"We outsource logistics because it's not our core competency."
How many times have we heard that as the reason companies cite for working with third party logistics (3PL) service providers? I'd have to outsource that calculation because math isn't my core competency. But learning is, as it should be for every logistics professional—especially learning about what logistics will be like ten or fifteen years from now. If you expect your company to survive to 2030, learning and planning need to be two of your strongest core competencies.
I'm writing this the day after my return from Dallas where I attended this year's annual WERC Conference. That stands for the Warehousing Education and Research Council, and one of the sessions from their program stands out in my memory as particularly educational and timely. It was titled "Supply Chain Management in 2030," and was hosted by Chad Autry, associate professor of supply chain management at the University of Tennessee at Knoxville. His reason for thinking so long term?
Because so few in supply chain management seem to think that way these days. They manage in quarters, Autry said. We need to think well beyond the quarter and plan for how we'll deal with some of logistics' greatest long-term problems. These include: our transportation infrastructure (which started rapidly losing its capacity late in the last century); resource scarcity (i.e., China and other countries leasing land outside their own geographies to grow food—and paying the price transportation-wise); changing weather patterns (leading to water shortages in some regions and ice and snow in others not logistically prepared to deal with those elements); U.S. engineering talent scarcity (think of India graduating more engineers than the total U.S. population of engineers); wars (they used to be fought to win land, but will eventually be fought to win water and other scarce commodities); garbage (another potential cause for war, with the losers forced to take the spoils).
Core competencies will have to be devoted to: more flexible transportation management planning (and negotiations with networks of partners and providers); urban logistics planning (serving larger populations in smaller, taller building footprints using smaller trucks, and even bicycle messengers, on more frequent delivery schedules); reverse logistics center management (to reclaim, redistribute and reuse scarce commodities like heavy metals); security management (to protect the transportation and distribution of scarce but essential commodities).
In case you're thinking, "yeah, same-old same-old from an ivory-tower academic," another WERC session offered a real-world example of a company walking this talk. You'd only have to look at the presenter's business card to know that Kathleen Shafer is living up to her job title. She's senior director of supply chain transformation for retail pharmacy chain CVS Caremark. In addition to thinking about a few of those problems Autry mentioned, her company is facing a growing market of seniors requiring medical and pharmaceutical care. That requires her company to be an omni-channel source of products for customers in ever-diversifying markets. They're going from a standardized logistics platform to offering product assortments tailored to each store. This new direction is the result of multi-disciplined visioning sessions under C-level guidance. Merchandising and marketing are now part of the supply chain organization.
Shafer acknowledged to her audience that she's still early into this effort, but she knows what her core competencies must now be: network analysis and modeling, cycle time studies, store delivery models and customer shopping patterns. This is a 5- to 7-year project with C-level sponsorship, Shafer emphasized. It's not a logistics project, but an enterprise initiative. Logistics just happened to be chosen to facilitate it.
That alone should tell you where a company's core competency must reside.
So take what you can from this month's features on 3PLs and transportation intermediaries, but give your long-term plans some thought, too. 3PLs and 4PLs may fit into them, but how they fit must be your core competency.