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Logistics Strategies

Simple strategies can help a business find the right logistics provider.

Jeff Linnville

C hoosing and managing logistics providers is an art. The logistics industry is made up of many players that can potentially serve some or all of a customers needs. Trucking companies, warehouses, customs brokers, property brokers, freight forwarders, steamship lines, and three- and four-party logistics suppliers all make up a highly fragmented market of services and prices. When supply chain processes are discussed today, logistics is always included in the conversation. No supply chain strategy can be executed without the management of transportation services. The ongoing problem is that logistics programs rarely meet the expectations of buyers, operations and the ultimate customer. With so many manufacturing and distribution processes outsourced today, both globally and locally, securing timely logistics providers has become a matter of business survival. Learning what these providers can and can't do clearly becomes a compelling business process. Some simple ideas and strategies can help navigate an organization, regardless of size, through a sizeable market of providers. These ideas will help a company narrow the field of potential logistics vendors to a few well-qualified players.

Understand Your Needs First

The 15-second rule says you should be able to explain your business to a stranger on the street in 15 seconds. If that isn't possible, then it's time to rethink the explanation. It is crucial to know the needs of your organization before beginning the search for a logistics provider. That may mean having to go to the president of the company and ask about the specifics of the business plan. Each logistics strategy will have specific areas that need critical focus. Understand the business processes so well that you can mesh your operations with the operations of the provider you choose. Make sure all of your providers have taken the time to listen to your 15-second explanation and commit to being a part of the plan. If you are passionate about serving your clients, be sure to choose vendors that will adopt and follow though with your vision. Focus on what you do best to execute the company's business plan by implementing a well-thought-out selection process. Taking time to do this is crucial to how effectively you can explain your needs to others. Take the time to draw, graph, or plot how goods move to and from facilities and customers. The provider will appreciate your interest in the transportation process, and the illustration will serve as a good tool to initiate an information exchange. Simplicity of processes will make your relationship with your provider straightforward and productive. Another important point to consider is event management the process of singling out those events or failures in the transportation network that produce problems. Look for problems where permanent changes need to be made and fix them. Make a record of these events, and it will soon become clear where the same problem occurs over and over. There is a tendency to put out the fire and move on without solving the underlying problem. Be sure to avoid this, which may mean eliminating a provider that creates bottlenecks, or is continually late, or just doesn't have the resources to properly serve your business needs.

Look For Value

Value propositions exist today in every business. Learning to spot and use them in selecting providers creates a distinct advantage over the competition. A value proposition is defined as the factors, other than price, that compel a buyer to choose one product or service over another. Examples include convenience, predictability, comfort and style. All business owners make purchase decisions based upon something other than price. They know that cheap things don't last. Keep this in mind when choosing and working with a logistics provider. Look for logistics companies that take ordinary business processes and turn them into something special. These companies create value. Logistics is an operationally intense environment; choose providers that seem to have a clear grasp of the need for convenience and ease of use. Companies that do a good job of providing these services have invested the time and resources needed to offer superior services at competitive prices. That means they will provide good service to your suppliers and customers. Prices matter, but execution is everything. Do business with providers that create confidence by being on time, offering problem resolutions, and communicating the message that they are serious about their business. There are both small and large logistics companies that deliver services in this way. Once you find the right vendor, work to build a relationship that takes its value and translates it all the way down to the customer. Make a list of services these providers offer and their prices. When asked why you chose this vendor, you can defend your decision by displaying an acute understanding of the underlying business processes at work everyday. Learn to sell the results of your hard work by continually spreading the word to your companys marketing, manufacturing and management operations.

Look For Clarity

It is important that a logistics supplier have a clear understanding of the services its customers need. These providers reinforce everyday details into a continuous regime. They hire people who can communicate, work and succeed. They train and execute all parts and pieces until the whole organization is seamless. Both internal and external operations are dissected, thought about and improved upon. To be sure, no one person can see all logistics processes taking place as they happen. There are companies that understand exactly what your company needs and work hard to create transparent organizations. They have a passion for results, understand what they do well, and make money doing it. To identify these companies, take a hard look at the message they portray. Question everything they do. Are they interested in obtaining shipment status? Do they offer service levels in writing? Is pricing clear and easy to understand? Do they deliver the same service every day no matter what the geographic location? Can you reach a manager? Do they ask probing questions about what you expect? Most companies have a tendency to look inward or outward. Locate companies that do both. Executing clarity into your logistics strategy will make choosing, managing and developing providers a well-thought-out process. Execution through good selection is the goal.

Putting Logistics Strategies To Work

Buyers of transportation must work towards creating a relationship with their logistics and managing companies, eliminating those that do not meet or exceed expectations. Consider internally what you want first, measure and graph it, show the vendor, and then look for those areas of value that make the cream rise to the top. Always consider pricing somewhere down the line, but not as the primary factor. Cheap prices don't build relationships. Putting price first is a mistake that many companies make over and over. Comfort and predictability cannot be created by the lowest-priced bidder. Look closely for the value proposition, and use it to create a long-lasting plan where successful execution is ongoing.

Editors Note: Jeff Linville is president of Gainesville, Ga.-based Piedmont Logistics.

March 2005