The title of a recent best-selling thriller, The Rule of Four, refers to a riddle that unlocks the mystery of a Renaissance manuscript. But there’s nothing cryptic about our Rule of Three — it consists of basic tenets that should form the foundation of a sound logistics strategy in 2005. At seminars and workshops around the country this year, professors and practitioners presented no dearth of theories, ideas, and advice, yet these same three recommendations cropped up again and again. We summarize them for you in an easily readable (and portable) format:
- Control your costs
Despite what you may read and hear about the economy improving, the bottom line remains what it has been for several years — trim your expenses. In its annual survey of industrial firms, “Logistics Cost and Service 2004,” the consulting firm Herbert W. Davis and Company/Establish Inc. found that respondents’ most pressing issue in operating logistics functions was reducing costs. The Council of Logistics Management points out that those managers who deliver increased efficiencies each year are “the ones whose careers continue to rise.”
- Think global
Today’s supply chain girdles the earth, encompassing Europe and Latin America, Africa and Asia. An MIT study of large companies found that the majority required their third-party logistics providers to serve the global marketplace. And offshore outsourcing isn’t the only “global” thing going on; foreigners send more office work to the U.S. (amounting to a $53.6 billion surplus last year) than what goes overseas from here, reports the U.S. Commerce Department.
Before you dismiss this as a cliché, consider the ideas of the world’s best logistics experts. Professor Yossi Sheffi of MIT says that most innovative technologies go through six evolutionary stages, and that analyzing their progress can lead to breakthroughs. At the U.K.’s Cranfield School of Management, Professor Martin Christopher advocates a practical seven-step formula for agility. “New ways of managing supply chains are needed if we are to meet the demands of increasingly turbulent markets,” Dr. Christopher says. “We must be prepared to question long-held beliefs, like the assumption that inventory is always bad.”