Logistics effectiveness requires teamwork
Wednesday, 15 August 2007
Tom Craig
Logistics, perhaps more than any other function, impacts and interacts with many different departments in a company. Consider five key issues with logistics
l Movement of Product
l Service/Time
l Cost
l Movement of Information
l Integration, within your company, with customers and with vendors.
Scope. These issues touch almost all parts of a company. Logistics likely has worked with all of them at one time or another. Accounting. Finance. Engineering. MIS. Marketing. Sales. Manufacturing. Customer Service and Purchasing (if they are not already a part of the logistics organisation). Some of these departments work daily with Logistics, some less frequently.
There are also external elements to the supply chain with vendors, customers, carriers, warehouses and other organisations. If the supply chain includes imports and exports, the scope of the logistics pipeline is extensive. With the global activity, the logistics pipeline is very significant. No other function has this scope of responsibilities and interfaces. There are service issues. Cost issues. Operational issues. Strategic issues.
Logistics must deliver products to a customer at the time, method and cost to satisfy that particular customer's requirements. Responsiveness is needed, the quicker the better, the smoother the better. Flexibility is needed to meet the quickly changing market and customer demands.
Usually each customer has different requirements on how he wants his orders handled. So as the number of customers increases, so do the demands to meet the unique requirements of each customer. Take this responsibility back through the supply chain, through to the various vendors who supply parts and services and the scope of interaction becomes very significant and complex.
Teamwork. Logistics effectiveness is a process, an ongoing process. It is not a quick fix, not a 90-daywonder. It does not occur because someone holds a meeting or writes a memo. It takes teamwork to be effective. The problem may seem to be excessive inventory or high freight costs or slow order cycle times or some other problem. Yet often these are not problems, they are symptoms. It takes teamwork ,the diverse functions of a company and the external organisations working together. With a team perspective, root causes and bigger issues can begin to be recognised and addressed.
Teamwork presents opportunities to look at how best to serve your customers, how to best conduct business. To make all this work, and work effectively, requires the positive, active participation of diverse functions, diverse outside companies. It takes teamwork--real teamwork, both internal and external. It takes information to communicate between and among the various internal and external elements. The teamwork and information should then be integrated
This can be easier said than done. Look around at sports teams or at other companies. Not all teams are successful. Some are downright terrible, both at playing and at organisation. They are teams in name only. They don't work together. Yet others are highly successful. They win. And they continue to win, year in and year out. They do this because they work together. Self-serving agendas and other negatives get in the way. Teamwork means everyone working together because it's good for the company. It means sales, growth, profitability, jobs and a sense of feeling good.
The team must be cross-functional. It cannot just be members of the logistics organisation. This is not effective. It must include Sales, Manufacturing, Purchasing, MIS, Accounting, Logistics and whoever else is needed to achieve results. They must work together to analyse the needs, issues and concerns, whether they are meeting the needs of customers and/or taking a blank sheet of paper to reengineer their entire process.
The team may tackle broad issues involving changing customer and market demands, service, cost, quality, the company network of suppliers, plants, warehouses and territories. These are significant issues, vital to the future of the company. The team may, in reality, be agents of change.
There is a problem with achieving teamwork--it's the organisation chart. Organisation charts show who reports to who. Who has what functions? These can become a barrier to teamwork. They can operate as functional silos. Silos are vertical, teamwork is horizontal. These create turf wars.
Departments squabble about whose budget will be hurt. They hinder integration and working together. It can get in the way of cross-functional endeavours, especially on an ongoing basis.
Now when you expand the team to be a global team, reflecting the global scope of the logistics pipeline, the team issues must also include cultural issues. They must also recognise the goals of the outside companies, which may be different than your company. The outside company is not wrong with their own goals. But this should be recognised. Cost and service goals can conflict. Short term goals can conflict with developing an ongoing, dynamic and effective logistics process.
With the external organisations, we are talking about partnerships, not a buyer-seller relationships. The external elements must be made part, an integral part, of the team. They are not just given orders by their counterpart in the other organisations. They are a very vital part of the team. They must provide the parts and services necessary for the supply chain to properly function.
