May
Companies That Benchmark Logistics Are Leading the Way
Whether you are a trusted advisor to manufacturers and distributors, an investor in those spaces, or a manufacturer or distributor, understand that logistics is the way that businesses move forward — literally and in terms of their strategic goals. The logistics function governs how supplies, products, and other goods get to where they need to be. And just as with any other aspect of business, it’s important to benchmark logistics so you can understand what’s working well and what needs improvement.
Benchmarking helps organizations overcome complacency. It creates the path to pursue to stay relevant in the marketplace, and it identifies areas where the gap between their standards and that of the industry is the largest.
Benchmarking logistics has never been more timely, either. The logistics industry saw numerous trends over the last 12 to 18 months. These trends provided plenty of opportunities for many firms, but they also presented a number of challenges that if not managed well could lead to poor performance.
Whether it was the transportation pricing environment, driver shortages, increases in e-commerce activity, advancements in technology (such as blockchain and AI) and of course the impact of COVID-19, it was difficult for companies to stay abreast of all that was taking place.
However, the companies that anticipated these trends and took action are the ones now leading the industry. The common denominators between companies that made the Gartner top 25 for logistics included an emphasis on scaling digital supply chain capabilities, focusing on the customer experience, obtaining and understanding the best cost/service combinations, and including the logistics discipline in board-level discussions. An additional attribute of the very best is a focus on increasing the pursuit of the Perfect Order status month in and month out!
So how can you as a trusted advisor help clients benchmark logistics for success? While it will be important to know what metrics to actually benchmark, your first step is communicating the importance of doing so and the impact it makes on the bottom line.
Want expert insights and support for benchmarking and improving clients’ logistics? Get a complimentary logistics health check today.
Helping Clients Understand Why They Should Benchmark Logistics
Without a consistent benchmarking mindset, your clients will never know just how good they can truly be — both with logistics itself and in other areas influenced by logistics. There are dozens of functional and complex metrics that you and your clients could benchmark and monitor over time, such as cash-to-cash time cycle, freight bill accuracy, perfect order rate, inventory turnover, on-time shipping, inventory velocity, and more. Let’s set those aside for a moment and consider the benefits of undertaking such an initiative.
It Optimizes Critical Tasks
Logistics is a 24/7/365 machine. Products have to keep moving, otherwise, the company doesn’t succeed. There are countless tasks that need to be completed every hour of every day to keep this machine running. And while they’re repetitive, they’re also necessary. That means there’s an opportunity for your clients to optimize them as much as possible. Even the smallest improvements in a repeatable workstream can produce significant gains over the course of a single month or quarter. When you and your clients benchmark logistics, it becomes clear where these opportunities for improvement are.
It Allows for Contingency Planning
When you benchmark logistics, you create a cycle for ongoing monitoring and improvement. However, it’s inevitable that some extraneous or out-of-the-ordinary event will occur that stands to modify or shift this cycle. If on-time shipping is a metric you and your client are tracking, you must also know what your steps will be if the metric can no longer be tracked accurately or efforts to improve performance can’t continue as a result of such an event. This gives the business a stronger foundation to react to sudden or unexpected change.
It Creates Visibility
The benefit of benchmarking logistics isn’t only watching costs decrease and revenue increase. It’s also gaining insight and visibility into the areas of the logistics program that aren’t working or may be under-supported or understaffed. Conversely, it also reveals aspects of the program that are performing well — and why that’s the case. Armed with this information, you and your clients can identify actionable next steps to not only drive down costs and widen margins but also implement other efficiencies into the business.
It Establishes Systems and Project Prioritization
The sheer amount of data involved in such an initiative can’t be tracked manually, so in order to benchmark logistics, your clients may need new tooling and systems in order to track data accurately and efficiently. New processes and policies may also be needed in order to effectively track logistics metrics. And of course, the result of benchmarking logistics may open doors to new systems as well. By deciding to benchmark and continually improve logistics performance, these tools and systems are ushered into the organization, adding other collateral benefits such as better overall use of time, less administrative cost, greater data for decision-making, and more. And through their use, your clients will gain greater clarity into the projects that they need to be working on to achieve their goals.
It’s Time to Start Keeping Score
Take a moment and ask your clients where they believe they stand amongst their industry peers when it comes to logistics. Do those companies seem to always be a step ahead? Are they slowly (or quickly) gaining more ground in the market than your clients? Do your clients feel like their logistics program is a stagnant or an ignored aspect of their organization? If they’re unsure, or if they know they’re falling behind competitors, then it’s time for a change. And the first step on that path is to benchmark logistics.
A best-in-class logistics program with benchmarked metrics that are aligned with the corporate mission and master operating plan — and tailored to the client’s market — can quickly prove to be a competitive differentiator. And you’d better believe that your clients’ competitors are keeping score, whether they’re massive retailers like Amazon or a competing SMB that understands the importance of technology and tracking in their program.
When was the last time that you or your client completed a benchmarking practice and identified where they stand? At Brady Partners, we serve as a trusted advisor to professional services firms that work directly with manufacturers and distributors. By proactively seeking ways to add value to your clients, you’ll strengthen and cement your client relationships.
Contact us today to learn how we can partner for your clients’ long-term success.