Commentary | Viewpoint

Communication is Key When Optimizing Logistics Networks

Tags: Inventory Management, Transportation Management Systems (TMS), Supply Chain Management, Transportation Management, Logistics

Jeff Vielhaber is Chief Operating Officer at TTS, 214-778-0803

Within any logistics network there are vendors, warehouses, distribution centers, service operations, transportation routes and hubs, carriers, freight forwarders, importers, exporters, and more. The idea of optimizing all of it is enough to give anyone a splitting headache.

The goal of optimization is to reduce costs while becoming more efficient. To do this, some companies hire analysts; others employ the latest and greatest technologies. We often think by simply getting advice or upgrading our systems we’ll accomplish our goals, only to find that we come up short. Many seem to forget about communication.

New technologies must either communicate with current technology or replace it all together. If a company hires an expert for advice, that advice needs to be shared and acted upon in all departments.

Imagine a company integrating a new transportation management system (TMS) that doesn’t communicate with an existing billing system. While scheduling and tracking shipments becomes easier, employees still have to manually take the information down from the TMS and upload it into the accounting system. This inefficiency costs the company time and money, and increases the margin for error. Now, imagine inefficiencies like this running rampant across an entire logistics network.

Take Your Time

Before jumping into the latest innovation, it’s important for everyone within your company to understand what success looks like. It’s easy for each department to become bogged down with their individual goals. However, for optimization to succeed, all departments must be held accountable for achieving the same goals.

Remember the definition of a network. Everything is intertwined and connected, and has to work cohesively. Map out your network to determine areas needing the most improvement and consider how your efforts in streamlining one area of your business will affect the others. Listen to your operations staff when they discuss where time is wasted with repetitive tasks. Address your communications down to the lowest level of sophistication. Lastly, review your data exchange. Is it easy for any party within the company to access data for a transaction via phone, fax, email, or other means? Do all technologies work cohesively to transfer data, creating one integrated system? The ability to interact with all constituents is a good base line for any optimization effort.

Also, anticipate your future needs. All too often, companies invest in a technology that’s made irrelevant within a couple of years. Plan to have a more fluid approach by looking at the company’s projected business goals.

As the company evolves, so must optimization processes. For example, take that TMS again. Let’s say when it’s implemented, the company strictly uses freight trucks as their mode of transportation. But later, the company needs to add rail transport. If that original TMS can’t handle the intricacies of rail transportation, it will become a burden to the company as employees deal with two different ways of managing loads.

It often seems appealing to use a Band-Aid approach to optimization. When one system fails, many companies will simply fix that one system without thinking about the bigger picture. The problem with this is two-fold:

  1. Using this approach makes it difficult to reintegrate that system with the rest of the logistics network because communication between that system and the rest wasn’t accounted for.
  2. Within a couple of years, a new fix will be needed.

Avoid the quick fix and prepare for the future by taking an integrated approach to optimization. This starts with understanding business goals and how every aspect of your business fits into those goals. Then, take into account how upgrades, new technology, mechanization, or better communication processes will enhance your ability to achieve those goals.

It is also necessary for each department to understand the big picture. Keeping everyone on the same page helps create a smooth transition to new processes. Remember, optimization is not a one-time fix, but rather an ongoing process of changing operation procedures.