It’s all too easy to be blindsided by the dizzying speed at which the logistics business is changing. But rest assured that there are coping mechanisms. Try the strategies below, recommended by Ian Beckman, senior vice president at Hellman Worldwide Logistics. These suggestions are about as up-to-date as you can get—yesterday we sat in on Beckman’s presentation on the topic at Logistics Service Providers 2004, a Worldwide Business Research conference taking place Dec. 6-8 at Miami’s Doral Golf Resort & Spa.
Focus on integrating your supplier into your supply chain, advised Beckman. He added that such integration is the only way to keep pace with developments such as flexible manufacturing systems, new approaches to inventory based on material requirements planning, just-in-time methods, and a growing emphasis on quality. According to Beckman, developing an agile supply chain involves outsourcing certain components of the operation, establishing a global logistics information system, and making sure of where the business fits in the supply chain. (Of course, all of this needs to be done without running up a hefty tab. Beckman cited a recent study showing that the top concern of U.S. manufacturers is to cut costs.)
Another priority should be to create key performance indicators (KPIs) that seek to develop skills, not just measure them. In a project that Hellman handled for high-end electronics maker Bang & Olufsen, the latter’s goal was not only to set up a DC that could serve the entire U.S. market but also to stay in control of the entire supply chain process. Bang & Olufsen set specific KPIs for international freight, warehousing, and IT requirements; examples included 100% accuracy of EDI data, 100% on-time picking, 100% accuracy, 98% on-time delivery, and zero damages and loss.
Beckman offered several tips for building relationships with suppliers that allow for change and negotiation: Develop a well-thought-out strategy for outsourcing; select providers rigorously; define your expectations clearly; spell out everything in the contract; establish sound policies and procedures; identify and avoid potential friction points; communicate effectively; and motivate and reward providers. Above all, don’t forget that the rules of good behavior apply to you as well.