Article By John Boorsma, Interim Chief Operating Officer, Ontime Delivery Solutions
Several myths and misconceptions about logistics endure, and deserve to be busted as they can de-rail manufacturers’ supply chains.
Some of these may sound relatively harmless, but they have the potential to increase delivery transport costs, waste management time, and even cause reputational damage.
Logistics Myth One: The cheapest freight rate equals the lowest cost
Obtaining the lowest rate per pallet, kilometre, hour, delivery or vehicle might seem to be the goal in transport procurement. But these headline rates only tell part of the story.
A cheap freight rate can be misleading because it can gloss over major issues such as reliability, professionalism, resourcing, and performance. For example, if items arrive late or damaged, the reputational damage can far outweigh the so-called headline savings.
Similar problems emerge when a transport provider cannot work well with your systems, leading to wasted management time and putting out constant spot fires.
The ability to provide a reliable service, to optimise performance, and have the flexibility to respond at short notice are often more influential to your logistics performance than the headline rate. The cheapest option can be an expensive mistake.
Logistics Myth Two: A busy fleet is an efficient fleet
A flat-out fleet looks great. But it’s important to look closely. Are drivers doubling up on delivery runs or taking inefficient routes? Are vehicles operating below capacity? Activity does not equal efficiency.
Optimising delivery fleets for performance requires a major ongoing commitment, but the efficiency gains are often worth the work you put into it.
It’s great to be busy, but it’s better to be smart about measuring and understanding your efficiency.
Logistics Myth Three: The job is over once the product leaves the factory
The product may be the most important thing, but how the product reaches your customer shouldn’t be underestimated. That delivery might be the only in-person interaction your customer has with your company.
A perfect product arriving late, or at an inconvenient time, may not be perceived as a successful order by the recipient.
By making sure the customer service is professional, reliable and dependable, manufacturers can enhance their reputation and improve their prospects of repeat business.
Logistics Myth Four: Our own fleet gives us greater control
Many Australian manufacturers have over time found themselves doing something they never set out to do – also becoming a logistics company.
While ownership may imply greater control in theory, it is often a different story in practice. The demands of running a high performing fleet can lead to greater stress, hidden costs, and wasted management time – all the hallmarks of a “reluctant fleet manager”.
Control comes from having flexibility in your fleet. A partially or fully outsourced fleet can provide this flexibility, assuming the suppliers are professional and have the resourcing and systems to make your fleet life easier.
Logistics Myth Five: It’s all about speed
Speed is certainly important in some industries. But it’s no good being fast if you’re inaccurate or unreliable.
Recent research from McKinsey shows that consumers increasingly rate reliability ahead of speed for last mile delivery.
Showing up when expected, managing absenteeism, and communicating with customers can do more to enhance your reputation than speed alone.
Logistics Myth Six: Technology will fix an inefficient operation
Technology has the potential to make a transport division more efficient. But serious questions need to be asked about the technology being implemented and the end goal.
The real question is how the technology will lead to fleet optimisation. This may require several changes to your fleet operations and structure, in addition to the technology.
Partnering with the right supplier is critical to maximise the full potential of the technology that you implement, as successful fleets require a combined effort with technology, management, and suppliers working together.
