There's a sentence near the end of Perry Trunick's article on international freight forwarding in this issue ("Global Sourcing, Global Markets, Global Headaches"), that should strike a chord with every logistics manager: "The factory in China missed its deadline, putting pressure on the transportation network to take up the slack."
Ring a bell?
How often is your logistics organization called upon to make up for delays, missed deadlines and outright incompetence elsewhere in the supply chain? As everyone familiar with the "bullwhip effect" knows, such demands are inevitable because, on the inbound side, transportation is at the tail end of the procurement process. On the outbound side, it's at the tail end of the order fulfillment process. As dog owners and logistics managers know from experience, being at the tail end of anything isn't always fun.
Imagine, if you will--insert swirling Twilight Zone imagery here--that instead of being at the tail end where any minor problem is magnified and multiplied seven-fold, that you were put in charge of the folks in sales, marketing, purchasing, engineering, manufacturing and finance. All of the people who cause you grief every day. What would you do?
Here are a few ideas to spark your imagination:
Sales: You could realign sales incentives to balance the workflow through the company's distribution network. No more end-of-the-month or end-of-the-year crunch to place and ship orders. Net result: Reduced overtime and a more predictable customer demand that allows your organization to lower inventory levels, freeing up cash for more productive purposes.
Marketing: You could require final sign off on all marketing promises. From delivery timeframes and special promotions to rush order requests, no one makes any customer guarantees that your organization isn't equipped to handle. Net result: Logistics' ability to deliver and satisfy customer expectations increases customer loyalty and drives repeat business.
Purchasing: Total logistics costs, not just per unit price, would be included in all buying decisions. And while you're at it, you'd add a "headache factor" to the quotes of the bottom 5-10% of suppliers who almost always ship late. Net result: the elimination of sourcing decisions made to save a few pennies on purchase price, where any savings are negated by the need for expedited transportation or, much worse, parts unavailability.
Engineering: The ability to compromise and consider alternatives would be spliced into everyone's DNA. In addition, engineers and product designers would always consider shipping and packaging requirements at the start of the product development process. Net result: Oddball configurations are eliminated and cube utilization is improved, reducing overall transportation costs.
Manufacturing: Machine utilization as a performance measure would be replaced by metrics that reflect customer demand. Any hiccups in production would immediately be communicated so alternative transportation capacity could be lined up and customer expectations could be managed. Net result: Reduced raw materials and finished goods inventory, and better customer relationships.
Corporate finance: Budgeting and forecasting would become a reality-based process informed by thorough market analysis, not a dreamland of hopes filled with arbitrary targets and.... Whoa there, back to the real world before we get too carried away.
If such measures were implemented at your company, maybe supply chain and logistics wouldn't always be trying to make up for lost time. Wouldn't that be nice? You could spend your time planning for tomorrow rather than fighting fires all day. Every day would follow a regular pattern and routine. Hmm. Sounds kind of boring, doesn't it?
There's a bit of the masochist in every person who works in logistics. On some level you like being the person who has to save the day. Taking up the slack is what you do best. Admit it. You like it.
WHAT DO YOU THINK?
Pick a corporate function outside of logistics that causes you the most headaches, and share your thoughts on what you would do if you were in charge with the Logistics Today community (forums.logisticstoday.com).
