Common Logistic Inefficiencies That Are Killing Your Bottom Line

Logistics is often viewed simply as the moving of goods from vendors to customers or from manufacturing facilities to warehouses or distributors. In actuality, it’s a lot more than that. Logistics is a process that involves the entire company, and inefficiencies within it can significantly impact the effectiveness of your business. Find out what they are and how to make sure they do not slow your company down.

Bad Information Management

In business, information is everything. Without relevant information, you won’t be able to do anything. There can be no planning, no insight into the work process, etc. By missing out on just one item, or piece of information, you risk destroying your company in the long run – and this simply cannot happen.

Therefore, the most important thing is to obtain all the relevant information for your business. The best way to do this is through an information management system. There are two ways you can go: custom solution or an existing one. If your company is in good financial standing, and you can afford it, we recommend that you obtain a customized system.

By integrating this information management system into your work process, you will be able to track all of your orders, warehouse inventory, supply chain, delivery, etc. Your entire business will go through a thorough transformation from the bottom up. Information management is the key to your business success.

Poorly Trained Employees

This is another part of logistics that many businesses somehow overlook. In every part of your company, trained, knowledgeable employees are an essential component of the entire work process. And logistics is no exception to that.

Your employees have to be fully trained for the position, and they need to possess enough knowledge to deal with their daily tasks and challenges. If you have staff members who were trained years ago, they won’t be able to contribute in their full capacity; they have to be trained anew, and learn everything about the new developments in the industry.

SOP That Needs Reworking

SOP or standard operational procedure is the axis of your work process. Just because you have a SOP and your company is working – doesn’t mean that you have the best SOP around.

Oftentimes, a good SOP doesn’t have too many steps. Some of the best SOPs have only a couple of steps, but they are all well thought out and tailored to the needs of the company. Therefore, you have to make sure that your SOP is in touch with the company values and your business requirements. SOP must address all the aspects of the work process, enabling them to work efficiently. Also, remember that a good SOP always includes regular quality control.

Neglecting KPI

KPI, or key performance indicator, is a very important aspect of logistics, and you should give it your utmost attention. In essence, KPI is an objective measurement of your work progress, based on two factors – 1) your business goals and 2) your standard of performance.

Just any a physical measurement instrument, KPI tells you how fast you are going toward your business goals within a given time frame. In order to be effective, KPI must include measurements from all the key aspects of logistics, such as:

  • order invoicing
  • inventory
  • purchase and supply
  • stock management
  • transportation

The more elements you include into your KPI, the more accurate its results will be.

Neglecting the Supply Chain

Supply chain is not some addition to your business. It is not an optional part of your business – it is your business. Think of supply chain as the bloodline of your company. If you block it, or don’t pay enough attention to it, your business will wither and die.

In order to make it as effective as possible, think of your supply chain as a standalone business within your company. It still belongs to your company, it works along with it – but it is also independent. Your supply chain is your connection to the market; without it, you are completely lost. The better your strategy for your supply chain is, the better your commercial results will be.

Be sure to have a supply chain with a good network design and solid supplier performance – both are equally important for its success. As mentioned earlier, your supply chain resembles a bloodline – in that sense, its network design is the system of veins and arteries and the supplier performance is a pulse.

No Strategic Planning

If you don’t know where you are going, you won’t get anywhere. This is where the importance of strategic planning lies. Your business, as a whole, needs strategic planning in order to survive, but so does every aspect of your business – including logistics. You need to develop a solid strategy for your warehouse, transportation, ordering, suppliers, vendors, etc.

Don’t leave anything to chance – each section of the work process has to be well thought out. Although you run your business on a day-to-day basis, you cannot allow yourself to plan on a day-to-day basis. Strategic planning requires seeing the “big picture” and thinking long-term.

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Lean Predictions For 2017 And Beyond

We polish our crystal ball and give you our insights into the future.

Prediction 1: It’s How You Implement It That Counts!

At least two Lean implementation forks in the road exist right now. One has some companies looking for the next big thing after a foray into Lean.

