The Director of Logistics role has evolved. Whiles this management position was traditionally responsible for "pushing boxes out the back door," that transactional role has truly transformed into a more strategic player within organizations. For instance, technology has caused a true disruption of the supply chain, presenting the Director of Logistics with opportunities to gain insight into customer preferences, expedite delivery and streamline operations. This management position now plays a central role in strengthening the supply chain to positively influence customers and manage one of the largest spends within a company.
Still, these opportunities bring challenges - from new buying patterns (such as 24/7 purchasing online) to different customer expectations (such as free, next-day delivery). The sales team often echoes the customers' demands for online tracking and expedited delivery, while accounting emphasizes the need to control costs. Monitoring the pulse of the supply chain, the Director of Logistics is crucial to evaluating these challenges and opportunities and sharing that ongoing analysis with the leadership team. So, what are the most common challenges facing the Director Logistics in the move to digitize the supply chain?
Many shippers overlook costly shipping rates because they don’t have the historical data to analyze and/or they don’t know what to do with the information if they have it. They also aren’t able to track all inbound and out- bound shipping costs, so instead of incorporating those costs into the price extended to the end customers, they unintentionally absorb those costs. The result is rising operating costs with thinning margins. To delve deeper, read “Cost Visibility – Information is King”.
Lack of Automation
Another common frustration is when disparate departments and processes prevent information from being shared, slowing organizational performance. The lag between products being shipped and customers being invoiced can have a negative impact on cash flow. Yet it is the Director of Logistics who typically sees the disconnect and ways to improve it.
These first two problems are internal issues, which are often solved by implementing the right system to manage freight. Vendor contract optimization then takes an external view.
No Contract Optimization Data
Most organizations are so focused on manufacturing and selling products that little time is spent under- standing why freight costs are chipping away at profits.
“We often find businesses stick with the carrier that they’re used to using,” Mike Broussard, vice president of Broussard Logistics, said. “However, one carrier may be best suited for long hauls while another specializes in shorter, intra-state hauls. Optimizing your carrier contracts brings flexibility and cost savings to your supply chain.”
While shipping costs are rising, optimizing the carrier contracts can be quite impactful. The Director of Logistics should be central to these decisions.
The evolving demands on and insights of the Director of Logistics can help reinforce organizations’ supply chain, strengthening the connection with customers. Organizations that don’t tap into this intelligence aren’t able to build digital, connected and flexible supply chains – a requirement for thriving in a competitive landscape. Now is the time to work with the Director of Logistics to maximize efficiencies and cost savings related to freight.
In November, this series will turn to the lack of technology that hinders leaders’ ability to access meaningful data and dive deep into the actionable steps to take before year-end. In December, this article series will wrap up with important actions to optimize carrier contracts. Together, all this information can prepare organizations for a profitable New Year.