Logistics 101: A Comprehensive Guide to Efficient Operations

Logistics 101: A Comprehensive Guide to Efficient Operations

Logistics 101: A Comprehensive Guide to Efficient Operations

I. Introduction to Logistics

A. Definition and significance of logistics in business operations: Logistics refers to the management of the flow of goods, information, and resources between the point of origin and the point of consumption. It plays a crucial role in ensuring the timely and efficient delivery of products to customers. Effective logistics operations contribute to customer satisfaction, cost savings, and overall business success.

B. Key components of logistics and their interdependencies: Logistics encompasses various components, including transportation, inventory management, warehousing, order fulfillment, and supply chain visibility. These components are interconnected and rely on each other to ensure the seamless flow of goods and information throughout the supply chain. By optimizing each component, businesses can enhance their logistics operations and drive operational efficiency.

II. Transportation Management in Logistics

A. Modes of transportation (road, rail, air, sea) and their suitability for different types of cargo: Different modes of transportation offer unique advantages and are suitable for specific types of cargo. Road transport is flexible and ideal for short distances, while rail and sea transport are more cost-effective for long-distance shipping. Air transport offers speed and is suitable for time-sensitive or high-value goods. Understanding the strengths and limitations of each mode helps businesses choose the most appropriate transportation method for their logistics needs.

B. Route optimization for cost-effective and timely deliveries: Optimizing transportation routes is essential for reducing fuel costs, minimizing transit times, and improving delivery efficiency. By leveraging route optimization software and considering factors such as distance, traffic patterns, and delivery time windows, businesses can identify the most efficient routes for their shipments. Route optimization helps reduce transportation costs and enhances customer satisfaction by ensuring timely deliveries.

C. Freight forwarding and carrier selection criteria: Freight forwarding involves coordinating the movement of goods through various transportation modes. When selecting freight forwarders and carriers, businesses should consider factors such as reliability, transit times, pricing, and the carrier’s expertise in handling specific types of cargo. Working with trusted partners ensures smooth logistics operations and minimizes the risk of disruptions.

D. Last-mile delivery challenges and solutions: Last-mile delivery, the final leg of the logistics process from the distribution center to the customer’s location, presents unique challenges. These challenges include navigating urban areas, managing diverse delivery requirements, and ensuring timely and accurate deliveries. To overcome last-mile challenges, businesses can explore solutions such as crowdsourced delivery, locker systems, or partnerships with local couriers to optimize last-mile operations and improve customer satisfaction.

III. Inventory Management and Control

A. Inventory classification techniques (ABC analysis, XYZ analysis): Inventory classification techniques help businesses prioritize their inventory management efforts. ABC analysis categorizes products based on their value or importance, allowing businesses to focus on managing high-value items more effectively. XYZ analysis classifies products based on demand variability, helping businesses determine appropriate inventory replenishment strategies for different product categories.

B. Just-in-Time (JIT) and lean inventory management principles: Just-in-Time (JIT) and lean inventory management principles aim to minimize inventory levels while ensuring timely product availability. JIT emphasizes receiving inventory only when needed, reducing carrying costs and inventory obsolescence. Lean inventory management focuses on eliminating waste, optimizing production and delivery schedules, and maintaining minimal inventory levels while meeting customer demand.

C. Demand forecasting methods and their impact on inventory levels: Accurate demand forecasting is crucial for effective inventory management. Businesses can employ forecasting methods such as historical data analysis, market research, and statistical modeling to predict future demand. By understanding demand patterns and trends, businesses can optimize inventory levels, reduce stockouts, and avoid excess inventory.

D. Warehouse layout optimization for efficient storage and retrieval: Warehouse layout optimization plays a vital role in efficient inventory management. By organizing the warehouse based on product characteristics, demand patterns, and picking frequency, businesses can minimize travel time, reduce order fulfillment errors, and optimize space utilization. Techniques such as slotting optimization, cross-docking, and implementing automated storage and retrieval systems contribute to efficient warehouse operations.

IV. Warehouse Management Systems (WMS) and Technology Integration

A. Introduction to Warehouse Management Systems (WMS): Warehouse Management Systems (WMS) are software applications that facilitate the management of warehouse operations, including inventory control, order processing, and tracking. WMS provides real-time visibility into inventory levels, automates workflows, and enables data-driven decision-making, enhancing overall warehouse efficiency.

