ARE YOU LOOKING AFTER YOUR HEART?

The logistics industry has always been known for its acronyms, catchphrases and trends. Using the appropriate terms, you could have a conversation with a like minded person that would sound like a foreign language, a political debate in parliament or a traffic update. The fact is the logistics industry thrives on abbreviations and reinventing the wheel, because the industry is dynamic and always will be.

In recent times, we have reinvented the wheel with a phrase that is fundamental to ensuring that an operation remains efficient. We now call it the “health check” and in my opinion it is relevant because it allows for a company to evaluate its operational costs, which in turn has a catchphrase, “cost to serve”. Nevertheless the term health check is understood to mean how well the supply chain is performing in terms of operational costs and customer service.

THE VITAL ORGAN

The trouble is that the health check seems to have missed the most important organ in the operation, which is the heart. Millions are spent on systems and hardware which are vital to the success of the operation, but they are not the heart.

The heart of the operation is the people and when it comes to investing in them we seem to miss the value added and the major contributions the people make to the operation and to the bottom line.

There are several schools of thought on why investing in people is not as high on the priority list for a company as it should be. The reasons range from:

• Staff turnover is too high

• No time (commonly used by both employer and employee)

• Cheaper to buy experience than develop it

• We are too small a company

• No formal training structure

The interesting point: the reasons for not investing in people are the same reasons why you need to invest.

COST IMPLICATIONS

We can calculate the “cost to serve” model of any part of the operation and that includes the heart. No one should be considered as irreplaceable within the operation, but a small investment today may prevent a person leaving tomorrow, especially if they are leaving for the wrong reason.

Consider the operation costs from the point of view of the inefficiencies, which if controlled by well trained professional people can directly affect not only the bottom line but your client’s approval level of your service. Now consider how much you can afford to invest in the heart to prevent or reduce those inefficiencies.

The answer becomes very clear that companies large or small cannot afford not to invest in the heart of the operation. The key therefore is not the financial investment because the ROI can be proven. The key is to know what the best medicine for the heart is.

CORRECT DIAGNOSIS

A health check of the operation carried out correctly will advise you on how well the supply chain is performing and include detailed recommendations (medicine) with action plans. From there it’s up to the company to act on all or part of the recommendations, but the health check has to be performed to ensure the right cure or preventive medicine is found.

Logistics is driven by people; we need to invest in them to ensure that they have the right tools for the job and that they are motivated so that they in turn invest in the company by solving or contributing to solving issues that affect the performance of the operation and customer service.

Yes we need systems and we need to continue to invest in state-of the-art technology to ensure we stay enlightened and keep that competitive edge, but if no one knows how to turn the lights on we will stay in the dark.