The outsiders must be made insiders. Everyone must share respective department and company information and plans. They must understand each other's operations and requirements. They must be active participants in the team. All the internal work may fail, without the participation of all the key players, including those outside the company. Think of how much of the logistics pipeline actually takes place outside of the company. It is quite a lot, perhaps even more than takes place within the company itself. It will produce good results where functions work with their counterparts at the customer or vendors with the cross-functional teams.
Not every vendor, customer or service provider may develop into a key relationship. This reflects the complexity, scope and priority that each has the supply chain. But you must look at the entire chain. If you do not, you will not achieve the necessary effectiveness. Where the relationship is vital, then the mutual synergies and interaction must be developed into the team.
Information and Technology. To be responsive to customer needs, you must be able to analyse your present operation. Plans and information must be shared by and among the team members. Good data, detailed, is necessary, as are methods to take the data and transform it into information. You must be able to communicate the needs and plans effectively throughout the supply chain. This is true whether you are talking about external elements, customers, vendors, carriers, forwarders, warehouses and more. It may be even more true internally, both as to communication and activity.
With mutual sharing of information, everyone must understand what is required and his role in meeting the requirements. With this understanding, the supply chain can work. It can work, even when there is a problem, when something does not quite go as planned. There is flexibility. But it requires information to make it all happen.
Technology is a key factor today. Personal computers, E-mail, EDI, bar-coding, and more. These are not optional. Many customers place their orders via EDI; they want ASN's. Bar-coding is vital to inventory management, order management, information systems for logistics segments, manufacturing, accounting and other groups within a company. Most systems have a focus, whether designated primary or implicit. It may be accounting. It may be manufacturing. But remember, no other function in a company interacts with as many groups as does logistics. If the system is not sufficiently focused on logistics, it will not achieve its maximum results. Systems create information which can create value-added, both for your internal operations and for external, especially with customers.
Integration. Integration brings the team an information together. It must occur within your company, between you and your customers and between you and your vendors. All the elements of the team and the information must come together into an integrated effort. This is absolutely necessary for logistics effectiveness and success. You are forging a supply chain, and each link must be strong.
Consider a situation where you must make 10,000 of a product for a promotion or key customer. You get your team together. You discuss and find out you can manufacture 2,000 per day. Further there is one very critical component needed. The vendor is located overseas. You talk with him. He discusses his available capacity, stock status and ability to manufacture. Together you agree that he can make a special run for you. His production rate will be 4,000 per day. Now with this information, the team can review alternatives, such as have the vendor hold all production until he has 10,000 made. Or they can decide not to hold but instead to ship his production each day, creating a pipeline of inventory intrans it and on hand.
With the short timing required, the teams decide to air freight the components. Your team also includes your air forwarder and customs broker. The forwarder tells you that there is a space shortage. You workout a programme with him to schedule, prioritise and move the components. You also work with the forwarder, your customs broker and the trucker on what everyone must do so the shipments are not delayed upon arrival. Teamwork.
Or a major customer sends you his new requirements and procedures. These involve bar-coding of cartons and shipments and require EDI receipt of his orders and your transmission of advanced ship notices and invoices. The team gets together. MIS reviews what must be done to receive the orders and what must be done to transmit the ASN's and invoices. They also analyse the current system to automate it to facilitate ASN's and to better manage the warehouse, using the bar-code internally to prepare bar-code labels, and to track inventory and orders. Purchasing is given the carton bar code requirements and discusses with their box vendor what must be done. Customer Service reviews how they will handle orders coming in EDI as opposed to faxes. Accounts Receivable and Accounting review how they will track receivables and book the sales using the EDI transmission. Sales heads up a cross-functional team to meet with their respective counterparts at the customer. Teamwork.
Conclusion. No man is an island, and certainly no department is, especially Logistics. To have logistics effectiveness requires internal and external teamwork. Cross-functional teams must work together to handle the ever dynamic and complex requirements of doing business.
