Logistics and Supply Chain Consultants

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Logistics and Supply Chain Strategy

Logistics and Supply Chain Strategy – ‘Making the service fit for purpose and cost’     

Businesses need to have a clear logistics and supply chain strategy that they own and understand. Bisham Consulting’s team of experienced senior level supply chain strategy consultants have developed a set of proven models and approaches that enable their customers to develop realistic and robust strategies. Using these proven methodologies and unique skills in understanding their customer’s business they are able to work with the senior management teams to develop strategies the business can follow.

  • Supply chains are always changing and developing
  • Costs may be a relatively small proportion of net sales, but the impact on customer service is major
  • Identify customer needs and track changes
  • Build flexibility into your supply chain
  • The least cost solution is rarely sustainable over time
  • Effective planning and resourcing of implementations is critical – even then it will not be easy!
  • Think broadly when things go wrong – rarely is anything quite what it seems

A Logistics and Supply Chain Strategy needs to be practical to improve the cost effectiveness and service capability of transport, warehousing, inventory and associated IT systems

Priorities generally are:

  • Rationalisation and cost cutting
  • Preparing for sales growth and limiting cost increases
  • Customer service

 Supply chains are continually changing (often in subtle ways) under pressure from market forces:

  • New products
  • Global sourcing
  • Sourcing assemblies
  • Flexible manufacturing
  • Supply rise/fall
  • Changing service needs
  • Order size and frequency
  • Customer delivery points
  • Changing needs
  • Demand rise/fallsupply chain strategy
  • Competition
  • Restructuring
  • Mergers and Acquisitions

Companies should review their supply chain strategy every 2 years to see if it still applies

Implementation is a key part of Supply Chain Strategy

If the mechanics of implementation are not thought through and costed properly then the strategy is incomplete. Logistics implementations are qualitatively different from many others in business:

  • Immediate impact on customers
  • Need to keep operations running
  • Acute focus on cost
  • Complex nature of the operations at a detailed level
  • Cultural differences

People and Cultural Issues

When considering major change programs in logistics it is best to bring in additional operational and planning expertise and resources to avoid failure. The investment cost is minimal compared to the impact on costs and customer service of failing programs

  • Under-resourcing large change programs in terms of quality and numbers
  • Major cultural and educational differences between average employees in logistics and elsewhere
  • Particularly evident when implementing new systems in logistics – what happens when the clever guys go?
  • De-skilling also adds to difficulties in staff retention
  • 3PLs focus on transport and warehousing and have limited expertise in overall supply chain management

Cost Increases in Logistics

  • Changes in order sizes and timing, or number of SKUs or delivery frequencies can increase costs
  • The single biggest cost to a business derives from poor customer service in logistics which leads to lost sales and profit
  • Focus on customer service not just costs

The Importance of Customer Service

  • A focus only on cost in your supply chain strategy is a recipe for failure in the long-term
  • Poor customer service is a hallmark of secondary and tertiary suppliers (who are early losers in periods of fierce competition)
  • Interestingly, our experience is that businesses which are poor at service are often also high cost

Define the customer service proposition – find out what your customers want and expect!

Industry surveys repeatedly show that customers want reliability:

  • High levels of product availability
  • Delivery reliability – arrive at agreed date/time (rather than very short lead-times)
  • Low prices (but not at the expense of consistent service)
  • Fast and accurate response to simple order status enquiries (75% of calls to call centres!)

Developing Key Performance Indicators and interpreting them sensibly is a good way of gaining early warning of trouble ahead

Some examples from case studies:

  • Failing picking and packing operations – order processing and management
  • Goods inwards bottleneck
  • Transport congestion – warehouse picking scheduling
  • Inventory inaccuracy – systems weaknesses
  • Reducing productivity – shift patterns
  • Weak availability – timing of order processing

Case Studies:

Briggs and Stratton

Briggs & Stratton, an operating division of a major US based manufacturer was seeking to move all N American production to Europe and combine with existing European manufacturing. Additionally it was seeking to combine assembly with distribution and establish a single location for all European assembly and distribution. Components were imported from a number of destinations in the Far East, Europe and N. America.. A decision had been made to locate the new EADC in Central Europe to gain advantage of low cost components, real estate and labour. Bisham was assigned the task of identifying possible locations, sizing the EADC and the required transport network.

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B&M Retail

To assist in planning and project managing the implementation of the strategic recommendations. Bisham Consulting analysed the service and cost performance of the current logistics operations including transport, warehousing, inventory and systems. A Cost-to-Serve model was developed to provide a benchmark against which to review future alternative options.

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