4 tips to improve logistics strategy
Whenever you are working as a part of a supply chain, you always need to understand that a chain is as weak as its weakest link. If your business is around physical goods, you will always have to deal with logistics. Especially if you are a shipper, you need to understand that logistics is a crucial part of the end user experience – and you need to ensure this link in the chain fits your overall strategy.
Therefor, your logistics strategy should always be very tightly integrated to your corporate strategy. For instance:
- – If your strategy is to be the cheapest supplier in the block, then the goal of the logistics strategy is to move products at the lowest possible cost.
- – If your corporate strategy is based on agility and the movement of goods faster than the others, then logistics strategy is based on speed rather than cost.
- – If your company sets the standard for quality, then your logistics goal should be to maintain perfect orders and eliminate/minimize errors.
Within the supply chain, there is the ongoing logistics challenge to optimize service and cost performance. There are more tools and challenges than ever before. For supply chain professionals, it’s all about delivering cost efficiency and good service. To achieve this status quo, companies need to gain end-to-end visibility of their value network and analyze service level and cost performance.
If you are a shipper dealing with physical goods, here are a couple of tips on overcoming logistics challenges and how to improve logistics strategy, efficiency, and performance:
1. Begin by building a transaction and information foundation. Often this could mean partnering with a third party logistics provider (3PL) who has the people, processes and some technology needed to execute, gain visibility, track and report cost and service performance.
2. You need to make sure you have the right people planning, executing and optimizing your transportation network. Communication is critical across the supply chain – to internal stakeholders, customers, suppliers, carrier partners and others in the industry – and managing the relationships.
3. Once you have a solid base of logistics information available based on data technology, you must analyze the data to optimize the freight. Remember strategic and tactical levels. Strategic optimization looks at procurement processes, selections of mode and overall supply chain network design. Tactical level optimization is related to you using right carriers, following if deliveries and pickups on-time, etc. Shippers should analyze the cost and the performance of service daily, preferably real-time and proactively, to see where they’re having carrier performance or service issues.
4. Don’t forget reporting, monitoring and continuous logistics process improvement. You’ve built that solid foundation of people, processes, data technology, accuracy and visibility; then it’s time to monitor, report and look for continuous improvement. By creating clear KPIs, dashboards and understandable reports, quarterly business reviews, and your continuous ad-hoc daily reporting, it makes it possible to examine trends over time and how you’re performing. This ensures logistics improvement and logistics efficiency.
Gaining end-to-end visibility and leveraging the data can help shippers identify opportunities to take unnecessary costs and inefficiencies out of their supply chain, step by step.
Successful execution of your logistics strategy will help you overcome logistics challenges and ultimately be extremely beneficial to the company. It helps the team & organization meet its strategic objectives and drives value for all stakeholders.
Remember that even with outsourced logistics, the end customer will see the logistics performance as a part of your product and service. Logistics is a part of your brand. Manage it that way.