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Managing the Logistics Process

There are quite a number of logisticss service companies offering best practice distribution and supply chain solutions that provide users with a competitive advantage, improved customer service, and increased efficiencies. They promise engineered solutions built around process improvements, materials handling automation, controls, and

and performance management software.

I have yet to meet a company with all these attributes in Nigeria. There may be. However, in reality, most LSPs (Logistics Service Provider) only specialise in one or two areas.  The larger firms offer to take over the entire process from pick-up to delivery thereby passing gains in one process to offset losses in another.

The concept of an LSP that manages all the phases involved in the logistics chain while outsourcing the actual tasks may be just around the corner and i suspect such service may already be provided but by smaller firms.

 This way, one can utilise the particular expertise of one company in task A, with the efficiency of another for task B.  The company using this method can then focuson managing the entire process and providing a best of breed aggregation of services. 

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Thursday, May 4, 2006 Posted by | Supply Chain | 1 Comment

The Manager

I was given that the manager is a person who handles complexity.

In my opinion, one of the key attributes of a manager must be the ability to break up such comlexities into simpler and easier to manage tasks, and to assign these tasks in such a way as to achieve objectives.

This way, devoting to a job need not be all comsuming. The better manager can find time to to engage in more than one pursuit.

You generally perform better when you enjoy your job, and you enjoy your job when you manage it well.

Thursday, May 4, 2006 Posted by | Careers, OpenZone, Supply Chain | Leave a comment

Logistics Performance Measurement and the 3PL Value Proposition.

Excerpts copied from Logistics Quarterly the official magazine of the Logistics Institute. For the whole article, click here

The case for logistics performance measurement
The five most recent studies published by the Council of Logistics Management on the subject of performance measurement in logistics had three significant findings in common (Kearney 1984; Bowersox et al 1989; Byrne and Markham 1991; Global Logistics Research Team at Michigan State University 1995; Keebler et. al. 1999):

(1) Most firms do not comprehensively measure logistics performance,

(2) Even the best performing firms fail to realize their productivity and service potential available from logistics performance measurement, and

(3) Logistics competency will increasingly be viewed as a
competitive differentiator and a key strategic resource
for the firm.

There are three major reasons why firms measure their logistics performance. They are to (1) reduce their operating costs, (2) drive their revenue growth, and (3) enhance their shareholder value. Measuring operating costs helps to identify whether and where to make operational changes to control expenses and to discover areas for improved asset management. To attract and retain valuable customers, the price/value of products offered can be enhanced through cost reductions and service improvements in logistics activities. The returns on stockholder investments and the market value of the firm are impacted by the performance of firm logistics. These seem to be obvious reasons why companies should want to be competent in performance measurement.

The 3PL value proposition
Third party logistics providers enable firms to achieve reduced operating costs and increased revenues in new and existing markets. 3Pls provide firms an opportunity to enhance their market value by reducing ownership of assets, which translates to a higher return on remaining assets and greater return on stockholder investment. 3PLs also bring to the relationship their specialized expertise in managing logistics with contemporary technology and systems. The COO’s decision to outsource company logistics operations to the 3PL is often justified solely on the favorable difference between the more efficient 3PL’s price for the services and the firm’s higher costs of existing operations. The chief marketing officer views the enhanced services and distribution reach of 3PLs in existing and new markets as translating into increased sales and better long-term relationships with customers. CFOs are delighted to see assets — property, plant, equipment, and even inventory — disappear from the firm’s balance sheet, freeing up cash for more productive uses, instantaneously and “permanently” improving the company’s returns on assets. CIOs are often very pleased to have access to the 3PLs systems and technology resources, avoiding the cost and trauma of upgrading their own. Reliance on the 3PL alliance frees up company employees to focus on their core competencies, doing more of what they are good at and less of what can be done better by the 3PL. Chief logistics officers begin to realize that ownership of resources is not necessary to achieve control over the results.

Conclusions
In today’s competitive market place what distinguishes winners from losers is the ability to differentiate themselves through their service and product offerings. For many firms, the service differentiation is accomplished by how well the logistics process is managed. To achieve excellence in logistics, successful firms ensure that the key logistics processes are aligned with the firm’s business strategy and measured against predetermined performance objectives. Additionally, the top firms are jointly defining the specifics of each measure with their trading partners (customers / suppliers / 3PLs) to create a common understating of expectations. While some firms are developing their measurement capability internally, a number are turning to 3PLs to support their needs. As focused service providers, 3PLs are ideally positioned to bring the systems, process design, and managerial expertise to aid in establishing and implementing a comprehensive logistics measurement effort. The 3PL is also often in the position to act as a catalyst for meaningful dialogue between trading partners to establish a level of service performance that truly adds value.