B. Benefits of implementing a WMS in logistics operations: Implementing a WMS brings several benefits to logistics operations. It improves inventory accuracy, enables efficient order processing, reduces picking errors, and optimizes space utilization. WMS integration with other business systems, such as Enterprise Resource Planning (ERP) and Transportation Management Systems (TMS), enhances supply chain visibility and coordination.

C. Automation and robotics in warehouse operations: Automation and robotics technologies are revolutionizing warehouse operations. Automated guided vehicles (AGVs), robotic pickers, and automated sorting systems streamline material handling processes, increase picking accuracy, and enhance order fulfillment speed. Robotics and automation technologies reduce labor-intensive tasks, optimize resource allocation, and improve overall operational efficiency.

D. Integration of data analytics and Artificial Intelligence (AI) in logistics: Data analytics and AI technologies provide valuable insights into logistics operations. By analyzing historical data, market trends, and customer behavior, businesses can optimize inventory levels, predict demand, and improve supply chain visibility. AI-powered algorithms can optimize routing, identify cost-saving opportunities, and enable proactive decision-making in logistics operations.

V. Sustainability in Logistics

A. Green logistics and its importance in modern supply chains: Green logistics focuses on reducing the environmental impact of logistics operations. It includes initiatives such as using eco-friendly packaging materials, optimizing transportation routes to reduce emissions, and implementing energy-efficient practices. Green logistics contributes to environmental sustainability, enhances brand reputation, and aligns with customers’ eco-conscious preferences.

B. Reverse logistics and the management of product returns: Reverse logistics involves managing the flow of products from customers back to the original source, such as returns, repairs, or recycling. Implementing efficient reverse logistics processes helps businesses recover value from returned products, minimize waste, and improve customer satisfaction.

C. Collaboration and partnerships for sustainable supply chains: Collaboration and partnerships across the supply chain play a significant role in achieving sustainable logistics practices. Collaborative initiatives can involve sharing transportation resources, consolidating shipments, or implementing shared warehousing facilities. By working together, businesses can reduce carbon emissions, optimize resource utilization, and contribute to a greener supply chain.

D. Key performance indicators (KPIs) for measuring sustainability in logistics: Measuring sustainability in logistics requires defining and monitoring relevant Key Performance Indicators (KPIs). KPIs can include metrics such as carbon emissions per shipment, fuel consumption, waste generation, and percentage of recycled packaging materials. Tracking these KPIs helps businesses identify areas for improvement, set sustainability targets, and monitor their progress over time.

By implementing efficient logistics practices, leveraging technology, and embracing sustainability, businesses can optimize their operations, enhance customer satisfaction, and gain a competitive edge in the market.

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The Role of Warehousing in Optimizing Supply Chain Management

The Role of Warehousing in Optimizing Supply Chain Management

I. Introduction to Warehousing in Supply Chain Management

A. Importance of warehousing in supply chain optimization: Warehousing is a critical component of the supply chain that facilitates the smooth flow of goods from manufacturers to end customers. It provides a centralized location for storing, managing, and distributing products. Effective warehousing practices enable businesses to streamline their supply chain operations, enhance customer satisfaction, and achieve operational efficiency.

B. Role of warehousing in enhancing customer satisfaction and operational efficiency: Warehouses act as distribution centers that ensure products are available when and where customers need them. By strategically locating warehouses closer to target markets, businesses can reduce transportation costs and improve order delivery times. Moreover, warehousing enables efficient inventory management, reducing stockouts and ensuring timely order fulfillment. This, in turn, enhances customer satisfaction and helps businesses gain a competitive edge in the market.

II. Effective Warehousing Practices

A. Strategic warehouse location and its impact on transportation costs: The location of warehouses significantly impacts transportation costs. By analyzing customer demand patterns, businesses can strategically position warehouses closer to their target markets or distribution hubs. This reduces transportation distances and costs, resulting in more cost-effective and efficient supply chain operations.

B. Warehouse layout optimization for improved workflow and space utilization: Efficient warehouse layout design plays a crucial role in optimizing workflow and space utilization. By organizing the warehouse based on product characteristics, demand patterns, and picking frequency, businesses can reduce travel time and improve order fulfillment speed. Implementing techniques such as zone picking, cross-docking, and optimized slotting ensures efficient product flow and minimizes handling and storage costs.

