Defining your own logistics competitive weapon

  Photo: Shutterstock

Photo: Shutterstock

On the final day of enVista’s FUEL 2018 Conference, Adrian Gonzalez, President of Adelante SCM explained that in order to compete in the ever-changing logistics environment, the best thing companies can do is define their own competitive weapon.

Amazon’s killer weapon? Amazon Prime. According to Gonzalez, Amazon Prime members spend on average about $600 more per year than non-members. Gonzalez pointed to Amazon for the way in which customer expectations have begun shaping the supply chain.

The 2017 Third Party Logistics Study also found that 73% of shipper respondents indicated the importance of meaningful involvement of 3PLs in processes relating to supply chain transformation, with 9% suggesting significant involvement, 28% significant involvement and 36% advisory involvement. “Users and providers agreed that 3PLs could be of assistance with their 3PL industry knowledge, supply chain experience, and shipper industry knowledge.”

Looking ahead, “cost management remains important, but that’s not a growth strategy,” Gonzalez said, explaining that it tends to take a back seat to quality, efficiency, safety, customer satisfaction, and innovation.

As companies begin to prioritize logistics, Gonzalez shared five tips to make the transition as smooth as possible:

  • Put customers at the center of the supply chain universe.

    • “There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality” —Jeff Bezos, CEO of Amazon, in his 2016 letter to shareholders.

  • Link logistics to strategy and business plans

    • Provide supply chain and logistics a seat at the C-Suite table

      • Having a knowledgeable and experienced executive in the C-Suite who can link the value and role of supply chain management to the company’s strategy and business plan is critically important.

  • Improve logistics and sales collaboration

    • “Our ability to respond quickly and effectively to fluctuations in demand, adjust order sizes and delivery frequency as required, and provide timely and accurate visibility to orders, inventory, and other metrics are all competitive weapons. Let’s use them to our advantage!”—VP of logistics for a large food manufacturer.  

  • Change the mindset on business relationships

    • In today’s rapidly evolving world, business relationships based on an outdated ‘win-lose’ mentality won’t withstand a market that demands constant change and adaptation. Only by focusing on ‘win-win’ relationships can companies drive innovation and increase their competitive edge.

  • Stop shoveling snow with a dustpan

    • Yesterday’s supply chain tools and processes take more time, more effort, and aren’t as user friendly and effective—and they’re becoming today’s dustpans. They might look the same, but they won’t work for what you need, Gonzalez explained.

With these points in mind, the challenge then becomes learning to walk the talk, according to Gonzalez.

Gonzalez quoted Michael Eskew, former chairman and CEO of UPS who noted at the CSCMP Annual Conference in 2002 that there’s been a “dynamic shift in the relationship between business plans and logistics, a shift from the perception of our industry as a back-end process to a front-end strategy that informs and supports your entire business plan.” Ultimately, “your supply chain strategy in effect becomes your business plan,” Eskew said.

Gonzalez encouraged attendees to look to software, social networking, and B2B connectivity to find supply chain innovation.

“The bottom line is that the clock speeds of every industry are accelerating, and what got you here won’t get you where you need to be. To become a company of tomorrow, you have to unlearn ‘the way we’ve always done things’ with respect to yesterday’s processes, technologies, and business models,” Gonzalez concluded.