“It is change, continuing change, inevitable change, that is the dominant fact in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be.” —Isaac Asimov
In this article from our Financial & Administrative Controller, Jennifer Pelosi, we take a look at how strong logistical planning and dynamic flexibility helps SciPhy Systems deliver for clients, as well as how internal logistics management at extractors and processors’ businesses can help their companies succeed. Logistics and administration can’t take a backseat if you want to get ahead, we hope this survey helps you plan and adapt better moving forward.
By definition, logistics is a detailed process involving monitoring, directing, and attempting to control everything from information (consumption and use) to products and services on both internal and external levels. The main goal of a logistical manager in any industry is to bridge the gap and exchange of information and goods between the six different types of stakeholders (employees, clients, government, investors, suppliers, and communities). The position of a logistics manager requires a particular type of organizational agility; one must be flexible and have a strong ability to adapt to change, similar to an air traffic controller. Granted, oftentimes logistics managers are not making life or death decisions, but risks exist nonetheless and can have a serious impact on your business now and in the future. The focus of this article is not to shock managers or owners, but rather to assist in identifying and reflecting on value-added opportunities within the logistics realm. This logistics guide identifies common challenges and methods of navigating environments that are constantly changing and that, more often than not, alter the course of business events for all stakeholders.
Core Objectives of Logistics Managers
Organizing, leading, and controlling information in rapidly changing environments are the core objectives in logistical positions. Lateral and vertical collaboration is also a fundamental aspect of logistics. By definition, “Collaboration is vital between functional areas, such as the director of operations and accounting, and sales, and technicians, because it allows members of staff not only to create a strategic plan meant to satisfy customers, but also reach organizational goals that benefit all key stakeholders. Both lateral and vertical collaboration leads to a form of collective intelligence among staff such as increased awareness and perception that leads to enhanced problem-solving techniques and judgment calls” (MIT, 2012, para. 4). With the explosion of e-commerce and international manufacturing, comes a few new hurdles and, more importantly, new opportunities for businesses that only operated domestically in the past. “Logistics has advanced significantly during the past twenty years as companies have appreciated the gains from such initiatives as limiting inventories, making use of ‘seamless’ distribution services, and taking advantage of advances in telecommunication and information technologies” (Handbook of Logistics and Supply-Chain Management: Volume 2 2001). Organizations large and small have found new ways of cutting costs while delivering products, services, and information on global levels. Likewise, more organizations are making a switch to remote working environments, which places a greater need for situational analysis to increase an organization’s strategic value. The fact is, there are more opportunities now for a competitive advantage within the logistical sphere.
Regardless of the industry, “Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services, and related information from point of origin to point of consumption (including inbound, outbound, internal, and external movements) for the purpose of conforming to customer requirements” (Jackson & Bianco, 2011).
Approaching Dynamic Logistical Needs
Some logistical challenges will always remain the same, hence the need for flexibility. Examples of challenges include: manufacturing or freight delays, quality control, expectation management, and the general flow of information between manufacturing, vendors, clients, and departments within an organization. A strong framework of processes and procedures is necessary for a successful supply chain; however, being too rigid in your framework may create new lists of challenges. Manufacturing delays are inevitable, especially when work is outsourced or relies on multiple vendors. Freight and shipping, from international customs, to packaging, to the coordination of deliveries and inspections, can change daily if not hourly. Is freight delayed with no ETA, or has freight dropped the ball (and your shipment) so replacements are needed, along with a whole new scope of work related to insurance chases and audits? These are just some of common challenges and should be somewhat anticipated. Additionally, the larger or more complex requests from clients often invite situational delays on their end such as governmental or state regulations, permitting, and inspections. Factors that seem simple, such as scheduling receiving, also have their own set of challenges. Are cranes needed? Are engineering principles a factor? Are you shipping multiple small-item packages over the course of a few months and have to rely on the client’s ability to manage and organize this inventory while they are also consumed with their own business logistical coordination? As a business, oftentimes you are meant to adapt to client’s on the fly demands to maintain a customer service competitive advantage. While setting boundaries and managing client expectations is important, going that extra logistical mile for your client is a method of providing added value that will separate you from the competition.
