of tools, KPIs and reports, to assist in regular checkups and notifications. Meetings should be focused and short, they should be about cooperation and strictly avoid confrontation. Yes, we will discuss what went wrong, but with a focus on the “why” and “how” of improvement and eliminating the issue. It should be more about planning for what is coming in the short and long term, and how the team will address it.
There must be commitment by all parties to move past the functional silos that continue to haunt companies. It must, over time, become an ingrained component of the company’s culture.
Properly executed, a solid S&OP process can do more than any other single logistics strategy to improve the odds of success. Once the “team” is in sync, the individual functional areas can turn to focusing on how to most effectively address their part of the process, understanding fully what the goals are.
Without S&OP it has been proven that most functions will create their own goals, but they are likely to not be aligned with the rest of the business. For example; A DC achieving a high fill rate for customer orders may not be good for the business if doing so comes at a high cost to the rest of the business. S&OP can help ensure that all of the logistics related activities are tuned to getting the highest fill rate possible in the most economic and efficient manner.
Rick D. Blasgen currently serves as the president and chief executive officer of the Council of Supply Chain Management Professionals (CSCMP) in Lombard, Illinois, USA. He began his career with Nabisco, where he held various logistics positions of increasing responsibility in inventory management, order processing, and transportation and distribution center operations management. He became vice president, supply chain, at Nabisco in 1998, then vice president supply chain for Kraft in 2002. From 2003 until 2005, he served as senior vice president integrated logistics at ConAgra Foods. He earned his degree in business administration from Governors State University.
When it comes to logistic planning for any business…
My top tip is to acquire an experienced logistician who has great interpersonal skills, is well connected to the logistics/supply chain world (a CSCMP member of course!), is a proven leader, and has solid financial acumen.
Richard Wilding is the Professor of Supply Chain Strategy at Cranfield School of Management. As Chair (Full Professor) in Supply Chain Strategy at the Centre for Logistics and Supply Chain Management, Cranfield School of Management UK, Richard works with European and International companies on Logistics and Supply Chain projects in all sectors including pharmaceutical, retail, automotive, high technology, food, drink and professional services to name a few. He is a highly acclaimed presenter and regularly speaks at Industrial Conferences and has undertaken lecture tours of Europe and Asia at the invitation of local Universities & Confederations of Industry. He has published widely in the area of Supply Chain Management and is Editorial Advisor to a number of top journals in this area.
When it comes to creating an effective logistics management strategy…
The answer to your question is contained in my 60 seconds on Supply Chain Strategy video on YouTube.
Some notes from the 60 second video:
Logistics and supply chain strategy can be summarized as the operational execution of the business mission.
So firstly understand the business mission, reflect on the Corporate strategy of the organization and plan accordingly. Secondly, recognize an “average” supply chain means 50% of customers are sick of your service and 50% you are spending to much money on! A focused competitive strategy is required so liaise and discuss with the marketing and sales functions of your business. So you need to segment your customers and products so that you can develop individual supply chains to create maximum value at the lowest possible cost for each of these groups. Thirdly, now for a supply chain strategy to really work, four areas need to be designed.
Your supply chain processes, the supply chain infrastructure including where you locate facilities and also what equipment is used, your supply chain information systems, and finally the supply chain organization. This is how you organize your people.
So in summary, start with the corporate strategy, identify how you compete in various markets and understand the competitive strategy, develop the supply chain strategy to serve these markets by tailoring your Supply Chain Processes, infrastructure, information systems and organization and people.
Kenneth B. Ackerman
Ken Ackerman has been active in logistics and warehousing management for his entire career. Before entering the consulting field, he was chief executive of Distribution Centers, Inc., a public warehousing company which is now part of Exel Logistics USA. In 1980, Ackerman sold the company and joined the management consulting division of Coopers & Lybrand. In 1981, he formed the Ackerman Company, a management advisory service.
Ken is editor and publisher of Warehousing Forum, a monthly subscription newsletter and blog. His newest books are Lean Warehousing and Fundamentals of Supply Chain Management, both published in 2007. His other recent publications include Auditing Warehouse Performance and Warehousing Tips. Harvard Business Review published “Making Warehousing More Efficient,” co-authored with Professor Bernard J. LaLonde. The New York Times published his bylined article “Just In Time, Right For Retail.” He is the author of numerous other articles dealing with warehousing and management.
