May
How Are Manufacturer and Distributor C-Levels Tackling Logistics Transportation & Distribution Challenges?
The leadership teams for small and mid-size manufacturers and distributors have a great deal on their plates already, particularly with the unknowable challenges that lie ahead due to COVID-19, ongoing tariff negotiations, and other industry trends. While these times are filled with a great amount of uncertainty, it’s nevertheless important that your clients’ leaders are asking themselves the right Logistics questions to understand how logistics fits in with their overall strategy.
Here, we’ve gathered the top Logistics questions that C-level executives should be asking as they evaluate Logistics performance and consider how this critical function of their organization fits in with their current and future planning. Let’s dig in.
1. Is your Logistics organization responsible for year-over-year performance improvement on critical financial metrics?
Logistics practices, processes, costs, and strategies impact the company’s financial performance on a daily basis. Over the course of their financial year, that can translate into significant gains or losses. It’s critical that your clients are paying attention to how Logistics is improving — or not — year-over-year. Logistics can directly or indirectly impact margins, business valuation, return on assets, return on invested capital, cash flow, and customer service. Tracking the methods by which Logistics can impact these key metrics must be performed on a year-over-year basis.
2. What are the top three to five Logistics performance improvement initiatives for this year?
A key focus for any manufacturer or distributor should be to identify a set of Logistics improvement initiatives that they can implement and work toward every year. Identifying these improvement initiatives provides a blueprint toward success. Some of the top improvement initiatives within the industry include education, benchmarking, assessment, prioritization, and communication.
But remember, it’s not just about the Logistics function itself — how do these performance improvement initiatives tie into the annual operating plan and the forecast for business growth and client retention? It’s also important to consider backup efforts to maintain the improvement momentum. What are the alternative initiatives identified if the primary projects fall short of the plan?
3. Is there a focused effort to monitor Logistics risks and establish strategies to mitigate such risks?
It’s important that there is a process for monitoring different risks that may be encountered throughout the Logistics discipline. Not only can monitoring risks within the Logistics function allow for optimizing performance, but it also helps control and limit operating costs.
Developing and establishing a strategy to mitigate such risks is crucial as it will allow your clients to continue running their businesses efficiently. A few risks that you should be monitoring include service provider quality, performance, and profitability, E-commerce capabilities, technology gaps, driver shortage and retention, government regulations, transportation costs, and lack of visibility to outsourced operations costs.
4. Do you have a process in place to accurately measure and track the true cost to serve specific channels and customer segments?
While any manufacturer or distributor should have a process in place for monitoring risks, they should also have a process in place to measure and track their costs when it comes to specific channels and customer segments that they serve. Not every channel and segment is going to perform the same, and as a result, it may become necessary to dedicate more resources, time, and effort to serving the segments that drive the most business. Over time, this also allows an organization to accurately track their efforts and see whether they’re being justified, or if their time and money can be reallocated to other segments.
5. When is the last time that your company benchmarked your Logistics practices, strategies, and cost drivers against other firms with similar business characteristics as your own?
Understanding how your performance compares to competitors, to other industries, and to the best in class is a great way to determine where you stand and how you are progressing. Not only can this provide an understanding of the current state of affairs, but it can also provide a competitive advantage in the marketplace. If a manufacturer or distributor is consistently benchmarking these categories, they’ll have the opportunity to improve in areas that need to be addressed, continue to excel in areas where they’re thriving, and sustain all other operations.
6. How will emerging trends in the Logistics industry impact your business going forward?
In a post-COVID-19 world, there continue to be a number of trends emerging in Logistics that will require your attention. The Logistics industry continues to evolve at a rapid pace, and given all we’ve experienced in the last few months, Logistics is front and center in connecting you to your customers and suppliers. Industry experts predict that globalization will take a back seat, customers will become even more price-conscious, and the demand for predictive analytics and business intelligence will be a requirement to provide the highest levels of service. These are just a few of the trends taking place. What’s important is that you have a firm grasp on each trend and how it will impact your business today and how you will leverage these trends to leapfrog your competition.
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Brady Partners is a logistics optimization firm that partners with advisors working with manufacturing and distribution companies. We understand the challenges that manufacturers and distributors face with their Logistics operations and just as importantly, where the opportunities exist for continuous improvement. If you are struggling with improving or even measuring Logistics performance, we’re here to help.