We need to talk about supply chain management - and, more specifically, the role of logistics within the supply chain - in a way that honors the far-reaching effect of those activities throughout a company's operations. On the one hand, there is still a lack of awareness in the boardroom; not surprising when you consider how rare it is, even now, to find a C-level logistics or supply chain exec there. But logistics and supply chain managers, also, are partly responsible for the unfairly low profile their operations maintain within the corporate structure. In short, they fail to recognize their roles in the broader context.
If we want logistics to be appropriately recognized for its contribution to business success, two things urgently need attention. First, logistics managers need to get more serious about understanding and broadcasting the way these day-to-day tasks have an extensive and important ripple effect across any given company. Secondly, those managers also need to bring hard data about supply chain operations into the broader mix of financial and operational information. A more confident and cross-disciplinary outlook will help with the former. Technology can help with the latter.
“At the end of the day, all we do is move shirts,” one logistics colleague muttered to me as he was about to quit his job. He saw his role as one-dimensional; merely moving product from point A to point B. This was ironic, because he had only just completed a very successful project that improved safety in his company’s operations, reduced inventory, and made ETAs more predictable. Yet still, the definition he gave himself and his job was limited to “just moving shirts.” But the truth is that he had lost sight of the bigger picture; of the downstream and integrated impact of his efforts. I felt as if I was talking with the logistics version of George Bailey from the movie “It’s a Wonderful Life.” In the movie, George loses sight of all the lives he has touched and of the tremendous impact he has had on his community. Through divine intervention, he is given a view of how that community would have turned out without him. In hindsight, I wish I could have creatively painted an equivalent picture for my friend, so he could see his true impact. His projects improved inventory turns, helped to increase gross margins and allowed the company to expand in emerging markets – creating more jobs and supporting top-line results. It was so much more than moving shirts.
As a reader of SupplyChainBrain, you understand that the supply chain is anything but one-dimensional. My favorite interview question to ask job candidates at Amber Road is: “What is a shipment?” If the potential employee can answer in one sentence, they don’t get the job. There are countless variables in defining a shipment, as well as many responsible parties. There are interested parties from financial and compliance aspects; as well as the possibility of a myriad of different shipment configurations and ownership structures.
You may be fully aware that supply chains are complex and ever-changing, but do you effectively communicate the depth and ripple effect of your work? For example, how did you paint the picture about the recent Hanjin bankruptcy? Did you answer in one sentence – or did you offer a more complete picture?
Is your description of supply chain interruptions limited to the physical impact of late shipments for the holiday season, for example? You might want to expand your vocabulary to include terms the CFO will understand – inventory turns, days sales outstanding, and other balance sheet metrics. Logistics is far too important to limit the description of its influence to a single area of operations.
Increasing global trade volatility and the push towards expanding into emerging markets while maintaining gross margins are raising the stakes for everyone, and company departments need to pull together more than ever. Are your logistics systems able to support sourcing and trade compliance business processes? Can documentation be created from a single repository that is tailored for the different functions of sourcing, logistics, import and export – even manufacturing and packaging design and promotions? The ripple effect of logistics-related information is just as great as the physical one.
The good news is that the growth in the amount of information generated by logistics functions gives you increasing evidence to win recognition. Although supply chain applications that provide visibility into physical movements have been around for many years, the breadth and utility of the information they gather has matured significantly. Track and trace functions have moved far beyond monitoring containers and event tracking. Our customers typically want so much more: managing and optimizing the total cost to serve at a line item level, for example. Other customers are integrating the physical and regulatory compliance business processes to streamline cross-border operations, thereby reducing Customs delays and inventory carrying costs, and driving improvements in export operations cycle times. That can only happen via the multi-dimensional collection and integration of data elements, business processes and disciplines. Logistics operations provide the common thread in this ever-growing skein of information.
At the end of the day, logistics has a tremendous ripple effect and impact on your organization – spanning the full spectrum of your business and business systems. Expand your descriptions and plans beyond a limited view, to reflect logistics’ true importance to the success of your company.
At Amber Road, Stephanie Miles is senior vice president of commercial services.
Source: Amber Road
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