He has the following educational and professional credentials:
- B.A., Princeton University
- M.B.A., Harvard University
- Council of Supply Chain Management Professionals – Past President
- Warehousing Education and Research Council – Founder
The most important idea about a business’ logistics plan is…
that it should always be subordinate to corporate strategy. For example:
- If your company’s strategy is to always be the low price leader, then the prime goal of the logistics strategy is to move stuff at the lowest possible cost.
- If your corporate strategy is based on agility and the movement of goods faster than competitors, then logistics strategy is based on speed rather than cost.
- If your company sets the standard for quality, then the logistics goal is to have100% perfect orders and to do whatever it takes to correct any error.
- If your company is growing by merger, one logistics strategy is to integrate the operations of the new acquisition into the existing logistics program.
- If your corporation is judged by its return on invested capital, then the logistics strategy is to remain as free of assets as possible by finding short term leases for warehouse real estate and transport equipment.
Steve Novak is the President of PPR Management Services, LLC, where he works with organizations to define and achieve their goals. He has over 20 years of process improvement and business operations experience, and is the author of “The Small Manufacturer’s Toolkit”.
My top tip for creating an effective logistics strategy is…
First define what you are trying to accomplish, what goals you are trying to achieve. Your logistics / supply chain strategy supports the goals of the business, so your supply chain strategy must align with and help achieve the organization’s goals. The second step is to articulate how the supply chain strategy works to achieve the higher level goals.
For example, if speed to market is a goal, the supply chain strategy will look different than one where the goal is to be the low cost supplier.
Timothy D. Garcia
Tim Garcia is the founder and CEO of Apptricity, a leading logistics and supply chain management software solutions provider. Tim brings more than 25 years of software sales, management and development experience in the enterprise applications market to Apptricity, and under his leadership, Apptricity’s growing client base now includes three of the world’s largest organizations, namely Walmart Stores, AT&T and the Department of Defense. Prior to Apptricity, Garcia held management positions at Pivotal Corporation (Nasdaq: PVTL), Compuware Corporation (Nasdaq: CPWR), Peregrine Systems (NYSE: HPQ), Sterling Software (NYSE: CA), and EDS (NYSE: HPQ). He received his BA degree in Economics from the University of California at Davis.
When it comes to any company’s logistics management strategy…
There is a critical need in today’s hyper-fast, online environment to meet the expectations of clients. Finding a faster, more efficient means of handling products is important for supporting a successful organization, and a well-run supply chain is vital to the success of a business. Starting with a great solution or upgrading the supply chain management system is essential in order to compete and can provide a substantial boost to productivity. The potential for supply chain disruption comes from unexpected weather, natural disasters, political upheaval, economic crises and other “black swan” or unique events that can ruin a start up and cripple an existing business.
The most important tip in mitigating the potential negative outcomes of supply chain disruptions is doing effective and careful pre-planning. Benjamin Franklin said, “An ounce of prevention is worth a pound of cure.” That quote absolutely applies to supply chain logistics. Each company has a special “finger print” with its products; some are sensitive to spoilage, some are fragile electronics and others require more human labor. In order to react swiftly and decisively, a plan supported by the right solution is critical to an organization. With corporations, suppliers and manufacturers situated in different parts of the globe, you need technology that can link everyone together in a way that provides consistency, streamlines processes and enhances visibility to meet challenges in real time. A business is only as successful as its supply chain. Pre-planning now and elevating this to the executive team in an organization today can eliminate the majority of customer service issues tomorrow.
Finding the right solution can be game-changing in today’s frantic, uncertain market. Potential problems lie within mismanaged warehouse processes, inadequately tracked fleets and their inventory, scattered inventory, lackluster transportation management or some other supply chain conundrum.. Many warehouses handle massive numbers of shipments every year and in an economy that has seen less frequent hiring of additional help, much of the focus has been placed on maximizing the potential of the workforce. Having fewer hands to help receive and move shipments places an increased premium on accuracy and speed. This applies closely to organizations that deal with perishable and time-sensitive products, such as food, beverages or anything that involves the cold chain. Within these organizations, careful tracking of shipments is essential.
