Is Your Business Strategy Aligned with Logistics Execution?

ByLorenzo Fornaroli

July 15, 2019

Lorenzo Fornaroli

As we talk about strategy and competitive advantage, we should acknowledge the value of experience in operations management and how a bottom-up approach greatly contributes to achieving goals.

Working as global adviser on strategy and operations management, I have the opportunity and the curiosity (and the luck!) to delve sometimes into the true challenges of logistics and supply chain operations, helping achieve ambitious goals through what I define as “professional empathy”, i.e., the ability to understand and appreciate the challenges others face behind a successful performance.

I’m currently in Indonesia to support the local team on contract, supplier management, and performance improvement activities. Similar to a lean-based “gemba walk”, the photos demonstrate how strategic objectives and field execution must continue to remain solidly aligned. This makes my job interesting, and provides the humility to learn and share the challenges of logistics, its performance drivers, and the difficulties in applying one unique standard of measurement or process consistency.

Daytime Jakarta Traffic
Nighttime Jakarta Traffic

The two photos show Jakarta traffic (in the same location), while the ones below demonstrate the true challenges of delivering to remote areas in Indonesia, a country of approximately 17,000 islands that necessitates multi-modal transportation across islands and through forests. Our ship-to addresses increased from 39,000 to 48,000 this year, making the promise to deliver to our customers more complex and demanding.

As I looked at the photos, I listed some high-level and general considerations on strategic operations management and supplier relationships which can impact a spotless execution and performance metrics:

  • How “standard” traffic (given that Jakarta is just like many other big cities) impacts the reliability and speed of service in last-mile logistics.
  • As part of our digital transformation, we measure our suppliers on their adoption rate of E-POD. In severe delivery circumstances this becomes a low-priority KPI.
  • Budgeting the cost of logistics when additional resources need to be called in to support delivery.
  • How accurately is logistics factored in COGS (Cost of Goods Sold)?
  • What’s the level of engagement between Sales and Logistics when it comes to service commitment and pricing?
  • The challenges arising in performance management and contract clauses between a shipper and a 3PL 
  • As we pursue (scalable) automation, many human dependencies behind a logistics execution still exist.
  • Logistics is the last supply chain “function” before goods are delivered to our customers; agility and flexibility continue to remain key components of service quality.

Let us know about the practical challenges you face in aligning your strategy and actual execution .

Read more: Pain points, IoT, & smart logistics

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