C. Inventory management techniques for accurate stock control and order fulfillment: Effective inventory management is essential for maintaining optimal stock levels and meeting customer demands. By implementing inventory control methods such as ABC analysis and just-in-time (JIT) inventory management, businesses can prioritize high-demand products and minimize carrying costs. Adopting inventory tracking technologies, such as barcode scanning and radio frequency identification (RFID), improves inventory accuracy, reduces errors, and enables real-time stock visibility.

D. Integration of technology in warehousing operations (e.g., Warehouse Management Systems): Warehouse Management Systems (WMS) automate and optimize various warehousing tasks, including inventory management, order processing, and tracking. These systems provide real-time visibility into stock levels, streamline order fulfillment processes, and facilitate data-driven decision-making. By integrating WMS with other business systems, such as Enterprise Resource Planning (ERP) software and transportation management systems (TMS), businesses can achieve end-to-end visibility and operational efficiency.

E. Barcode scanning and tracking systems for enhanced inventory accuracy: Barcode scanning and tracking systems play a crucial role in improving inventory accuracy and order fulfillment efficiency. By assigning unique barcodes to each product or SKU, businesses can track inventory movements accurately. Barcode scanning devices enable quick and error-free data capture during receiving, picking, and shipping processes, ensuring accurate inventory counts and reducing picking errors.

III. Advantages of Efficient Warehousing

A. Minimizing transportation costs and reducing order delivery time: Well-planned warehouse locations can minimize transportation costs by reducing the distance and time required to deliver products to customers. By strategically placing warehouses near demand centers or optimizing multi-modal transportation routes, businesses can achieve cost savings and improve order delivery times.

B. Ensuring seamless order fulfillment and timely product availability: Efficient warehousing practices enable businesses to maintain optimal stock levels, reduce stockouts, and fulfill customer orders promptly. By implementing effective inventory management techniques, businesses can ensure the availability of products when customers need them, leading to improved customer satisfaction and increased repeat purchases.

C. Optimizing storage capacity and space utilization for cost savings: Proper warehouse layout optimization and space utilization help businesses make the most of their storage capacity. By implementing storage solutions such as pallet racking systems, mezzanine floors, and automated retrieval systems, businesses can maximize space utilization, reduce storage costs, and accommodate a larger volume of products.

D. Improving inventory accuracy and minimizing stockouts: Accurate inventory management is crucial for minimizing stockouts and preventing excess inventory. With technologies like barcode scanning and RFID, businesses can track inventory movements in real-time, ensuring accurate inventory counts. This leads to better inventory planning, reduced stockouts, and improved overall supply chain performance.

E. Enhancing supply chain visibility and responsiveness to market demands: Efficient warehousing practices provide businesses with better supply chain visibility. By integrating data from various systems, such as WMS, TMS, and ERP, businesses can gain insights into inventory levels, demand patterns, and customer preferences. This visibility enables proactive decision-making, allowing businesses to respond quickly to changing market demands, optimize inventory levels, and improve customer satisfaction.

IV. Best Practices for Effective Warehousing

A. Cross-docking: Streamlining the flow of goods for faster order processing: Cross-docking is a warehousing practice that involves transferring goods directly from inbound shipments to outbound shipments with minimal or no storage time. This practice eliminates the need for long-term storage and reduces order processing time, enabling businesses to fulfill orders faster and improve overall operational efficiency.

B. Just-in-Time (JIT) warehousing: Reducing inventory holding costs: Just-in-Time (JIT) warehousing is a practice where warehouses hold minimal inventory and receive goods only when needed. By aligning inventory levels with customer demand, businesses can reduce inventory carrying costs, minimize the risk of inventory obsolescence, and improve cash flow.

C. Vendor-Managed Inventory (VMI): Collaborative approach for inventory management: Vendor-Managed Inventory (VMI) is a collaborative inventory management approach where suppliers monitor and replenish inventory at the customer’s location. By allowing suppliers to have real-time visibility into inventory levels, businesses can streamline the replenishment process, reduce stockouts, and optimize inventory holding costs.