Many organizations still rely on “tribal knowledge” for this sort of information, but even the best memories fail. Manual processes tend toward error, but a system that centralizes information and helps automate the supply chain provides a level of support and real-time access to information that can help a business reach its maximum potential with minimum investment of time, planning and solution implementation.
Planning for the future with innovation is the key, whether it’s through whipping your company fleet into shape with fleet management software, keeping close tabs on product through inventory management solutions or maximizing every square foot of space with improved warehouse management. Innovation is hitting the market as solutions centralize data and provide real-time access to what you need to know, whether you’re in the office, down the street or several continents away.
Technology is linking vendors to customers and customers to shippers through an interlinked web that promotes the sort of fast, adaptable response that sets a business ahead of its competitors. Today’s logistics is mobile-enabled, connected and requires much more than the pencil-and-clipboard style of management from years past. Google CEO Eric Schmidt has said the world now creates as much data in a span of 48 hours as all of human civilization managed to produce from the beginning of history until 2003. Planning and leveraging that Big Data to better understand and propel a business means building a sustainable future.
Clay Gentry is VP of Logistics Operations, responsible for developing innovative TMS technology and improving processes for clients of Transportation Insight, a leading North American 3PL. He has more than a decade of experience in non-asset based logistics management. His engagement with clients has included transportation planning and process management, engineering, continuous improvement and Transportation Management System (TMS) process design and integration.
The best idea I can share with business professionals for better understanding how logistics strategies work is…
Logistics strategy is the science of evaluating the most cost effective methodology of distributing goods to market while achieving service level objectives. When establishing an effective logistics strategy, you need to understand to what degree logistics impacts your operations and your customers’ operations. How crucial is timely delivery to your inbound and outbound deliveries, and what constraints exist, such as budget, resources and existing network of providers. If you choose to outsource your logistics operations, make sure you use an organization that will work with you hand-in-hand to co-manage your logistics, so that you keep all your front-line carrier relationships and control. Work with an organization that doesn’t see you as a “project” but as a “partner” who will share with you their best practices and understanding of emerging trends. This partnership-type relationship ensures success within your logistics operations.
Samuel Levin is the Cofounder and Managing Director of MavenWire LCC. Prior to co-founding MavenWire LLC, Samuel served in a variety of roles at G-Log Inc., (Global Logistics Technologies, acquired by Oracle Corporation in 2005), including Technical Consultant, Senior Functional Consultant, and Project Manager. While implementing G-Log’s award winning GC3 Supply Chain Management solution, Samuel has had the opportunity to work in virtually every logistics vertical including CPG, Automotive, 3PL/4PL, Manufacturing, and International Freight Forwarding.
One of my most important tips for maximizing the effectiveness of your business logistics strategy is…
Focus on your competencies. Many companies think they need to “do it all” when it comes to logistics, but in reality there are many options available to organizations that are looking to develop effective and efficient logistics processes. Depending on the complexity of your reader’s shipping needs, for example, in some cases it may be easier to outsource logistics domestically to a 3PL or a global freight forwarder. And, even start ups that lack established IT departments can create effective logistics strategies by using an affordable SaaS-based transportation management solution (TMS). These platforms allow organizations to plan, execute and track freight without the concerns of managing software applications and computer hardware.
Raad Mobrem is the CEO and co-cofounder of Lettuce, which he originally created as an internal solution for his first wholesale small business. Getting tremendous demand from other wholesale businesses after seeing Raad’s company use the product, Lettuce was launched in early 2012 with the help of CTO Frank Jones. Raad is the visionary behind Lettuce’s product and company, which is focused on creating consumer-like business applications that make it simpler for businesses to run their company.
The best way to increase the effectiveness of your logistics plan is through…
Utilizing the technology available to you. My own company, Lettuce, has innovated a way for small business owners to cut costs by consolidating the entire sales, processing, accounting, inventory, forecasting, fulfillment and shipping process into the click of just one button – let that sink in a bit. It’s taken a task that spans across multiple departments and translated it into a single click.
