I ‘heart’ logistics

A healthy supply chain is like a healthy circulatory system

An adult heart, beating 100,000 times a day, moves 7,500 litres of blood around a 100,000 km circulatory system. Impressive logistics!

What is even more impressive is just how dynamic that system is. A heart resting at 75 beats per minute can double its rate in a matter of minutes during intense activity.

The heart and the circulatory system, down to every last capillary, keep every other organ in the body working. Logistics keeps a supply chain working.

The most important thing we can take from this analogy is that the heart and circulatory system works so well because it is a dynamic system. It must be able to respond effectively and efficiently to the environment it is in. It will operate quite differently when you’re lying on the beach than when you’re running to catch a bus.

When organisations go to buy logistics services, they often fail to recognise how dynamic the field of logistics is, and so the specifications and terms of any contract they execute may not adequately reflect the dynamism that is an essential part of good logistics.

A mature procurement team has a distinct approach to logistics. Like so much in modern procurement, it starts with a strategic framework. That framework is based on well-defined goals and an assessment of current performance and future needs. This work will enable the development of sound strategies.

You want a partner, not a supplier

Central to logistics strategies is that suppliers often become partners and this status will colour the entire contract. A partnership is essential if genuine collaboration is to be achieved, and collaboration is the key to achieving a dynamic system, one where both hearts beat as one, and where the heart rate keeps pace with the variation in demand.

A partnership with a logistics company should enable the flexibility you will want across pricing, delivery volumes and timing. From your side, you need to be sharing your data with your logistics partner, as well as your plans and forecasts, so that they can better anticipate and respond to your changing needs.

Technology can really bring a partnership to life. Sharing performance metrics, especially in real-time, enables you and your partner to make better decisions. So, be prepared to be open and transparent. Work together to improve efficiency and accuracy. Invite your partner to undertake analysis and make recommendations. You can express this desired posture when you go to market and your expectations regarding collaboration and how continuous improvement will be managed can be made clear in the contract.

Don’t be shy when it comes to defining the values of the collaborative culture you seek. You can expect potential partners to be aligned with your goals and you can describe how you expect open and constructive communication arrangements should work. You should also consider how other parts of your business might also become more collaborative and assist the logistics partnership to flourish.

Make sure your business is loved

One early-stage consideration for finding the right logistics partner is to make sure you are a good fit in terms of scale. Ideally, your contract, and the commercial value of your business, will mean enough to foster collaboration, but not too much to generate an unhealthy dependency.

A small company serving a single domestic market partnering with a global giant will often be unlikely to produce the level of collaboration you seek (their heart won’t be in it). Rather, a smaller, challenger logistics company is likely to be more passionate and attentive. Similarly, if your organisation operates globally with regional offices and so forth, then a global logistics firm may well be a better match. Cultural fit is also part of this matching.

Finally, in preparing to go to market you need to be confident that your organisation is operationally literate. Establishing the dynamic logistics partnership you want will depend on your ability to prepare documents that accurately express how that dynamic relationship will come about, how it will be managed and, most importantly, how the relationship will deal with variations and new developments.

In our experience, many organisations would benefit significantly from increased collaboration between logistics and procurement teams, so procurement really understands what a future-ready supply chain looks like, and logistics teams can understand how procurement can facilitate this vision.

First, we must be able to imagine, to conceive of, the type of arrangements we need to have. If we don’t have the language or know-how to articulate what we need, then it is highly likely we won’t get it. And if we don’t have the language right, we need to learn it and/or work with experts to develop this capability. Once we realise, learn to express our aims and communicate our intentions more effectively we are ready to work with all parties’ best interests at heart.