D. Efficient picking and packing methods for order accuracy and efficiency: Picking and packing are critical operations in the order fulfillment process. By implementing efficient picking methods, such as batch picking or zone picking, and using automated picking technologies, businesses can improve order accuracy and reduce picking time. Optimized packing methods, such as standardized packaging materials and automated packing systems, ensure secure and efficient packing, minimizing shipping errors and damage.

E. Implementing safety protocols and security measures in the warehouse: Safety is paramount in warehouse operations. Implementing safety protocols, including proper training for warehouse staff, enforcing safety regulations, and maintaining a clean and organized workspace, ensures a safe working environment and reduces the risk of accidents or injuries. Additionally, implementing security measures, such as surveillance cameras, access control systems, and inventory tracking technologies, safeguards inventory against theft or unauthorized access.

V. Future Trends in Warehousing and Supply Chain Management

A. Robotics and automation in warehousing operations: The future of warehousing involves increased adoption of robotics and automation technologies. Robotic systems, including automated guided vehicles (AGVs) and autonomous mobile robots (AMRs), can perform tasks such as goods movement, order picking, and inventory replenishment. Warehouse automation improves operational efficiency, reduces labor costs, and enables round-the-clock operations.

B. Artificial Intelligence (AI) for demand forecasting and predictive analytics: AI-powered technologies, such as machine learning and predictive analytics, play a crucial role in demand forecasting and inventory management. By analyzing historical sales data, market trends, and external factors, AI algorithms can generate accurate demand forecasts, helping businesses optimize inventory levels, reduce stockouts, and improve overall supply chain efficiency.

C. IoT-enabled smart warehouses for real-time monitoring and inventory management: Internet of Things (IoT) technologies enable real-time monitoring and control of warehouse operations. IoT sensors can collect data on temperature, humidity, inventory levels, and equipment performance, providing insights into warehouse conditions. This data helps businesses identify bottlenecks, optimize resource allocation, and proactively address potential issues, leading to improved operational efficiency and product quality.

D. Sustainability practices in warehousing and green logistics initiatives: With the growing emphasis on sustainability, warehousing is increasingly adopting eco-friendly practices. This includes implementing energy-efficient lighting systems, optimizing packaging to reduce waste, and adopting green transportation options. Green logistics initiatives, such as using electric vehicles, optimizing delivery routes, and implementing carbon offset programs, contribute to reducing the environmental impact of warehousing operations.

By incorporating these best practices and keeping up with emerging trends, businesses can optimize their warehousing operations, streamline their supply chains, and gain a competitive advantage in today’s dynamic market.

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3PLs And Software Vendors: 3 Questions To Keep Innovating Your Business Models

Author’s note: I wrote a slightly longer version of this post in November 2012. I’m sharing it again today with some minor edits because I believe the topic remains very relevant today.

Most of the time, when people talk about innovation in supply chain management and logistics, the focus is on technology (e.g., AI and machine learning) or business processes (e.g., same-day delivery and omni-channel fulfillment). But what about innovation in business models? Is there an opportunity for third-party logistics providers (3PLs) and software vendors, for example, to innovate their business models to deliver greater value to clients, differentiate themselves from the competition and gain market share, and achieve greater financial success?

Of course there is.

3PLs and software vendors have been transforming their business models over the past decade (e.g., the transition to cloud and software-as-a-service, the adoption of Vested Outsourcing principles). The challenge now is to keep looking for additional opportunities to innovate. But how do you find these opportunities?

You can start by answering these three questions:

1. Is your mission statement aligned with your customer’s objectives and desired outcomes? 

As highlighted in a November 2012 HBR blog post (“When Business Models Trump Technology”), an Israeli company, Netafim, captured almost one-third of the “seemingly commoditized” micro-irrigation equipment market by changing its business model to better address the needs and constraints of its customers (read the post for all the details). According to the authors, “Netafim went so far as to change [its] mission statement from ‘making the best drip irrigation equipment for customers’ to ‘helping the world grow more with less,’ an objective far more aligned with the objectives of its customers, the farmers.”

This reminded me of a case study I wrote in 2011 highlighting Jaguar and Unipart Logistics. The two companies created the following shared vision statement, which they review at the start of every meeting between them:

“To support Jaguar dealers in delivering a Unique Personal Ownership Experience to Jaguar Drivers worldwide, ensuring industry leading owner loyalty through partnership and world-class logistics.”

