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The COVID-19 pandemic is going to be with us for considerably longer than anyone would like. Most people now understand that supply chain, and more specifically supply chain logistics, is critical to our ability to organize resources and overcome the social, economic and health care challenges posed by the pandemic.
It is in this context that I spoke with Trevor N. Andersen, managing partner and chief operating officer of TRJ Consulting Services, about the fundamental management lessons that small and medium-size logistics companies should adhere to as they navigate the difficult economic terrain caused by the pandemic.
Our conversation draws on Andersen’s 15-plus years of progressive experience as an operations and finance executive in various industries for which logistics is key. More specifically, it draws on the eight-plus years he spent at Ports America, where his responsibilities spanned the gamut from operations and corporate finance to pricing and business development leadership for 12 of the company’s East Coast locations.
His experience is in stevedoring and terminal operations, but his observations can be generalized to other types of logistics businesses and companies.
It is important to pick a strategy
Andersen made the observation that logistics companies are often not the best at picking a strategy and then designing the company to reflect that strategy. He believes that stevedoring and terminal operations companies need to decide if they will be the low-cost provider, the best-in-class provider or the innovator. Arguing that the choice matters because it affects how the business is run, he observed that the choice even affects the types of partnerships a company might pursue, how the company might respond to competition, or how the company makes decisions about the businesses it should enter or exit.
Operations is about more than just getting the job done
According to Andersen, one of the things he learned from his mentors in the logistics business is that operations means a lot more than simply getting the job done. Rather, operations is about getting the job done for the customer AND strengthening the company’s relationship with the customer in the process. He cited a commitment to safety and innovation as characteristics of logistics companies that he believes exemplify excellence.
In the context of port operations, Andersen highlighted the relationships with unions as one example of an area in which companies that exemplify great operations take an approach that differs from their peers by building a collaborative relationship with their unions as opposed to resorting to the complacent approach that is commonplace.
Finance should function as a strategic business partner to operations
Andersen says he finds that often finance professionals in logistics companies play the traditional role that one would expect — they gather, analyze and report on accounting and financial data. That’s it. He calls this the “finance professional” approach. He instead suggests that finance professionals leave their offices and spend more time with their colleagues in operations in order to gain an understanding of the business drivers that lead to the accounting data at the end of every month or every quarter. He believes that this makes it possible for finance professionals and their colleagues in operations to identify areas for the continuous improvement that lead to better financial results over time. He calls this the “strategic business partner approach” and describes it as one in which the focus is equally on finance, accounting and operations — and ensuring that they work hand-in-glove for the betterment of the company, its employees and its customers.
In an economic environment such as the one we are living through, good management by itself is not enough to help a business survive. However, poor management makes surviving an economic crisis like this one virtually impossible.
If you are a team working on innovations that you believe have the potential to significantly refashion global supply chains, we’d love to tell your story in FreightWaves. I am easy to reach on LinkedIn and Twitter. Alternatively, you can reach out to any member of the editorial team at FreightWaves at email@example.com.