On the second path, companies in diverse industries such as manufacturing, healthcare, IT and aviation have achieved the planned outcomes that a sustained, successful Lean implementation brings. They are able to point to the specific rewards and improvements in parts, or across the whole, of their business.

For the first path, a lesson to emerge is that the journey can be a challenge and that even those with years of experience in performance improvement using Lean methodologies may have further to go to achieve the outcomes they are looking for, or, they may have to restructure their process. The challenge that a Lean implementation presents is for the many pathways to be explored and carefully implemented.

So….. we predict that companies will learn from these lessons and aim for a Lean implementation that is carefully planned. In this way companies avoid the frustration of having to look for the next new management tool as a result of an unhappy experience.

Prediction 2: It’s All About Your People!

• The Lean journey for some companies may be a case of history repeating itself. Project management evolved in the second half of the 20th century from an emphasis on “process” to an understanding that process is only part of the solution and the importance of fully engaged and empowered and enabled employees cannot be overlooked.

The Lean journey may have some parallels.

Lean emerged from the Toyota experience with an important message to emerge being“We do not just build cars, we build people”.

So we predict that companies implementing a Lean transformation will increasingly find ways to really engage employees and to develop employees’ Lean implementation capability and to meaningfully support them through the implementation.

As an element of this focus, we expect to see greater emphasis on the creation of cultural change as an essential component of a successful Lean implementation. In other words we predict that companies will incorporate an understanding of the importance for the business of really addressing “The way we do things here” as part of the Lean implementation.

Prediction 3: Let’s Not Forget Effective Management

If companies are to engage employees with the responsibility for continuous improvement via a Lean transformation, then they must ensure that managers can step-up to provide management processes and behaviors that not only lead the process change, but also generate employee engagement and commitment.

This requires managers understanding and explaining the need for, and the purpose of, the transformation. We see this as an essential beginning of the process.

Then managers need the capabilities to bring employees with them as the process unfolds. A well developed understanding of the Lean processes and principles is an essential start.

We predict further involvement by managers in implementing more generic management trends (that relate to a Lean transformation) to build on the capability-development trend. We can add improved understanding of culture change and development in companies, as well as greater knowledge of learning organizations and performance management in projects and teams.

Prediction 4: 2017 Will Be a Big Year

We guess that you have been paying attention recently and like us, expect the unexpected during 2017, as the changes in the USA political landscape ripple through to business.

We predict that the inevitable changes will create new opportunities and that winners will, to some extent, be those companies agile enough to look at process changes, technology advances and customer buying/interaction patterns that impact on the customer experience and the way they do business.

Emerging technology trends and changes in federal regulation in the USA (and elsewhere as the world catches up) will encourage companies to seek process and business change solutions as a matter of urgency.

Lean will play its part and may begin a new age of adaptive change.

More rapid evolution of the Lean process is, in our opinion, inevitable’s businesses look for short and longer term solutions to the opportunities and challenges emerging during 2017.

Prediction 5: Lean Will Increasingly Address a Range of Workplace Challenges

We expect Lean systems to be asked to do more to address the pace of change. We are not talking replacing evolution with revolution but rather looking for adaptive responses to emerging issues across industries.

This may mean that process and solution sharing responses will become more important, especially where there is common ground across industries. What works in IT for example may be adapted for use in health. Creative minds and adaptable systems will converge around this challenge and opportunity.

As a starting point, this convergence could include areas such as employee engagement, manager capability and processes and systems for managing the processes. IT will also play an important part in supporting and speeding the process.

One challenging prediction is that, while Lean is primarily focused as a solution for information flow problems,it may also emerge as a system for improving human health in organizations.

We look forward to Lean transformations emerging as systems capable of evolving from its constraints and improving human health in companies.

For example, eliminating information flow problems greatly reduces the myriad of workplace stressors facing managers and employees, not to forget customers and suppliers.

And isn’t this what we use Lean for? The creation of a productive, efficient and effective workplace finely tuned to the needs and opportunities of the marketplace and staffed by engaged and healthy employees.