Responding to External Variables
The ability to respond to uncertainty or variables and external influences is an essential aspect of a business’s logistical framework. Likewise, rational decision making during “crises” situations is a necessity. While project management plays a major role in both tracking and conveying this information to stakeholders, it is the logistics department’s function to track everything in real-time, and to act, respond, and navigate external factors that often have a far-reaching impact on the planned timeline of business operations. Acting too soon may raise alarms and unnecessary stress between all stakeholders. Acting too late can often result in missed opportunities that could have put the operation train back on its intended track. Logistical complexities require one to be centered in order to harness intellectual and tangible resources to aid in making sensible decisions. What many may not realize is that logistics positions are more far-reaching then just orders or tracking. It is more accurate to conceive logistical positions as solution oriented roles. In that framework, a job well done may be viewed as no problems or challenges at all. In the end everything “felt” like smooth sailing, as any challenge that did arise was handled in the back of the house and corrected before it became an actual problem. Another perspective is that there are some unavoidable scenarios that require a more complex system of vertical and lateral collaboration. Obstructions do exist and how those are handled often reflects an organization’s integrity and ability to problem-solve while meeting stakeholder’s requests. The best advice in these situations boils down to one very important undertaking consisting of multiple components:
Strategy for Response
1st: Identify the problem.
2nd: Create a plan to correct the problem.
3rd: Create a contingency plan, if not multiple.
4th: Identify every scenario imaginable if said plans do not follow suit as promised.
5th: Transparency: convey the possibilities, what is being worked on, and worst-case scenarios so stakeholders are able to maintain and prepare for a few bumps in the road.
6th and final: Action: coordinating, tracking and exchange of updates on regular basis.
Bringing it All Together: Examples of Challenges
Let’s look at two common problems, with some sample responses by a logistics manager. The two problems can be common in industrial facility development: shipping delays due to manufacturer, and the facility not being fully prepped for installation when equipment arrives.
Problem 1: freight delays due to hurricanes where manufacturing is underway; manufacturing plant has to close thereby pushing manufacturing timeline.
Effect: freight delays push client’s timeline; result is generally an unhappy client.
Actions: vendor communications: obtain information as to when they can reopen.
Consider possible damage from storm that could push manufacturing timeline further
Obtain new date based on manufacturing feedback.
Client communications: Logistical Manager should provide write up for Project Manager. Project Manager holds a meeting immediately. Maintain transparency to client: factors of the storm, and possibilities of additional delays if there is damage. Create best case and worst case scenario timeline and convey to the client so expectations are clear.
Continue to monitor the manufacturing facility and update the project manager regularly so they can update the client as we receive data.
Problem 2: Equipment has arrived, but client facility not prepared for installation
Identify client delays. Example: permits are not in and electrical requirements are not in place for commissioning the system.
Action: Hold meeting with client to discuss their time frame in relation to the city and their electrical contractors.
Develop a contingency plan: can we do partial work without permits and electrical requirements? Are we able to break the installation down into phases to help client try to maintain their timeline? Discuss contingency plans with client and have them decide what works best for them.
Keep in mind we want to save the client on install costs such as travel. Is it worth it to send an installer for 2 days, or is it worth it to wait a week and send installer to complete more tasks in one visit? Discuss these options with the client, maintain transparency to make efficient decisions regarding cost and time management.
Action: In this case the final action is going to be based on what is in the best interest of the client. Likewise, the client should acknowledge in writing after discussing with their own team leads to ensure all parties are aware of the situation and course of action. From a logistical standpoint, the company’s next move is based on client communications and confirmations. From there, the Project Manager schedules accordingly and logistics set’s up benchmarks for check in points to confirm the timeline and any change requests or delays by outside contractors.
Conclusion: Taking Logistics To Heart
In summary, knowledge management, collaboration, and communication skills are the fundamental instruments in the logistical manager’s toolbox. In a perfect, unchanging world, strict procedures and processes would be all that is needed; however, problem-solving and the ability to be flexible and fluid in operations will always require some level of finesse to achieve your goals, in business and in life. At the same time, businesses can use organizational agility as a method to increase a business’s overall value. Even though logistical efforts are often viewed as an intangible asset, it is an asset nonetheless and can be harnessed to give an organization an important and additional competitive edge. In the end, logistical managers may not be actual air-traffic controllers, but they certainly do expedite and organize traffic, as well as prevent collisions for your business.
Have a question for Jen? Email her at email@example.com