Tools like this are what I think are essential for maximizing your logistic process. Lettuce is an inventory management program accessible via the web portal and iPad app, cuts out the middle man and eliminates repetitive data entry, saving businesses money by cutting overhead costs and brings in more profit by allowing salespeople to secure more sales because they’re not wasting time with back-end order processing. Not to mention it helps small companies go a little bit greener (like Lettuce) by replacing pen and paper, the traditional sales method, with an iPad. Companies can utilize this app to create instant digital catalogs, validate credit card info on the spot (perfect for trade shows), calculate shipping charges, sync with QuickBooks, forecast inventory needs and give wholesalers 24/7 access and ordering capability, slashing countless hours off the back-end fulfillment process.
Dr. McKay is the CEO for MJMcKay Consulting Corporation. He was one of the first academics asked by the Boeing Company in the early 1990’s to create a Lean manufacturing curriculum for the company’s middle management. The training that he created has since been used to teach Lean to thousands of participants. He has also enjoyed his time discovering growth opportunities for giant corporations such as Microsoft Corporation, Starbucks, and Pfizer. He has worked with government organizations, NGO’s, service organizations, and manufacturers. He has substantial experience successfully working with the particularly unique challenges of the family-owned business.
When it comes to creating an effective, yet realistic, logistics strategy…
Plan to give the decision away.
I don’t mean that you have to use a 3PL or necessarily outsource your logistics in any way, but if you are an executive of your company, no matter how small, then make plans now to intentionally stay away from the logistics decision making. Smart executives hire smart managers to take care of inefficiencies in logistics and information flow, and then stay out of the way. Dumb logistics are sometimes the result of bad spreadsheets and bad logic, but that’s only a symptom of the disease. The real cause of dumb logistics is internal company politics. The “people with influence” want this or that, and the logistics get hammered. Spend your time making sure that your logistics managers, whether in-house or outsourced, are both (1) totally on-board with how logistics supports your strategy, and (2) totally empowered to make decisions without asking permission. You have bigger fish to fry.
Mark Broussard is the President & Chief Operating Officer for SAMI, responsible for global consulting operations, knowledge operations, administration and marketing. Mark entered management consulting over ten years ago and has created substantial value for clients in upstream oil and gas, mining, metals, power generation, pharmaceuticals, and entertainment industry verticals. Mark is a member of the American Management Association, Society of Maintenance & Reliability Professionals and is a Certified Maintenance & Reliability Professional.
The #1 way to increase the effectiveness of your logistics strategy is to…
Have absolute clarity on the purpose of the logistics function in the organization. Investing in developing and clearly articulating the vision of logistics in support of the overall operation are foundational steps in defining optimum logistics strategies.
Ben Cubitt currently serves as the Senior Vice President, Consulting & Engineering of Transplace, and has more than 20 years of industry and consulting experience in freight optimization. At Transplace he leads the engineering, carrier management and consulting teams. He has a deep familiarity with the freight procurement field working for consulting firms and multiple Fortune 500 companies in the consumer products, paper and automotive industries. Mr. Cubitt has led and assisted with bid projects for companies such as MeadWestvaco, Kellogg’s, RockTenn, The Home Depot, Colgate-Palmolive, RockTenn and McCormick Foods.
When it comes to logistics planning and strategies…
Within the supply chain, there is the constant challenge to optimize service and cost performance. There are more tools and challenges than ever before; but at the end of the day, for supply chain professionals, it’s all about delivering low cost and great service. To accomplish this, companies need to gain end-to-end visibility of their network and analyze service and cost performance. It starts with building a solid transaction and information foundation. Often this means partnering with a third party logistics provider (3PL) who has the people, processes and technology needed to execute, gain visibility, track and report cost and service performance.
Secondly, companies need to make sure they have the right people planning, executing and optimizing their transportation network. Do you have a team of transportation professionals with a mix of real world experience and solid academic and analytical skills? Are they trained in Lean or Six Sigma? Can they communicate? Communication is critical across the supply chain – to internal stakeholders, customers, suppliers, carrier partners or others in the industry – and managing those relationships.
Once you have a solid base of information, you need to analyze the data then optimize their freight. There are two levels of optimization: strategic and tactical. Strategic optimization looks at procurement processes, mode selection and overall network design. Tactical optimization is considering if you’re using right carriers, if deliveries and pickups on-time, etc. Shippers need to analyze cost of service daily to see where they’re having carrier performance or other service issues.
The next step is reporting and continuous improvement. You’ve built that solid foundation of data accuracy and visibility and have the right team in place and made changes to optimize your freight; then it’s time to report track and seek continuous improvement. By creating executive dashboards and actionable reports, quarterly business reviews, and continuous ad-hoc reporting it’s possible to examine trends over time and how you’re trending versus a prior period.