This shared vision statement aligns both companies toward a common goal that both unifies and transcends the interests of each company.

Simply put, if your mission statement and objectives are not aligned with those of your customers, then an opportunity exists to change your business model to close that gap.

2. What challenges and constraints do your customers still face that you can solve or alleviate for them?

The Cloud/SaaS model emerged in large part to address a problem many companies faced: they had limited IT resources and limited (and shrinking) IT budgets. Supply chain and logistics organizations face many challenges today, such as finding and retaining talent, enabling new business processes quickly, complying with emerging sustainability regulations, and dealing with high variability in supply and demand. The idea here is to take a step back and look at all of the resources and assets you have at your disposal (including those you’ve only been utilizing internally) to see if there are opportunities to bundle, price, and deliver them together in new and unique ways to solve the problems and constraints your customers still face.

3. What is your customer’s total experience with your product or service? 

In their July 1997 HBR article “Discovering New Points of Differentiation,” Ian C. MacMillan and Rita Gunther McGrath write that “most companies, in seeking to differentiate themselves, focus their energy only on their products or services. In fact, a company has the opportunity to differentiate itself at every point where it comes in contact with its customers — “from the moment customers realize that they need a product or service to the time when they no longer want it and decide to dispose of it.” They go on to say: “We believe that if companies open up their creative thinking to their customers’ entire experience with a product or service — what we call the consumption chain — they can uncover opportunities to position their offerings in ways that they, and their competitors, would never have thought possible.”

The article outlines how to map the consumption chain, which includes answering questions such as: How do customers find your offering? How do customers make their final selection? How is your product or service delivered? How is your product or service paid for? What is your customer really using your product for? What do customers need help with when they use your product?

The bottom line is that by exploring these questions in detail, you will likely uncover opportunities to streamline and improve your existing business model and practices.

I’ll end with a quote from another great HBR article related to this topic: “One secret to maintaining a thriving business is recognizing when it needs a fundamental change.” 

Something to think about and discuss in your next strategy meeting.

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Supply Chain Visibility: From Buzzword To Business Benefits

Editor’s Note: The following is an excerpt of a research report published recently, “Realizing the Full Business Benefits of Supply Chain Visibility.” The research, conducted by Adelante SCM and commissioned by Kaleris, highlights the main objectives companies have for achieving end-to-end supply chain visibility; the biggest dark/blind spots in the supply chain today; and the capabilities required to realize the full business benefits of supply chain visibility. Please visit the report page for more information about the research and to download the full report.

“Although visibility has become a popular buzzword in the supply chain literature it remains an ill-defined and poorly understood concept.”

So begins a research paper published in January 2007 (“Antecedents of supply chain visibility in retail supply chains: A resource-based theory perspective”) written by Mark Barratt and Adegoke Oke, researchers at Arizona State University at the time. In the paper, the authors define supply chain visibility as ‘‘the extent to which actors within a supply chain have access to or share information which they consider as key or useful to their operations and which they consider will be of mutual benefit.”

Barrat and Oke note that “it is assumed that if companies across supply chains have visibility of demand, inventory levels, processes, etc., that organizational performance improves.” They add, however, that “previous studies have examined the benefits, in terms of improved performance, of information sharing in supply chains, albeit mostly from a modeling/simulation perspective […] The results of these studies are generally inconclusive and vary subject to the differing structure of the supply chains under examination.”

Sixteen years later and the connection between supply chain visibility and realized business benefits remains fuzzy for many companies. The important word here is realized. Does having better supply chain visibility on its own translate into cost savings, service improvements, reduced risks, increased agility, and other business benefits?

History and experience have shown that visibility alone is not enough.

A prerequisite to achieving business benefits is having high data quality. As Barrat and Oke highlight in their paper, “the information [shared must be] accurate, trusted, timely, useful, and in a readily usable format…If the information passes this initial test it must then be incorporated into the decision making processes of the recipient who may now make a more informed decision enabled by better visibility of the sender’s current situation (derived from the shared information). It is this more informed decision making that potentially leads to improved performance.”

