How to plan a global logistics
model. By David Warrilow
What are the components of
a successful global logistics
model? First, typically, is the
presence of a multinational
manufacturer and a logistics
supplier who have both
bought into the strategy. Then comes the
ability to get product delivered in less
time than was previously possible with the
minimum number of warehouses - preferably
none - en route, and with improved
Another important component is
for all nodes in the delivery chain to have
transparent information that is locked in to
the system, and information that operates
outside corporate systems and that can be
accessed and analysed at all times, linked to
service level contracts.
Finally is the need for all parties to liaise and
address each other's requirements. This might
include breaking out of the three-year, hire
them and fire them cycle.
The high tech consumer industry is driving
changes like these but it is not alone. Like some
pharmaceutical companies this sector, with its
laptops, desktops, ipods, mobile phones, games
consoles and computer chips, is demanding
ever more just in time production, faster
delivery and improved security. It isn't
interested in old fashioned processes, work
practices and facilities that expose the pipeline
to weaknesses. It wants guaranteed delivery
times and improved security in all aspects of
DHL, the biggest player among logistics
suppliers, has been a user of this model for several years. The model may mean a higher
initial cost but this can quickly become
Multinationals want a competitive price but
they also want a high service level and perhaps
most important, they need control. The key to
achieving control is the pipeline visibility that
comes with the model.
Paying a slightly higher rate per kilo doesn't
automatically translate into a higher overall
cost - not when it allows a company to invest
and achieve cost benefits elsewhere, and
certainly not when the cost of customer
dissatisfaction of changing systems and
processes is factored in.
To summarise, a successful logistics model is
pivotal to successful change, and this
should acknowledge that process monitoring is
a prerequisite to process improvement. It
should also recognise and address the needs
of all parties.
The price must be competitive but this must
not be achieved at the cost of service levels. The
multinational should be prepared to invest in
infrastructure that will allow the logistics
supplier to succeed on its behalf.
Both parties should be prepared to enter into
an agreement with a long term view - agreeing
a longer contract (perhaps linked to agreed
service levels) than the traditional three years.
Multinationals must treat their logistics
suppliers as partners, thus giving them the
incentive to invest.
Implementing a global logistics model is not
the pain it might appear. It has been
successfully done with several of the world's
biggest companies. These are the firms helping
to bring logistics into the 21st century.