Gaining visibility and leveraging the data can help companies identify opportunities to take cost and inefficiency out of their supply chain. Logistics should to be a resource to the entire company and help the organization meet its strategic objectives and drive value for shareholders and customers.
Danny Yunes is the Manager of Supply Chain Strategy at Coyote Logistics. Coyote Logistics is a new third party transportation & logistics company built on a wealth of experience. Started in 2006 by a 22-year veteran of the industry, Coyote brings together the brightest, best trained employees and arms them with brand new technology that combines vast operational experience with the latest advances in optimization and applied probability sciences.
The most important tip I can share with logistics professionals…
Would be to always remember your core competency. Focus on it. Ingrain it into your culture. Then, align your logistics strategy around that competency, and segment out your products, customers, and vendors.
If your company is renowned for producing an industry-leading product, then focus on the innovation, quality and consistency that your customers expect. Your supply chain / logistics strategy should have a high-touch, value adding service component that keeps quality high.
If your product is commoditized and price is the only thing that differentiates you from your competitors, your supply chain / logistics strategy should focus on economies of scale and innovative ways to reduce waste.
Customers can then also be segmented by level of “importance” — focus on the ones that impact your business the most. These customers may or may not be the largest ones in your portfolio in terms of revenue. They may be middle of the pack customers who are collaborative and drive improvement in your business that can be replicated across other customers. Prioritizing these customers should be part of your logistics strategy.
Vendors can also be segmented by level of “importance” and again, it’s the collaborative ones — the ones that will work with you to improve your business and grow together — that you should include in your supply chain strategy.
Often times, start-up companies will try to differentiate themselves and win business by providing high levels of logistics service. If this is part of your strategy, then you know you have several options, from operating your own fleet to paying for premium service from an asset based or non-asset-based 3PL. This is why it is important to first understand your core competency. Are you a transportation company? Then yes, you should probably operate your own fleet. Do you make the best damn cupcakes in North America? Maybe you would consider outsourcing logistics…
Now, if you don’t want to be at the mercy of a logistics provider that treats you as the “little fish in a big pond,” one approach might be to seek a longer-term, contractually bound, collaborative relationship with a 3PL. By entrenching yourself into the 3PL’s business, a small or medium-sized start-up company encourages the logistics provider to invest in network development and build its capacity around the start-up company’s market. It’s the long-term commitment that builds stability for both the shipper and the carrier. With a strong collaborative relationship established, you can then work with the 3PL for additional value-adding and differentiating services down the road, such as custom software development, reporting and analytics, etc.
Richard J. Sherman
Rich is an author, speaker, and consultant on Supply Chain, Business, Leadership, and Information. He is an internationally recognized pundit and author on trends and issues across supply chain management. He currently serves as a Principal Essentialist at Trissential co-leading their supply chain consulting practice. His book “Supply Chain Transformation: Practical Roadmap for Best Practice Results” (Wiley, 2012) has received praise by practitioners, academics, and non-supply chain executives as a great read on business transformation. Throughout his career, Mr. Sherman has held senior management positions with visionary technology firms such as EXE, Syncra, and Numetrix, and marketing leading corporations such as Microsoft, Information Resources (IRI), Mercer Management Consulting, Digital Equipment Corporation (DEC), and Unisys.
One of my most important tips for maximizing the effectiveness of your logistics strategy is…
Begin and end with customers and how they use your offerings! Logistics is about optimizing costs while providing outstanding service. And, not all customers are created equal! A segmented logistics strategy that considers the requirements of your most valuable customers first and designed accordingly wins! Business is about growing exceptional current results while building a strong base for the long term. Logistics is the capability that can orchestrate all of that to happen, by starting with an intimate understanding of product and service needs of every customer segment and linking them to the steps that provide breakthrough satisfaction to customers. Logistics is the external link between suppliers, production, customer interface, and results. It is the internal link between product development, marketing, sales, procurement, production, finance, and executive leadership. An effective logistics strategy will contribute to the financial health of the company and fuel its growth. When it starts with customer segment needs and expectations and understands the value you create for the customer, only then can it produce exhilarating customer response through delivery of knockout value.
