Add Value; Cut Cost
When you work in the supply chain business, you know that complexity is often a feature of the services required. Also typically the more complex the process, the more benefit can be had from implementing lean processes.
In the context of this article, when we refer to “lean” we mean ways in which we can cut or reduce waste. By addressing waste reduction, there are many cost and efficiency benefits which both suppliers and buyers of logistics can access. On the other hand of course, the reverse is true; if your supplier is not operating in a lean manner, for example, customers may be paying more for freight forwarding services directly and indirectly through the hidden costs arising from poor processes or unnecessary waste.
Logistics Companies and Lean Processes
The primary objective for a logistics company like Cargocare is to organise the movement of goods from the supplier to the customer. When we discuss a lean logistics process, it involves a more comprehensive view of the service; taking into consideration managing this transportation process in a way that adds value to the service through the elimination and/or reduction of all associated waste.
It’s vital to consider the movement of goods throughout the whole transportation process and not just delivery to the end customer/ In traditional manufacturing companies, “lean” refers to optimising the manufacturing process and if we apply the same lean principles to the supply chain and logistics markets, we aim to optimise the use of resources throughout the transportation of goods. This may refer to physical assets such as vehicles or facilities, and it refers to resources such as labour or energy supplies. It also includes “softer” resources like customer branding, communication methods and more.
The Benefits of Lean Processes in Freight Forwarding
Projects like LaMiLo have proven that once you start to think in this manner; not only is waste minimised but other benefits soon become apparent. See some examples of successful lean logistics companies and projects implemented in the LaMiLo initiative.
So while a key driver for all businesses to consider operating in a lean manner is the cost efficiencies that soon become apparent, that’s only one half of the equation; there are many other benefits to be gained such as a better service; not just for buyers of supply chain services but also for end-users – who may benefit from a more friendly, flexible delivery service, for example. Similarly if the freight forwarder extends their support offering and skills e.g. to install – and not just deliver – office equipment, for example – then again the end-user gets a better, more efficient service and the perception of quality associated with the office equipment brand is likely to improve.
So when we consider lean in terms of waste, we need to have a broad view and to take into account both aspects of the existing service that add no value but also opportunities where additional activities can add further value. This more strategic approach will reduce transportation in-efficiencies and associated waste in a broader context of customer service, delivery and operational efficiency.
If you are involved in logistics then a good starting point to analyse your operations in relation to lean considerations is to review areas where waste may be apparent.
Here’s a checklist to kick-start your review
If you find deliveries are regularly late, items frequently arrive damaged or loads are often half-empty – then it’s clear that there are fundamental operational issues causing waste that need to be addressed; focus on identifying the root cause of these recurring issues and prioritise the need to address them in line with financial and customer service impacts. Consider these as the equivalent of down-time on the factory floor; they simply cannot be tolerated and need to be eliminated; just because they may not seem to have the same immediate impact as non-production in an industrial setting, they can have a radical effect on profitability over time – robust processes will weed out this type of recurring waste.
Is every team member being allocated for best affect? Are all the skills and creativity of the team being applied effectively in the work-place? Is there succession planning? Is there too many staff or not enough to service customers to best effect? Are you losing potential business or the opportunity to improve your service because your logistics supplier isn’t trained to do certain work like installing, not just delivering, office equipment?
Waste of Time
We all know in the commercial world time is money and in a logistical context managing time is crucial. If drivers are left waiting for a shipment to arrive; the cost clock is ticking loudly; if route-planning isn’t optimised again that additional time on the road is costing you money; not just labour costs but fuel and vehicle wear and tear too. Plus there’s the opportunity cost of these resources not being applied elsewhere. Whether you’re a customer buying freight forwarding services or a supplier in the market; less waiting time equates to lower costs and more efficiencies. It’s simply impossible to eliminate waiting time where certain events are outside your control e.g. a strike by port workers, however if you implement efficient processes to address time management where possible; you will minimise waiting time waste.
Optimising Goods Handling
It’s useful to analyse the strategic set-up of the business from time to time; is it working in an optimal way for current business needs? Is the warehousing close enough to the port; has it sufficient/too much capacity; are you paying for under-utilised facilities? Is the transportation and handling of goods done in an efficient way that minimises the process? Because logistics is complex, processes often depend on third parties and partnerships – its also worth reviewing these relationships from time to time and considering are they performing as they should; could they be leaner too? Could certain suppliers be eliminated from the process and maybe one supplier could take on more responsibility.
Using one supplier to undertake multiple activities can cut cost and also reduce the time needed to manage multiple suppliers. A good example of this extended service is the office equipment delivery and installation services offered by Cargocare, where the end-user i.e. the office customer, can take delivery of the equipment in out-of-office times if that’s more convenient and the Cargocare team can place the equipment in the right location and do “green light” testing to make sure it has arrived in working condition. This is not a set of services which a freight forwarder would have traditionally offered however it has both cost and efficiency benefits for the office equipment supplier and for the end-user.
Next Steps for Logistics Companies
Once you have considered different areas where waste may be reduced or eliminated to achieve a more lean logistics service, here’s a few simple steps you can use to instigate change;
Prioritise Areas of Waste to be Addressed
– which have the greatest impact on cost/profit/service?
Identify Ways to reduce this Waste
– discuss options with your team and take advice where necessary
Introduce Robust Processes
– this is key to lean organisations; standards will slip if proven processes are not in place
Track Progress, Review Regularly
– identify key performance indicators (KPI’s), monitor these regularly.
Lean processes can take time to introduce but strategically they are a vital part of continuously improving business processes and driving future profitability. They are also key in terms of sustainability for local businesses and in terms of environmental impact. So it’s well worth taking time out to address these considerations – for the benefit of all.
Integrated Freight Forwarding Services Provided by Cargocare
If you’ve read through this article and you are interested in the benefits of working with a supplier that can help your own business to operate in a leaner manner; with all the associated benefits, then why not contact us to talk through possible options? There may be services we can offer that will not only save you time and cost but also improve your relationships with your own customers and offer a better service all-round.
We’re a hands-on, responsive family-run business that have been operating in freight forwarding for many decades. We specialise in transportation of goods throughout and to and from the UK and Ireland. To facilitate the last mile of the retail supply chain for print room and photocopier equipment we have dedicated installation teams to cover the Irish market.
We have the capacity, skills, vehicles and equipment to offer a more comprehensive, integrated service than many traditional freight forwarders. As a lean company, we are confident that we can improve your profitability and add real value to the reputation of brand. We like to work closely in partnership with clients and long-term loyal relationships work well for both parties – talk to our clients to find out more. We love to innovate and like to work with clients in a way that also builds better relationships with their own customers – we’ve proven our ability to do this many times with our own clients; many of whom have remained customers of ours for decades and through many transformations of their own businesses.
Please do call now – we look forward to discussing your requirements.