A certain comedian from the South has achieved great fame with an act based entirely on a series of “You might be this, if that” jokes. He enjoys poking fun at those who don’t take stock of the obvious to solve their problems. Minus the chastising and the humor, however, it’s the same practice of self awareness that is critical for those logistics professionals who are uncertain about whether their supply chains are poised for success. They may think their supply chain is in great shape, but how do they really know? With organizations’ competitive edge in the global market at stake, evaluating supply chains early and often is critical. Taking a cue from our comedian friend, it is helpful to identify those conditions — obvious or not — that might drive the need for a supply chain intervention. “You might need a supply chain intervention if …” just might be one of the most powerful conversation starters in the industry.
The Wake-up Call
Determining whether you need to stage a supply chain intervention requires an internal champion who is willing to admit that vulnerabilities exist and is dedicated to driving out waste, creating efficiencies and laying the groundwork for a supply chain that succeeds well into the future.
Once you’ve found that champion, there are a number of ways to determine the need for an intervention by a fourth-party logistics (4PL) provider — the conductor for the orchestra that is your supply chain. You can start by asking yourself if any of the below scenarios hold true about your supply chain:
- There isn’t an enterprise-wide supply chain strategy or vision in place
- You’re unsure of your supply chain spend
- It’s difficult, if not impossible, to follow the money trail within your supply chain
- You’re behind the competition on critical supply chain metrics, such as cost of goods sold, order-to-cash cycle time, order delivery, customer satisfaction, etc.
- Your supply chain is siloed across geographic regions and/or business units
If you’re nodding your head in agreement with any of these, you’re on your way. It’s not a pleasant revelation, but it’s a vital and unavoidable step toward success. From here, however, you must keep one thing at the top of your mind — that even though you’ll cut costs from your supply chain with an intervention, doing so is not the end goal. The cost savings revealed upon addressing the fundamental underlying maladies will simply enable you to fund longer, sustainable change initiatives, creating a supply chain that supports the demands of both internal and external customers.
Supply chain interventions are enterprise-wide initiatives, which is why it’s important to educate and have buy-in for the endeavor from C-level executives up front. Some points to share:
- 4PLs aren’t tactical entities. Instead of addressing the symptoms of a dysfunctional supply chain, such as high inventory and transportation costs, they focus on effectively linking the synchronous flow of information to trigger the right supply chain events.
- The primary focus of a 4PL is on four key tenets: driving the speed of improvement for the organization, increasing supply chain capabilities and competencies, growing capabilities internally within the contracting entity and eliminating waste.
- The ROI of a 4PL engagement is typically longer as well, so the 4PL will help you gain the necessary organizational support by delivering on the quick wins in the beginning in order to make broader business changes down the line.
- Communicate that 4PLs structure the commercial relationship to share risk. This covers the cost of entry for the organization and incentivizes both parties to focus on the correct initiatives and ROI, whether short-term for immediate buy-in or longer term to build the foundation for the future.
- The value that a 4PL drives focuses on business transformation and supply chain innovation. Since the supply chain touches all functional areas and can impact both up and downstream processes, the lean principles of continuous improvement and reduction of waste can be applied widely.
- Tools like value stream mapping and a simple impact matrix help to identify disconnects, put structure around each of the initiatives and form the roadmap for implementation.
The best 4PLs will work collaboratively with your organization in whatever capacity necessary, and will assess whether you even need an intervention at all. If you do, it won’t happen without honesty and a willingness to take a look in the logistics mirror to see the true state of your supply chain.
Carl Fowler is Senior Director, AIG Business Development at Menlo Worldwide Logistics. During his eight-year tenure with Menlo, he has worked in transportation, warehouse operations, account management and business development, and has earned a senior leadership role responsible for the company’s 4PL product offering. With an extensive background in manufacturing and warehousing distribution, Fowler has been immersed in the logistics and supply chain industry for more than 17 years. During that time, he has had the unique opportunity to work at all levels of the automotive logistics industry, from large tier-one suppliers to one of the early lead logistics providers at General Motors.