Naseem Malik is Managing Partner of MRA Global Sourcing, an affiliate of MRINetwork, one of the largest executive recruitment organizations in the world. Naseem brings over 15 years of experience in the supply management and logistics function to the search and recruitment business. Spanning diverse industries, he has worked in numerous roles of increasing responsibility, including implementation of global supply strategies, product and process cost reductions, logistics and transportation management and supply chain improvements. He was also Director of Global Sourcing at both Terex Corporation and ACCO Brands, and his background includes working in management consulting for AT Kearney, as well as multiple start-up businesses.
The truth about logistics strategy is that…
An effective logistics strategy at its core, is nothing more than the process of moving and positioning inventory to meet customer requirements at the lowest possible total cost to serve. For a business leader, it’s their responsibility to design and administer a system to control the flow and positioning of materials to support the business strategy. Every firm should adopt a strategic initiative to align suppliers and distributors into collaborative relationships to gain a competitive advantage. When this synchronization takes place, it’s called an integrated logistics model. There are a few key factors that comprise a successful integrated logistics model and they are: asset minimization, lowest total cost, and supply chain connectivity.
Since the business of logistics has become big business in the U.S., it’s also important to have a solid logistics structure in place. Critical components of a logistics structure that an organization should encompass are as follows: facility network, warehousing and material handling packaging, order management, transportation and inventory.
All of these things have one goal and that is to ensure customer success. No longer will excellent service and customer satisfaction lead to loyalty. For companies to now be competitive and successful, they will have to evolve their philosophy towards ensuring customer success. They will have to ask: “How can I enhance my customers’ performance?” This entails understanding customer requirements, processes and their total costs.
A successful logistics strategy will be a customer focused strategy. This will allow for a stronger franchise with best customers and lower logistics costs. It should also result in higher inventory turns and reduced expediting because you will be in a true partnership and not a tactical relationship with your customer base. The logistics value proposition for any company will focus on configuring in a customer relevant way while concurrently enhancing quality, productivity and operational excellence. Any successful strategy cannot remain static. Business leaders need to stay atop of technology and trends as they impact and change the scope of business faster than ever before.
Doug is currently the Manager of Operations at Quality Freight Logistics, Inc, a transportation company based in Michigan. Prior to helping found and mange Quality Freight Logistics, Doug helped launch and grow logistics firm, R2 Logistics, over the course of six years. He has more than 12 years of management and customer service experience in the Logistics industry.
When it comes to logistics strategy success, the most important tip I can share is…
Employ an experienced transportation procurement specialist to vet and manage your vendors “in house”. Within these vendors, you want to work with a combination of asset based companies and at least 2 third-party logistics companies (3pl’s). 3pl companies have access to all modes of transportation throughout the entire market, and will be able to adapt to changes in the market throughout the year. Also, working with more than one of these companies will keep them in competition with one another and will usually net you the lowest price for their services.
Nick is the CEO and Founder of RiskLogik. Before founding RiskLogik in 2010, CEO Nick Martyn held various command and staff appointments in both the Canadian and British Armies over 27 years of military service in Canada, UK, Germany, Former Republic of Yugoslavia and Afghanistan. From 2008 to 2011, he served as CEO of the Afghanistan Information Management Services (AIMS) where he oversaw the transition of AIMS from the United Nations to independent NGO status and transformed the organization taking them from a negative cash position to a peak of USD $9M revenue in 24 months. During that period AIMS delivered a world class international aid effectiveness management system (ANDMIS) to the Government of the Islamic Republic of Afghanistan while also modernizing the Land Management System and Mapping the Electrical Service in Kabul.
If I had one fundamental piece of logistics management advice for a company, it would be to…
Conduct a complete risk and resilience assessment prior to establishing a new supply chain. Unfortunately, resilience does not come in a box, and cannot be purchased just when you need it. While designing and building a resilient supply chain from the very beginning is much more cost-effective than trying to change the supply chain in mid-stream, many organizations must redesign them as they live with the results of one or more disasters or shocks.
A resilient supply chain is one that is flexible in the face of disruptive events. For example, an inbound supply chain that uses Just-In-Time delivery of parts is lean and cost-effective in the short term, but may be easily disrupted by events beyond the control of its managers. Resilience means having the flexibility of being able to choose from multiple suppliers, several backup modes of transport, or keeping 24-48 hours of parts on hand to smooth out the parts flow during disruptive events. This type of built-in resilience can give operational managers the time to react should the event prove to be a longer-term disruption.