Simply put, without high data quality, companies could potentially find themselves in a “garbage in, garbage out” situation, making decisions based on inaccurate and outdated information. 

However, assuming this data quality prerequisite is met, making “more informed decisions” is not enough either to realize the full benefits of supply chain visibility. 

The reason companies want supply chain visibility is not just to see, analyze, and make decisions; they also want to do something with the data and insights collected. It’s the doing —  the actions taken to improve their supply chain operations, proactively address issues, and drive innovation — that ultimately delivers business value. 

From a technology standpoint, therefore, implementing a supply chain visibility solution by itself is not going to deliver much value unless it receives timely, accurate, and useful data from all important nodes and trading partners across the network, and unless shippers, carriers, logistics service providers, and other network participants also have execution capabilities like transportation management (TMS), warehouse management (WMS), yard management (YMS), terminal operating systems, and port community systems that leverage the data and insights obtained to optimize and automate business processes.

What are the main objectives companies have for achieving end-to-end supply chain visibility? What are the biggest dark/blind spots in the supply chain today? What capabilities are required to realize the full business benefits of supply chain visibility?

Those are the main questions we explore in this paper, which includes insights from a November 2022 survey we conducted with members of our Indago supply chain research community — who are all supply chain and logistics executives from manufacturing, retail, and distribution companies — to get their perspective on this topic.

For the survey results and additional insights on how to realize the full business benefits of supply chain visibility, please download the research report.


Above The Fold: Supply Chain Logistics News (June 2, 2023)

It’s going to be 90 degrees fahrenheit today.

Why would I choose to cycle 60 miles (almost 4 hours) in this heat?

Because my daughter doesn’t have a choice when it comes to dealing with the daily challenges of living with type 1 diabetes (T1D). 

It’s been more than 11 years since she was diagnosed at age 11. I made a promise that as long as I am able, there is no distance I won’t go to help find a cure for T1D.

It’s why I launched our Logistics Leaders for T1D Cure cycling team in 2016, and why I’ll be cycling 100 miles at the JDRF Ride in Burlington, VT at the end of July.

Due to work travel, I’m behind on my training, which is why I’m going out today. I’m also very behind on reaching my fundraising goal. 

How can you help? Please consider making a tax-deductible donation to help the cause. You can do so via my rider page: http://www2.jdrf.org/goto/AdrianLL4T1DCure

If you’re a supply chain technology company or a logistics service provider, please consider sponsoring our team (a big thank you to TranzAct Technologies for sponsoring us again this year). We have a variety of sponsorship packages still available, which include many benefits, so if you’re interested in learning more, please contact me for details.

Thank you for listening.

Moving on, here’s the supply chain and logistics news that caught my attention this week:

IKEA: I Liked It So Much I Bought the Company 

Do you remember the 1979 commercial with Victor Kiam saying he liked the Remington electric shaver his wife bought him so much that he bought the company? If not, here it is:

This commercial came to mind when I saw the news that Ingka Investments, the investment arm of Ingka Group, owner and operator of 482 IKEA stores and e-commerce in 31 counties, acquired Made4net, “a global provider of cloud-based Warehouse Management System (WMS) & end-to-end supply chain execution software.” Here are some excerpts from the press release:

The Made4net omnichannel fulfillment solution will be deployed across IKEA stores and fulfillment points to modernize and future proof omnichannel operations…As a customer, IKEA will apply Made4net technology to significantly enhance how the retailer interacts with its consumers in a new era of omnichannel commerce, providing a more flexible way to shop, order and deliver products in a sustainable way. Made4net’s SCExpert™ platform will in the long term power IKEA’s worldwide fulfillment centers and store operations across 482 locations in more than 31 countries, with over 100,000 users to deliver faster, more accurate order fulfillment and improved supply chain visibility, resulting in a better experience for employees and customers. 

“Our business currently requires a better fulfillment operations system with more accurate data that better supports handling for our customers,” said Tolga Öncu, Head of Retail, Ingka Group. “Our goal is to become leaders of life at home, serving more people in an omnichannel reality, whenever and however customers choose to meet us.”

Last September, I wrote about the relatively recent trend of retailers acquiring 3PLs and/or offering logistics services. Now you have this example of a retailer buying a supply chain execution software company. What’s going on here?