The writer can be reached at email: tomc@ltdmgmt.com
Logistics, perhaps more than any other function, impacts and interacts with many different departments in a company. Consider five key issues with logistics
l Movement of Product
l Service/Time
l Cost
l Movement of Information
l Integration, within your company, with customers and with vendors.
Scope. These issues touch almost all parts of a company. Logistics likely has worked with all of them at one time or another. Accounting. Finance. Engineering. MIS. Marketing. Sales. Manufacturing. Customer Service and Purchasing (if they are not already a part of the logistics organisation). Some of these departments work daily with Logistics, some less frequently.
There are also external elements to the supply chain with vendors, customers, carriers, warehouses and other organisations. If the supply chain includes imports and exports, the scope of the logistics pipeline is extensive. With the global activity, the logistics pipeline is very significant. No other function has this scope of responsibilities and interfaces. There are service issues. Cost issues. Operational issues. Strategic issues.
Logistics must deliver products to a customer at the time, method and cost to satisfy that particular customer's requirements. Responsiveness is needed, the quicker the better, the smoother the better. Flexibility is needed to meet the quickly changing market and customer demands.
Usually each customer has different requirements on how he wants his orders handled. So as the number of customers increases, so do the demands to meet the unique requirements of each customer. Take this responsibility back through the supply chain, through to the various vendors who supply parts and services and the scope of interaction becomes very significant and complex.
Teamwork. Logistics effectiveness is a process, an ongoing process. It is not a quick fix, not a 90-daywonder. It does not occur because someone holds a meeting or writes a memo. It takes teamwork to be effective. The problem may seem to be excessive inventory or high freight costs or slow order cycle times or some other problem. Yet often these are not problems, they are symptoms. It takes teamwork ,the diverse functions of a company and the external organisations working together. With a team perspective, root causes and bigger issues can begin to be recognised and addressed.
Teamwork presents opportunities to look at how best to serve your customers, how to best conduct business. To make all this work, and work effectively, requires the positive, active participation of diverse functions, diverse outside companies. It takes teamwork--real teamwork, both internal and external. It takes information to communicate between and among the various internal and external elements. The teamwork and information should then be integrated
This can be easier said than done. Look around at sports teams or at other companies. Not all teams are successful. Some are downright terrible, both at playing and at organisation. They are teams in name only. They don't work together. Yet others are highly successful. They win. And they continue to win, year in and year out. They do this because they work together. Self-serving agendas and other negatives get in the way. Teamwork means everyone working together because it's good for the company. It means sales, growth, profitability, jobs and a sense of feeling good.
The team must be cross-functional. It cannot just be members of the logistics organisation. This is not effective. It must include Sales, Manufacturing, Purchasing, MIS, Accounting, Logistics and whoever else is needed to achieve results. They must work together to analyse the needs, issues and concerns, whether they are meeting the needs of customers and/or taking a blank sheet of paper to reengineer their entire process.
The team may tackle broad issues involving changing customer and market demands, service, cost, quality, the company network of suppliers, plants, warehouses and territories. These are significant issues, vital to the future of the company. The team may, in reality, be agents of change.
There is a problem with achieving teamwork--it's the organisation chart. Organisation charts show who reports to who. Who has what functions? These can become a barrier to teamwork. They can operate as functional silos. Silos are vertical, teamwork is horizontal. These create turf wars.
Departments squabble about whose budget will be hurt. They hinder integration and working together. It can get in the way of cross-functional endeavours, especially on an ongoing basis.
Now when you expand the team to be a global team, reflecting the global scope of the logistics pipeline, the team issues must also include cultural issues. They must also recognise the goals of the outside companies, which may be different than your company. The outside company is not wrong with their own goals. But this should be recognised. Cost and service goals can conflict. Short term goals can conflict with developing an ongoing, dynamic and effective logistics process.
With the external organisations, we are talking about partnerships, not a buyer-seller relationships. The external elements must be made part, an integral part, of the team. They are not just given orders by their counterpart in the other organisations. They are a very vital part of the team. They must provide the parts and services necessary for the supply chain to properly function.
