5 Mistakes Logisticians Make (Yes, you too.)
Companies are in business to make money. That is a fact.
However, the reality that logistics processes impact a company’s bottom line seems to be forgotten – this is consistently found across all industries. As the COVID-19 experience has taught us, a disrupted flow of goods can have severe consequences for every company and industry – by increasing costs, increasing complaints, loss of customers, and sometime even forced closure.
For your company to stay competitive in the market, you cannot afford a Supply Chain department or logistic processes that isn’t agile enough to handle the rapidly changing world. The global logistics market is estimated to represent 12% of the entire world’s GDP and yet it seems so easily taken for granted when it comes to innovation. It’s time logisticians stop accepting the status quo and acknowledge that “speed, mobility, and flexibility” are the requirements of modern logistics. You should expect better of yourselves and your tools in recognizing, adapting, and managing all these opportunities within logistics – within budget, without mistakes.
Let’s face it. Here are 5 mistakes you make while working in logistics:
1. You lack control
“I know what I am doing.” – Do you? Most companies have only about 20% visibility into their supply chains. You must ensure that you are better than that. Don’t make the mistake of concentrating only on your immediate working environment. Isolated working areas no longer exist. Everything is connected.
When optimizing businesses, the logistics processes within the supply chain are often left behind. Did you ever lose track of your inventory? What about losing an entire shipment? Were your shipments running behind schedule? Did you even know? If yes, you suffer from poor planning and control like so many others. For example, over ordering, building up safety stock and increasing storage capacities is not the best practice -it costs you money and is not the way to run modern day Supply Chains.
Of course, it is challenging to make the whole end-to-end process and communication visible and traceable – but not impossible. Take advantage of new digitalization and data analytics tools to step outside your box and regain control.
2. You aren’t fully digitized
“I already am digital.” – Are you? In the age of automation, technology is evolving fast and playing a decisive role in making processes more efficient and customer-friendly. However, some firms do not consider true digitization as necessary – and thus, lose their edge.
In the long run, logistics technology brings strategic advantages to companies and employees. On the one hand, you can reduce error rates and achieve cost savings. On the other hand, you can offer new services and enhance your operations with technological advancements such as real-time shipment tracking, digital documentation, or online administration of bookings.
Unfortunately, most cargo owners still do business the traditional way: on excel sheets, via emails, and via phone calls. But you should use up-to-date technologies and data-driven models if you want to increase your productivity.
3. You are too slow to make the best decisions
“I’ve already got the best deals.” – Do you? Decisions made in the logistics department are fundamental to maintain the competitiveness of the company. Thus, performance and cost pressures are extreme. Not only can the comparison between logistics service providers be complex and confusing, but also surprises can be found lurking in transportation costs such as surcharges, taxes, or changes in freight rates.
Many companies fear market rates because they can rapidly change and if you can’t easily find alternatives, you could get stuck with an overpriced service. This fear of uncertainty drives many companies to lock in fixed rate contracts to protect against the perceived risk of fluctuating market rates. The reality however is that these fixed rates are hedged by the logistics providers and in process you are overpaying on almost every shipment instead. Can you not find another way to balance the risks by comparing costs and locking in deals quickly? Favouring market rates for competitive deals and balancing risk can be done with the right technology.
4. You suck at time management
“I am already working as fast as I can.” – Are you? These days, you need to be faster, better, and stronger than the competition. But one problem with logistics is that it is often not possible to work faster because it’s hard to even keep up with the demands of your current business. This causes complex communications often combined with long waiting times, missed or incorrect shipments and frustrated customers on the other end, all of which eat up even more time to get right.
Thus, your success or failure depends heavily on your smart time management. You are in charge of scheduling your workplace, activities, and contacts. How much time do you spend on calls and e-mails? How often are you interrupted at work? When are you available? Do you need to be constantly available? You can either set priorities, say no, or delegate tasks, or suffer from permanent stress and poor performance.
Time to become a champion in time management. Nobody likes to hear your excuses, find your solution.
5. You ignore alternatives
“I already have the best business partner.” – Do you? Our lives are largely determined by routine. It is a pity when the power of habit determines everything, and one becomes blind to alternative approaches.
In logistics, this effect is often seen in the choice of long-term business partners. But this rigid commitment can make you blind to better services or options. When you rely on one resource and do not look around, you risk being vulnerable, left out, or miss better opportunities. Not to mention subscribing to or accepting services from partners which you do not even need if proper planning and execution would be part of your foundation! The logistics industry is constantly changing, and new companies are being founded almost daily all over the globe. It would be a mistake to ignore those alternatives. When planning your logistics value chain, you should keep on researching and checking the emerging offers and services of companies both new and old.