Brady Partners recently had the pleasure of speaking to senior executives through the Chief and Senior Executives Networks. Joe Brady, President, shared best practices around best-in-class logistics as well as strategies on how enhanced and optimized logistics can help companies strengthen existing customer relationships, attain new relationships and enhance margins and business valuation.
The past year brought significant change to countless industries around the world in multiple ways. On the consumer side, the global shift to e-commerce spending — up 4% year-over-year and growing almost twice as fast — has put immense pressure on manufacturers, distributors, and carriers to meet that demand in a timely fashion, with particular strain felt in last-mile delivery.
In 2017, there was a notable transportation capacity crisis stemming from multiple challenges facing both the transportation industry itself and the nation as a whole. For the transportation industry, there was a marked shortage of trucks to carry an abundance of loads. The cause? Fleet deterioration due to transportation companies cutting costs, a shortage in drivers with CDLs due to retirement and compensation challenges (and Millennials lacking interest in the industry), massive storms and fires causing economic problems, and increased regulations like the electronic logging device (ELD) topping a list of more than 20 laws making it difficult for companies to stay in business.
Every department within an organization has value and makes an impact on others. However, no other department makes a whole-organization impact like logistics does. This is because logistics is influenced by other departments and influences their ability to do what they do. And it’s because of this interconnectedness and immediate ability to impact the bottom line that CEOs care about logistics more than ever before.
We’re sure we’re not alone in that perspective. This year has certainly brought a number of challenges for countless industries around the world, but with 2021 comes a new opportunity — not only in terms of a refreshed perspective but also in how small and midsize businesses approach their logistics. SMB logistics may not be at the top of your “changes to make” list for your clients this year or even next, but we think it should be.
For many small and mid-size manufacturers and distributors, there is a significant opportunity to expand margins, increase business valuation, and strengthen competitive positioning through the practice of best-in-class Logistics strategies.
All too often, it can be easy for departments within your clients’ organizations to become too isolationist or focused on their own goals and problems. Why bother with cross-departmental collaboration when they already have enough on their plates to deal with, right? We’re sure your clients have experienced this challenge in the past — if it isn’t still a problem today. But when it comes to logistics and operations, this mindset simply won’t work.
The perfect order is something to which leading manufacturers and distributors aspire. At its most basic, the perfect order is getting the right product delivered to the right customer in the right place; at the right time; and in the right quantity, condition, and packaging — and with the right documentation. The concept is important because it promotes an outcome that is the result of the concerted effort of virtually all of a company’s operations. It’s something companies must do thousands of times each month across the globe.
All too often, people confuse logistics with the transportation of goods from A to B via ground, rail, air, or sea. It’s important to understand that logistics as a function of an organization also includes (or should include) warehousing and distribution functions.
Research is predicting that B2B organizations that do not embrace the latest digital technology and the eCommerce megatrend could lose nearly half of all future revenue over the next five years.