Regardless of the approach a firm takes in establishing logistics measurements, the real value comes when the information is acted
upon to align the effectiveness and efficiency of the logistics process performance to a level that is valued by customers. How well is your organization meeting your customers’ logistics expectations? What
role can the 3PL have in your success? Now may be the time to start measuring your logistics performance.

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Wednesday, February 22, 2006 Posted by | Supply Chain | 5 Comments

Outsourcing Logistics

As most large businesses move towards lean operating methods, outsourcing logistics requirements can help to reduce your company’s costs, improve your customer service quality, and increase the synchronization of activities throughout your supply chain. It can also help to identify opportunities to generate savings in your transportation, warehousing, and private truck fleet operations.

Sometimes a mix can be a better deal. By determining where your strengths lie, a Third Party Logistics company, – acting as consultants – can help you choose which part of the supply chain to outsource. Therefore you need only outsource parts for which your current solution is deficient. Thereby improving your competitiveness with much larger companies with seemingly boundless resources.

These third party logistics services can be as simple as brokering out and managing freight flows for the customer to more complex and difficult set-up and operation of major warehouse or distribution center operations.

Some 3PLs are internet based, and they offer load brokerage and freight matching services, or act as a hub to present to users a whole host of companies and services need by logistics and supply chain professionals as well as the information they need to do their jobs.

Thursday, February 16, 2006 Posted by | Supply Chain | Leave a comment

Logistics

Logistics is the art or science of moving resources efficiently with the minimum of cost and disruption from one place to another. I saw this  definition on Wiki:

Logistics is the process of strategically managing the procurement, movement and storage of materials, parts, and finished inventory (and the related information flows) through an organisation and its marketing channels in such a way that current and future profitability are maximised through the cost-effective fulfillment of orders”

This used to be just another part in the supply chain process but has grown to include purchasing, and warehousing.

The key points to note in any definition are efficiency and movement.

The movement part is rather easy. A resource has to be moved from the originating point to a place where it will fulfil a need. the tricky part, is doing it efficiently.

In Nigeria, processes tend to be complex – Sometimes unnecessarily so. this means that to efficiently move a resource to the customer, is very demanding. one must navigate several obstacles especially regulation.

…to be continued

Friday, December 9, 2005 Posted by | Supply Chain | Leave a comment

From here to there…

The Supply Chain

Wikipedia defines the Supply chain as “.. a business process that links suppliers, manufacturers, warehousing, logistics, retailers and the end customer in the form of a linear integrated skill and resource pool with the aggregated goal of delivering a product or service. It encompasses all activities and the flow of information both upstream and downstream the chain and is associated with the transformation of a product from raw materials through to a finished product.”
This is correct. However, it does sound a little too academic.
One way to look at the supply chain is as a network. This network includes all the players and facilities involved in getting the goods from materials requirement stage to fulfilment stage.

The entire chain is subdivided into subnets: Manufacturing, Finance, Warehousing, Logistics, Distribution, Retailing…

Each of these subnets is vital and linked to more than one other in the network, forming an intricate web that needs to be managed with skill – and foresight. Minor errors can sometimes (and often) lead to financial ruin.

I will visit each one in turn. Starting with…

Logistics

Friday, November 25, 2005 Posted by | Supply Chain | Leave a comment

How to play

To be a player in Supply chain Logistics as in every other service, one must be aware of all the factors.

You’d be amazed to know all that is involved in getting an item from one place to another. Banking, transportation, insurance, government regulations… Each of these in itself, requires major study.

To be succesful in this industry, you must be able to sell. no, i’m not going to be a text book but i will challenge myself to see how much i really know.

So, ask your questions now…

Friday, November 25, 2005 Posted by | Supply Chain | Leave a comment

Logistics Consulting

I have been asked to start a consultancy. I think I’ll give it a shot and post my experiences and views about it.Image

Friday, November 25, 2005 Posted by | Supply Chain | Leave a comment