Although logistics systems are called supply chains, they are not linear chains as the name suggests. Rather, supply chains are very often complex webs or networks of infrastructure, suppliers, supplies and services. Managers can’t use linear thinking when determining the weaknesses and risks in a complex system. Therefore, using systems thinking to map and quantify the movement of goods and services, and the dependencies between the parts of the supply chain, is a much more effective way to identify risks in a modern logistics network. This map or model can then be used to demonstrate to company decision-makers where vulnerabilities exist, and by extension which parts of the network are at greatest risk.
Large firms with their own planning departments run scenarios to determine the most costly and the most vulnerable nodes in the network, and use the results of the scenarios to mitigate the risks ahead of time. Until now, smaller firms did not have that ability. However, new software tools are enabling small and medium-sized companies to run their own planning scenarios, and recover more quickly from known events.
Identifying vulnerabilities and mitigating the supply chain risks ahead of time is critical to your survival when the disruptive event hits. This extra time can mean the difference between collapse and the ability to save money, recover faster and with less impact on the business and, most importantly, its customers.
A resilient supply chain is the product of thorough analysis and careful planning. Tomorrow`s resilience is the product of the smart decisions made today. Risk discovery, risk analysis and risk mitigation are complex and potentially costly. Our company, RiskLogik, provides the skilled professionals, proven techniques and leading edge tools to help your company build resilience quickly and cost effectively. RiskLogik’s software is being used by the Government of Ontario to analyze and plan for critical infrastructure risk events, and also by the Government of New Brunswick to map supply chain risks and vulnerabilities within the province. RiskLogik software and methodology has also been used to support program management in Afghanistan, security risks for NATO and the Canadian Forces, and critical infrastructure risk for the Government of Canada.
Patrick Burnson is the executive editor of Logistics Management, which provides editorial coverage for executives, managers, and other professionals in the field of logistics and supply chain management. Patrick also is the executive editor of Supply Chain Management Review. A widely published writer and editor, Patrick has spent the bulk of his career covering international trade, global logistics, and supply chain management.
NOTE: The following information is excerpted from Strategic Transportation Sourcing: 5 Tips to Improve Your Position via Logistics Management.
“Today, freight transportation management is more than just about price. But how do shippers put together a transportation and supplier sourcing strategy that will…”
Earn them the capacity that they need at a price that works for all parties involved?
Tip: Consider Big Data
When asked to identify the trend with the greatest potential impact on the way procurement does it job over the next decade, the majority of the Hackett Group study participants chose predictive analytics or forecasting.
Analysts observe that as procurement’s role matures in transportation management from transactional facilitator to trusted business advisor, proficiency with the next generation of analytics—Big Data—will be a key enabler. Big Data may also add significant value when it comes to customer analytics, bringing more agility to model massive volumes of structured and unstructured data from multiple sources.
However, Donna Wilcek, vice president of product marketing for Coupa, a cloud-based spend management software company, notes that this information overload can be overwhelming. “Everyone from the CFO on down the command in the supply chain should have access to this transparency, so that risk is mitigated and costs are contained,” she says.
In fact, Coupa’s recent whitepaper, “Understanding the Sourcing Organization Maturity Model,” posits that “immature” models may not have much of a process for project planning at all—since sourcing projects are handled on an ad hoc basis.
“As sourcing organizations move up the maturity ladder, projects are managed centrally but still may not be planned upfront,” says Andy Chiang, director of product management at Coupa. Further up the ladder, he adds, transportation sourcing projects are often strategically planned out and results are reported to the CEO.
Rayford Collins, former supply chain optimization expert with UPS Customer Solutions and current UPS director of global solutions, provides management leadership to a team that delivers engineering, technology, and sustainability solutions to a customer base of established global organizations. Rayford takes a consultative approach with some of the largest high tech and telecom companies around the world and helps them meet objectives in improved customer service, efficiency gains, increased market penetration, and revenue growth. Rayford also focuses on managing customer solutions inclusive of supply chain deign, business process re-engineering, and technology solutions.
