Supply Chain Bifocalism: Go Short or Long?(Biondo)
When economic times get tight, even the most visionary business logistics managers feel pressure to set strategic goals aside and focus on savings derived from process optimization and operational ROI.
Are you balancing strategic with tactical plays as you head down the field to the goal line of supply chain efficiency? Consider these questions:
Q: Are you continuing to build strong vendor relationships to find and share supply chain savings? Or, is there a blitz on initiatives to cut transportation costs?
And, in an economy that creates demand volatility for your products, are you using demand-driven logistics techniques across the value chain? Or are you bullying your vendors, pushing back inventory exposure to the extent that you damage those supplier relationships, and even their business?
Q: Even in a down economy, is your focus on forging long-term relationships with your carriers, 3PLs, and vendors by building mutually beneficial collaboration?
Do you share ideas to take costs out of the value chain, wherever they are? Or are you in constant conflict with your service providers and carriers to cut rates on every single transaction?
Q: Are you moving forward with enterprise initiatives to tear down functional silos and get a better handle on the total cost of logistics ownership? Or is that silo starting to look warm and cozy about now?
In a down economy, going only for tactical short yardage will move you down the field. But, if you also keep your eye on strategically going long, you can post bigger numbers on the board.
Metrics for measuring tactical ROI are clearly definable: If you save money on transport, you money on transport. In an environment of constricting opportunities, the pressure is on to achieve more definable cost reductions rather than nebulous ROI from initiatives to increase things like agility, adaptability, and enterprise transformation. Resist it.
This tension between strategic and tactical strategies is always present, but grows starker in lean times. Perhaps the thinking is that when times get flush again, you can jump-start your strategic initiatives.
Hmm...maybe. But the visionary/tactical bullwhip effect makes it extremely difficult to marshal buy-in from vendors, carriers, and 3PLs for strategic goals after you've been menacing them over each transaction.
Naturally, the importance of this tactical/strategic tension depends on the type and size of your business. But if your business is under stress, resist the impulse to go for short-term logistics ROI. It has to be a question of balance.
We are not arguing for supply chain stoicism; we live in the real world. But times will get better, and the best game plan for the long haul, and the most effective way to advance down the field, is to keep your eye on both short and long yardage opportunities at the same time.