Most logistics service providers (LSPs) present clients with monthly reports touting their on time delivery percentage. It is easy to become complacent when LSPs routinely report 97-99% on time service after taking exceptions for weather and other factors.
Why not challenge them to measure absolute performance failures instead of percentages? In a high volume operation even a small percentage can mean a lot of late shipments and unhappy customers. In a smaller operation with fewer customers every shipment is critical. If LSPs can track and report percentages they should be able to do the same for absolute numbers of shipments.
Finally, if you are an LSP, remember that you have a client on both ends of the shipment so service failures have twice the impact. Different metrics are like fresh eyes on an operation.
INVENTORY AT MULTIPLE LOCATIONS: THE SQUARE ROOT RULE
This technique is useful in determining the effect on total inventory levels when adding or reducing distribution centers.
The analysis assumes that total demand remains unchanged. The goal of this analysis is to approximate the aggregate inventory at multiple facilities by multiplying the square root of the number of facilities by the inventory previously stored at a single facility. X2= (X1) (Square root of n2/n1) where n1= number of existing facilities n2= number of future facilities where n2>n1 X1= total inventory in existing facilities X2= total inventory in future facilities
Example: A company distributes product to its customers in the southeastern US from a single facility in Atlanta, GA. It is considering opening a second facility in Nashville, TN to help serve the same market. Assume that average inventory levels at the Atlanta facility are 10,000 units. n1= 1 existing facility n2= 2 future facilities X1= 10,000 total units in the existing facility X2= total inventory in future facilities = (10,000) (Sq root of 2/1) = (10,000) (1.4142) = 14,142 units
Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse, good customer service is essential. While information is almost always available at your fingertips, action requiring human intervention can be elusive. Logistics managers deal with changing schedules, equipment failures, weather delays, regulatory issues, and miscommunication on a daily basis. Most problems, however, are not new. The same situations tend to repeat themselves so they can be anticipated. Developing a set of problem solving protocols for the most common issues in your supply chain will save you time since you will not be starting from scratch when a problem arises. It will also enable your colleagues to act in your absence. A basic protocol defines the problem and lists steps to be followed as well as the resources involved. Your logistics providers can help by providing relevant operations contact info for the identified problem areas. Your account rep should welcome the opportunity as it will save them time as well. Update protocols as needed and make them part of your account review meetings. Finally, if your account rep says “Just call me” don’t accept this response.
I came across the term “wicked problem” in the text for an International Supply Chain Management course. A wicked problem involves multiple stakeholders, each with different interests and values. As a result, there is no single common goal , no clear mission, and no universal solution. Any solution, after being implemented, will generate waves of consequences and can result in making the problem worse. A suggested framework for tackling a wicked problem consists of 4 levels of increasing complexity: Level 1- Process Engineering and inventory management. Level 2- Assets and Infrastructure. Level 3- Organizations and Inter-organizational networks. Level 4- the Macro Environment- PEST (Political, Economic, Social, and Tech). Fortunately, not all logistics problems are wicked problems. In most cases logistics problems are tactical and can be solved using Level 1 and 2 solutions. Supply chain issues are strategic and more complex so best suited to Levels 3 and 4. *Global Logistics & Supply Chain Management
Incoterms (continued)
Contrary to popular belief Incoterms do not cover title to goods, ownership, or invoice payment. They do cover obligations of buyer and seller for payment for insurance, transport, export and import clearance, and division of other costs of storage or delivery. Incoterms will be updated again in 2020 by the International Chamber of Commerce.
Senior Editor, Trucking and Domestic Transportation, The Journal of Commerce5d • EditedThe hashtag#bankruptcy of 101-year-old New England Motor Freight was a shock and a wake-up call for those who expected less volatility this year.
Mitch’s LinkedIn comment today:
Thoughtful analysis and right on target…traditional LTL carriers achieved efficiencies mostly thru managing labor costs…still important but real gains in efficiency will come via technology…
If you are planning to take the customs brokers exam in April you should be well into your preparations by now. The exam is not easy but a step by step study plan will give you confidence. I devised a simple method that worked well for me and will share it. E mail mitch@52.91.45.227 if interested.
Mitch Kostoulakos, LCBLicensed Customs Broker, International Logistics Consultant
Hi Dean, interesting article. I agree that separate opcos are an obstacle vs UPS. However, I don’t think a merger of opcos is feasible considering the contractor model in place for ground and company employees for express.
International Logistics Consulting; Licensed Customs Brokers
Hi Dean, interesting article. I agree that separate opcos are an obstacle vs UPS. However, I don’t think a merger of opcos is feasible considering the contractor model in place for ground and company employees for express.