NOTE: The following information is excerpted from 10 Small (But Significant) Ways to Improve Your Supply Chain Right Now via UPS Compass.
“There’s no doubt that supply chain and logistics issues are critical to any company’s success. But dramatic improvements don’t always involve…”
Large-scale strategic overhauls or process changes that require months to implement.
Small parcel carriers can often provide a cost savings on multi-piece shipments that don’t involve a full pallet or multiple pallets. Look at small parcel vs. LTL carrier or LTL vs. truckloads to understand the price differentials for various weight and zone break points. Changing the routing or mode of shipments can pay off, especially for midmarket shippers.
Make sure your A and B movers are properly located to allow for minimum processing time and distance to the outbound shipping lanes. Place those fast movers carefully. If they are all in the same aisle or location, you can create a bottleneck as employees run into each other doing the pick.
Companies shipping from more than one location would want A & B movers in each, but D movers in just one, to keep inventory carrying costs down. If you decide you need to have 100 D movers, put them where the warehouse space and labor costs are lowest. That can reduce your inbound shipping cost, too.
Lora Cecere is the founder of Supply Chain Insights and author of Supply Chain Shaman. She travels the world to track the course of supply chain practices and disruptive technologies. Lora’s writing and work focus on the use of enterprise applications to drive supply chain excellence. As the Supply Chain Shaman, Lora interprets and connects the evolving supply chain world to those in the industry who follow her work.
NOTE: The following information is excerpted from Executing Customer-Centric Supply Chain Strategies via Supply Chain Brief.
“I am on a mission. My goal? I want to understand why some companies outperform on the Supply Chain Metrics That Matter while others do not…”
About twice a month companies ask me to review their strategy documents. Frequently I see the goal of “build a customer-centric strategy” or “define an end-to-end vision to deliver on the customer promise.” However, when I probe and ask companies to explain what this means, I get either a pregnant pause or a blank stare. Many will say “Isn’t it obvious?” I shake my head and answer, “No. It requires a careful execution of strategy and the connection of strategy to execution.” All too often supply chain leaders are good at high-level vision, but weak at connecting the vision to execution. It requires big wings and big feet. (Big wings represent the ideation and creation of the strategy, and the big feet represents the execution. The Customer-Centric Supply Chain Strategy needs both.)
… the companies that are the most customer-centric have ten characteristics:
- Clarity of purpose for the buyer
- Take ownership of the channel: drive reliability and excitement
- Build segmented customer strategies: tie strategy to policy/execution
- Cost-to-serve with data-driven discussions
- The supply chain has a clear focus on outcomes
- Alignment between operations and commercial teams
- Build outside-in processes
- Hands-free and reliable order processes
- Cross-functional listening
- Execute at the moments of truth
Eric Mesister, former COO of LeanLogistics (now Blu Jay Solutions) and Local Orbit, is a pragmatic and results-oriented supply chain and technology executive with proven success in increasing enterprise value through implementing operational excellence, creative and innovative solution development, and creating long-term sustainable, collaborative relationships with team members, customers, and partners. Eric also focuses on the customer while serving as a commercial leader with consistent top and bottom line growth in expanding and contracting markets all the while improving customer and employee satisfaction.
NOTE: The following information is excerpted from Defining and Implementing an Effective Transportation Strategy via Talking Logistics.
“What we find is that the better aligned your strategies are – from supply chain to transportation to carrier strategies – and the better aligned they are with execution, the better able and more effective you are at…”
Managing both cost and service at the same time. Being able to benchmark allows you to identify your supply chain performance and the positioning of your supply chain within the business – both critical factors in determining what kind of shipper you are.
[The key to enabling alignment and synchronization across a broader supply chain strategy is] the people, process, and technology that allow you to hook everything together and make sure there’s alignment over time. Processes and technologies that are designed to provide transparency, visibility, and data are critical to ensuring an alignment between the various levels of strategy. We talk about a waterfall from the carrier to the supply chain strategy to the transportation strategy to the carrier strategy and then to the execution. There’s also a feedback loop forward that allows you to understand whether your strategies are aligned, and what impact changes have on your overall performance. An example would be, what is your carrier performance telling you about your supply chain strategy? If you have a significant change in your on-time or cost performance, what is that telling you about your supply chain strategy? Having that feedback loop ensures alignment.
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