A few months ago The Economist magazine discovered logistics. In a series of articles the global politics and business magazine reviewed how supply chains have evolved over the past decade, and why they are so critical to the world economy today.
For anyone involved in our business, the June 17th report didn't cover any new ground or tell any stories that you haven't heard before at industry conferences, in trade magazines like Logistics Today or in business school case studies.
Some of the familiar stories covered in the issue included:
- The nightly sort at the UPS Worldport in Louisville, Ky., and at FedEx's global hub in Memphis, Tenn.
- The long-term loss to shareholder value from supply-chain problems so big that they come to the attention of the investment community.
- Dell's direct-to-consumer, build-to-order business model.
- Zara's ability to quickly copy fashion trends by designing and sewing garments in Spain in response to what's hot on European runways.
- Procter & Gamble's use of point-of-sale data from Wal-Mart to smooth demand for diapers.
- Cisco's inventory glut and $2.2 billion, supplychain lesson following the burst of the Internet bubble in 2000 and 2001.
- Just-in-time delivery as practiced at Toyota factories worldwide.
- The logistics prowess of contract manufacturers such as Flextronics, Solectron, Sanmina-SCI and Celestica.
- The potential and limitations of RFID tags.
- The outward fragility and surprising resiliency of lean supply chains.
As well-publicized as these stories and issues may be, The Economist's coverage does help business people in other fields better understand the importance of logistics. Still, when I was reading these articles, it struck me that if a well-regarded business publication like this one is just noticing logistics, it's no wonder that some of our readers have such a hard time getting noticed within their own organizations.
Every logistics and supply chain success story, like the ones mentioned above, starts with top management support. This support begins with a solid understanding of logistics' role in satisfying customer demands. It takes a variety of forms.
First, management support is about resources, which means money, which means budgeting adequately for that three-year DC network optimization plan, or that new transportation management system, plus the training and the people necessary to run it. That budget must then be protected as the year unfolds when other priorities—like sales and earnings—fall short of expectations.
Management support is also about time. You want company executives to show up for regular meetings—not just the kick-off meeting—and communicate by their presence that the company's supply-chain initiative is a top priority.
This support also means running interference as changes take time to deliver results, and resolving disputes when efforts to optimize processes across silos require one department to take a hit for the benefit of all.
Management support comes most easily from executives who have risen up through the operations ranks, who have been schooled by experience in what it takes to make customers happy. But those folks are a minority in executive suites. Everyone else has to be convinced.
Selling the importance of logistics starts with a clearly communicated strategy supported by detailed investment and change proposals. Like any corporate investment, such proposals have to be made in financial terms that top executives will understand, starting with the impact on the income statement and balance sheet.
After the numbers are in order, the real sales job begins. The ability to win over the company's executive team, and then deliver on promises, is what distinguishes an average logistics manager from one with a market-beating success story to share. These are the people who eventually appear on the pages of magazines like this one. We would love to tell your story.
