Mastering the dark art of logistics – part two
In part two of this two-part blog, guest blogger Richard Amey, National Logistics Performance Manager at Hope Construction Materials, explains why breaking down the silo mentality is key to an efficient logistics operation. Read part one here.
When you work in a business where transport isn’t a core function – even if it is still a key element – people often simply assume the fleet, transport or logistics manager owns it and that it has little effect on them.
Sadly a vehicle fleet is also often seen solely as a cost. It isn’t something that makes you money, so doesn’t attract the same focus as other departments. But this is a mistake.
For example in my current business, I sought to change the view that we are a concrete production business to it being viewed as a concrete delivery business. This is something many businesses within the construction industry should strive to achieve.
Key to this is getting operations to focus on getting the product to the customer at the right price, in the right place, in the right quantity (and quality) at the right time. Once you look at it that way, it opens your eyes to the importance of logistics.
The logistic operation has a major effect on all aspects of the business, including sales, customer service, health and safety, HR, compliance and finance. Without realising this, companies will simply be unable to achieve optimum efficiency in any of these areas.
Right item, right place, right time, right quantity, right price
So what does a good logistic operation look like? I talk about the five Rs – right item, right place, right time, right quantity, right price. Generally if you are doing this then the operation is working, if any part of that isn’t happening then you have a problem.
At the very core of this is visibility, if you know where all your assets are and what they are doing you can make informed and timely decisions. But, for the logistics professional, it’s all about how you share and use that information. Telematics is a key weapon in your arsenal.
Organisations are often good at communicating top to bottom and sometimes bottom to top but it’s the sideways element that can prove tricky. So, in order to develop an understanding with the likes of sales, I will ask members of the sales team to spend a day in a truck. Usually, they will enjoy it because it’s a break from the usual routine and it will also allow them to develop an understanding of the transport function and how it affects them.
But not everyone can spare the time to go out in a vehicle. For those who prefer graphical presentation of data or are visual learners, telematics reports can quickly show trends in driving behaviour through easy-to-understand graphs and charts. This allows the logistics manager to quickly explain what impact driving style can have on fuel, wear and tear and, ultimately, the bottom line. Once managers understand poor driving is costing them money, they quickly become interested.
Data is key to logistics change
Other stakeholders, in finance and sales for example, will be focused on figures so may respond better to information presented in a spreadsheet. Often the focus for sales teams will inevitably be on selling products but it’s important to provide them with figures that highlight not every sale is sustainable.
For example, if a transit van costs £2 a mile to run and is sent 50 miles for an order that’s worth £50 to the business, it becomes unfeasible. All sales will see is the sale itself, but they might not realise the negative impact on the business. But a slick, efficient, reliable and well-presented logistics and transport operation can be a USP to help them win sales. Once you have shown them this and encouraged them to understand the logistic operation you have forged another strong co-dependant, inter-departmental relationship.
At Hope Construction, we encourage this by having all staff work in the same office, preventing the development of silos. This is crucial to ensuring the role of transport is widely appreciated and understood, which is, in turn, vital to gaining buy-in for any investment in the fleet department.
It is time for businesses to realise just how important logistics is to their business. They must stop focusing on just fleet and transport. But to do this, fleet, logistics and transport managers must begin the process of building bridges with other departments and show them what they are missing and what we can really deliver for them.
Construction firms can gain more specific advice on how to improve vehicle operations in this white paper, which offers seven tips to improve productivity.