The outsiders must be made insiders. Everyone must share respective department and company information and plans. They must understand each other's operations and requirements. They must be active participants in the team. All the internal work may fail, without the participation of all the key players, including those outside the company. Think of how much of the logistics pipeline actually takes place outside of the company. It is quite a lot, perhaps even more than takes place within the company itself. It will produce good results where functions work with their counterparts at the customer or vendors with the cross-functional teams.
Not every vendor, customer or service provider may develop into a key relationship. This reflects the complexity, scope and priority that each has the supply chain. But you must look at the entire chain. If you do not, you will not achieve the necessary effectiveness. Where the relationship is vital, then the mutual synergies and interaction must be developed into the team.
Information and Technology. To be responsive to customer needs, you must be able to analyse your present operation. Plans and information must be shared by and among the team members. Good data, detailed, is necessary, as are methods to take the data and transform it into information. You must be able to communicate the needs and plans effectively throughout the supply chain. This is true whether you are talking about external elements, customers, vendors, carriers, forwarders, warehouses and more. It may be even more true internally, both as to communication and activity.
With mutual sharing of information, everyone must understand what is required and his role in meeting the requirements. With this understanding, the supply chain can work. It can work, even when there is a problem, when something does not quite go as planned. There is flexibility. But it requires information to make it all happen.
Technology is a key factor today. Personal computers, E-mail, EDI, bar-coding, and more. These are not optional. Many customers place their orders via EDI; they want ASN's. Bar-coding is vital to inventory management, order management, information systems for logistics segments, manufacturing, accounting and other groups within a company. Most systems have a focus, whether designated primary or implicit. It may be accounting. It may be manufacturing. But remember, no other function in a company interacts with as many groups as does logistics. If the system is not sufficiently focused on logistics, it will not achieve its maximum results. Systems create information which can create value-added, both for your internal operations and for external, especially with customers.
Integration. Integration brings the team an information together. It must occur within your company, between you and your customers and between you and your vendors. All the elements of the team and the information must come together into an integrated effort. This is absolutely necessary for logistics effectiveness and success. You are forging a supply chain, and each link must be strong.
Consider a situation where you must make 10,000 of a product for a promotion or key customer. You get your team together. You discuss and find out you can manufacture 2,000 per day. Further there is one very critical component needed. The vendor is located overseas. You talk with him. He discusses his available capacity, stock status and ability to manufacture. Together you agree that he can make a special run for you. His production rate will be 4,000 per day. Now with this information, the team can review alternatives, such as have the vendor hold all production until he has 10,000 made. Or they can decide not to hold but instead to ship his production each day, creating a pipeline of inventory intrans it and on hand.
With the short timing required, the teams decide to air freight the components. Your team also includes your air forwarder and customs broker. The forwarder tells you that there is a space shortage. You workout a programme with him to schedule, prioritise and move the components. You also work with the forwarder, your customs broker and the trucker on what everyone must do so the shipments are not delayed upon arrival. Teamwork.
Or a major customer sends you his new requirements and procedures. These involve bar-coding of cartons and shipments and require EDI receipt of his orders and your transmission of advanced ship notices and invoices. The team gets together. MIS reviews what must be done to receive the orders and what must be done to transmit the ASN's and invoices. They also analyse the current system to automate it to facilitate ASN's and to better manage the warehouse, using the bar-code internally to prepare bar-code labels, and to track inventory and orders. Purchasing is given the carton bar code requirements and discusses with their box vendor what must be done. Customer Service reviews how they will handle orders coming in EDI as opposed to faxes. Accounts Receivable and Accounting review how they will track receivables and book the sales using the EDI transmission. Sales heads up a cross-functional team to meet with their respective counterparts at the customer. Teamwork.
Conclusion. No man is an island, and certainly no department is, especially Logistics. To have logistics effectiveness requires internal and external teamwork. Cross-functional teams must work together to handle the ever dynamic and complex requirements of doing business.
The writer can be reached at email: tomc@ltdmgmt.com