Jun
The “New Normal” Isn’t a Phrase — It’s Reality
The impact that COVID-19 has had on the logistics industry has been staggering. Whereas some industries like consumer goods, health, and life sciences have seen staggering growth as a result, retailers and various industrial companies have struggled to maintain operations despite significant losses. Depending on what industry your clients are in, they’ve likely experienced numerous challenges with their manufacturing logistics strategy.
For example, manufacturers producing products related to cleaning, medical items, protective equipment, and food production have likely experienced intense demand for their goods, creating a need for more logistics support. Conversely, manufacturers with lower demand for their goods may have found logistics support more challenging, as carriers have been repositioning fleets to support more highly impacted “hot spots.”
While the world is beginning to open back up and manufacturing businesses are resuming operations, it’s important to understand that the logistics function underwent significant change very quickly on a national and even global scale. While it will take some time to stabilize, the most proactive companies are the ones that stand to benefit from a well defined and closely followed manufacturing logistics strategy.
As an advisor or partner to your clients, with key insights into their financial or operational performance, you can help them understand the importance of putting such a manufacturing logistics strategy in place sooner rather than later. Let’s review a few things your clients’ logistics strategy should consider including as you work together to bring your clients back up to speed and prepare them to advance confidently into this new era.
Don’t lose another second. If you know your clients need support in this area, we’re here to help. Contact us today for a logistics health check for your clients.
What a Manufacturing Logistics Strategy Should Include
As with any other high-level strategy that stands to impact the organization at a whole, a manufacturing logistics strategy should begin at the leadership level. If you’re unsure where to start, take a look at these six logistics questions for senior executives. While these conversations with leadership might reveal additional aspects that should be included in the strategy, the following four items should be considered.
1. Transparency
Gaining deeper insight into how products move throughout a supply chain has been an important topic for years. But with the ongoing tariff challenges and heightened concern over how products are made and moved from A to B, taking that insight to a deeper level has become more critical. As you work with clients to help them mitigate supply chain and logistics risks, solutions that enable greater transparency should be considered.
The onus isn’t entirely on your clients, either — their suppliers are certainly facing the same levels of scrutiny. Those that respond and provide the information and visibility you and your clients are looking for not only help you achieve your transparency goals, but also prove themselves as more trustworthy and reliable suppliers.
2. Metrics
What can’t be measured can’t be improved. The same goes for your clients’ manufacturing logistics strategies. With so many areas of performance involved in a logistics transaction and the relationship overall, there are numerous ways that the performance of both your clients, their logistics partners, and other involved parties can be measured, monitored, and improved. Examples of functional logistics metrics include:
- Vendors — routing compliance, on-time shipping, PO fulfillment
- Carriers — on-time delivery, damage-free %, order accuracy
- Fulfillment — on-time shipping, internal order cycle time, pick accuracy
- Static optimization — mode selection, service type, carrier assignment
- Dynamic optimization — order consolidation, multi-stop consolidation
But more importantly, these metrics need to be linked back to your client and their goals. They must be prioritized and customized to ensure that what the metric is measuring is valuable and appropriate based on what they’re trying to achieve.
3. eCommerce
In 2019, consumers spent nearly $602 billion online with U.S. merchants. This was up 14.9% from nearly $524 billion the prior year. And while online sales still only comprised 16% of total retail sales in 2019, the channel must be considered in your clients’ manufacturing logistics strategy. Even if your clients aren’t accepting orders online (consumer or B2B), they’re likely connected to an eCommerce channel somewhere along their products’ lifecycle.
Take note: The growth of online spending has been roughly $60 billion year-over-year, and that doesn’t include consumers’ heavy reliance on eCommerce during the pandemic. If the figures from 2019 aren’t reason enough for your clients to evaluate the importance of eCommerce in their strategy, the 2020 figures are likely to change their minds.
4. Adaptability
A final consideration for your clients’ manufacturing logistics strategies is building in the structure to remain flexible and adaptable for change at any level. While the pandemic was a grand-scale experiment in change management, it is still possible that such change could occur again at any time. On a smaller scale, regulatory changes, industry trends, and other events could also necessitate shifts in strategy at any time.
One example is the long-term trend of smaller carriers being unable to compete against their larger counterparts. If your clients are small to midsize businesses that rely (both financially and operationally) on smaller carriers, it may soon be difficult to find these companies, get on their schedules, and receive consistent service levels. Identifying long-term carrier solutions will be critical to the success of your clients’ strategy, as will ensuring that the proper controls and mechanisms are in place to respond to change.
Get Expert Support with Your Clients’ Manufacturing Logistics Strategy
Brady Partners is a logistics advisory and optimization firm that partners with other advisory services firms that support distribution and manufacturing companies. As your logistics resource, we identify ways to improve your clients’ logistics to deliver positive, long-term financial results.
If your clients have been struggling with logistics in any fashion, whether it’s their in-house logistics department or the effects of an underperforming logistics partner, we’re here to help them get back on track. We partner with you to understand your goals and how our logistics optimization efforts can help.
The first step is conducting a logistics health check for your clients. This complimentary service analyzes various data about your clients’ logistics operations to identify opportunities for improvement.
Contact us today to learn more and to schedule a health check for your client.