I believe it’s part of the same trend I first wrote about in a March 2014 post titled, “Keeping Control: What 3PLs Must Convince Their Customers.” Simply put, a growing number of large retailers (and manufacturers) are starting to view logistics as a core strategic function, and so they are investing in assets, people, and technology to gain more direct control of their operations.

You can’t get any more direct control than buying the company.

What does this mean for Made4net’s existing customers? According to the press release, the company “will continue to operate as an independent subsidiary from its headquarters in New Jersey, U.S., and its six global offices where the company supports hundreds of global customers.” 

In the best case scenario, the investment by Ingka Group will help accelerate solution innovation in the months and years to come which will benefit all customers. In the worst case (and less likely) scenario, IKEA will pull an Amazon when it acquired Kiva years ago and eventually stop selling Made4net solutions to other companies.

Nothing surprises me any more in this industry.

And with that, have a happy weekend!

Song of the Week: “Wagging Tongue” by Depeche Mode

A passenger plane takes off from the night airport runway

What Dominates The Transportation Management Agenda In 2023?

Transportation executives have always been tasked with developing annual strategies and execution plans. And since the transportation market is cyclical, with swings in demand and capacity, every year presents new challenges. 2023 is no exception. The difference now, however, is that CEOs and CFOs are more interested in what’s happening in the market due to the supply chain shocks of the past three years. Considering this, what should dominate the transportation management agenda today? That is the high-level question addressed in Descartes’s 7th Annual Global Transportation Management Benchmark Survey, which I discussed with Chris Jones, Executive Vice President, Industry and Services at Descartes Systems Group, on a recent episode of Talking Logistics

Key Survey Findings

I began our discussion by asking Chris to share some of the key findings from this year’s survey. Chris explains that one aspect of the survey examined why two companies who implement the exact same system may have very different results.

Chris notes that while one company may have great results, another may have far less impact even though there was nothing wrong with their implementation. “What we found was that management’s perceptions of what the system could do for them had a major impact on results,” he says. “If management believes that transportation is important, they really do push the envelope [on driving change and innovation] and they perform better financially as well.

“Another factor was how well the company was doing financially, because that changes how aggressive they are. Those companies who were more aggressive in making changes during the pandemic typically saw more impact from their implementations.”

Cost and Capacity

Now that the market has swung toward relatively lower costs and greater capacity, I asked Chris what is top of mind for transportation executives. Chris notes that the driver shortage continues to be the top concern and will likely be so for the next five years or more. “But costs and capacity still came in at numbers two and three.” 

Chris goes on to explain that what is most on executives’ minds now is resiliency. Even though capacity has improved, it is still cyclical and they want to do things now to make sure they will have capacity when they need it down the road. “While they have some breathing room at the moment, they remember getting burned in the recent past and that makes now the perfect time to put capabilities in place to be better prepared in the future.”

Metrics Matter

I next asked Chris if the survey found any changes in the metrics companies are using to measure results. Chris comments that companies are still using the traditional metrics of cost and service, including On-Time In-Full. “Because those are the basics, you don’t get any credit for hitting those. 

“What is interesting are new metrics around transportation’s contribution to revenue and competitive differentiation. If you’re able to measure those you start to see where the value is. What was really clear in the survey was that companies who were top performers and who felt transportation was important were way ahead in those two metrics.”

Looking Down the Road

Another aspect of the survey I explored with Chris is what transportation management capabilities companies say will be most important over the next few years. Chris states that visibility continues to be critical, but even more so in areas such as for overseas shipments. “Are the shipments clearing customs? Are there potential problems? This can impact inventory management, as well as manufacturing plans.

“Other areas of focus are order management from the standpoint of what is coming down the road to plan for, and performance management and business analysis. Transportation generates so much data and you can learn a lot about things such as customer behavior — are they there to receive shipments, how much detention is there, for example, as well as learning what your carriers are doing. This is coming together with the rise in very sophisticated yet easy to use analytic platforms.”

Chris also had some great comments on how visibility to sustainability metrics intersects with costs and service, and shared what investments the survey found were on executives’ radar going forward. Therefore, I recommend that you watch the full episode for all of his insights and advice, and also download and read the 7th Annual Global Transportation Management Benchmark Survey. Then keep the conversation going by posting a comment with your questions and perspective on this topic.