3D – Think Supply Chain, Logistics and Transportation.

In my overall post, logistics and supply chain posts clocked the highest visit. I received emails thanking me for my simple wisdom on logistics. Logistic is not my favourite subject, marketing is. But when marketing defined as “strategy” of the organization, logistical consideration is a must. I connect logistic and marketing. Both cannot be in silos. Why marketing? They deal with customer, direct. Logistic, while defined as “process on how the product moves from point of origin to customers”, still the processes don’t interact with the customer directly. It is through logistical medium such as trucks, lorries, quality control, customer service, order fulfilment and so on. Therefore a delicate understanding is dire between these two, because ego doesn’t solve problem. Let marketing strategize, but logistic we need your brain on the table. Lets do it.

Now, with 3D slot (Deadly, Doable and Duplicable) – it’s a slot that I created to summarize my reading. I got hold of logistic case studies book, and I love..case studies. The book title is Global Operations and Logistics – Text and Cases by Philippe-Pierre Dornier et al. Here are 20 logistics nuggets of 3D I gained in the process for you to think about.

1.  From a process management viewpoint, satisfying customer demand is the overriding process that directs all activities

2.  Financial indicators are commonly used for measuring the performance of companies. However financial measures may paint an incomplete picture of a company’s operation. We have to have a set of measures. They are cost, quality, service and flexibility.

3.  In some manufacturing business, to boost sales is by redesigning the logistics and transportation processes. Because in some market, the customers are vastly different. It can be logistically challenging to serve a market that is half world away.

4.  If you are a global business or aspire to be one, you need to include logistic studies in your marketing plan.

5.  Sometimes to make your business logistically sane, you need to recruit and train up suppliers that maybe 300 miles away from your factory. Invite them and open up to them. They are more willing to do business with you if you do it right.

6.  Technology is key in making your logistics processes efficient. Be sure to handle the integration part to other areas of the business. Do not attempt to confine logistic into a corner, you would do better without technology instead.

7.  Era of standard products is over, and the era of extreme product customization is at hand.

8.  Recent changes in customer behaviour have shaken up the four pillars of marketing strategy. These changes have caused manufacturers, wholesalers, and retailers to adapt their strategies and organization structure in order to meet new expectations.  (I highly recommend my S6PEC approach to marketing).

9.  Logistics cannot keep costs down if it operates only in reactive mode, however, in order to realize maximum cost reductions, logistics must be considered from the start – from product conception stage.

10.  Changing consumer behaviour has important consequences for logistics and operations management; faster product renewal, increased availability, shorter delivery times, higher levels of customization and extreme level of functionality.

11.  Careless logistics planning can swamp your business model, kill your revenue model and ruin your strategies.

12.  One of Japanese key success factors in manufacturing is because of its superior structure in manufacturing systems. A unique attribute of this structure is the multiple-layered supplier pyramid. Where the uppermost of the pyramid is the final (end-product) assembly unit that caters to end-users. Each tier feeds product/material to the next higher tier. It promotes agility, innovative and efficient both in cost and administration.

13.  The following are key characteristics used by a technology company to assess its components to be outsourced or not:

– A mature, trusting relationship exists with the best supplier category

– The supplier must have a good engineering capability

– The volume of product category exceeds $1 million

– The product category involves many transactions, creating a need for an in-plant representative

– The technology in the category is not changing at a revolutionary pace

– The category does not involve proprietary or core technologies

14.  At one time, a Japanese automaker based in United States employs 340 people to manage 180 direct suppliers for an output of 3.6 million cars annually. In contrast to the US automaker employs 6,000 buyers to manage 1,500 suppliers for an output of 6 million cars annually. Clearly, the Japanese automaker reaps many cost savings from consolidating its supplier base.

15.  If there is one process that will make or break your core products or services and can be detrimental to your entire business, make sure you control it. Do not outsource that part.

16.  If you are a logistics supplier, you got to learn about your customers business fast enough to serve them. You will be surprised to learn that they need you to think for them and business awaits you. You have to have a vision for the customers.

17.  Internet is a good medium for a logistics company to start a new business i.e. by partnering with worthy product manufacturers or suppliers. In this way with you are maximizing your logistics opportunity and its almost zero cost.

18.  If you are already too networked as 3PL you should start operating 4PL to increase efficiencies. This will create new resources and new expertise.

19.  If your country is moving up the value chain and starting to focus on high tech industries, as logistics supplier you need to know when to change. You might want to consider expanding overseas or pick up new technology to cater to new customers domestically.

20.  As logistics and supply chain practitioners, learn about your own organization in totality. Be open both in heart and mind.

Logistics, supply chain and transportation studies are like a family. They are so inter-related. I am currently experimenting the application of this knowledge and thinking for service and knowledge-based business. Pretty awesome!

Brickbats please send to donkhairul@gmail.com

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