Logistics network reviews are an under-utilised tool for maintaining efficiency in a company’s supply chains and making sure they remain fit for purpose.
Indeed, a logistics network review is more relevant today than ever. The current complex business environment of uncertain demand, business change and increasingly demanding customer requirements offer both a threat and an opportunity.
“Is our logistics network right for the business?”
This is the question we are most often asked as independent supply chain consultants. It’s obviously a loaded question. nearly all cases, if the question is being asked, there is always some degree of dissatisfaction with the existing setup, behind the query.
Logistics networks can easily become sub-optimal. This is often gradually, as the business profile changes. New customers and new suppliers will often impact on warehouse capacities.
But that is just the start. Other important factors include:
- The introduction of new products.
- New channels to market.
- Changes to manufacturing footprint.
- Opening markets in new countries.
- and acquisition activity.
Many companies will tolerate a poor logistics network for years. Financially logistics costs may only account for 3 – 10% of your total cost base, so it is often not viewed as a priority.
However, it should not be forgotten that the performance of the logistics network that probably accounts for 80% of your customers’ experience. As a result, it will have a significant impact on revenue growth. So, although the logistics cost savings are welcome (typically between 8 – 30% are identified) the improvement in performance and customer experience should not be ignored.
Ensuring your logistics network fits your business needs
So, once a business has decided to review its current logistics network this will give them a good understanding of how efficient the existing network is. We will look at infrastructure, processes, IT and existing 3PL partners. The review will also identify where the network works well and where it doesn’t. It will show you what “good” looks like and it will create a roadmap to get there.
The project outputs will define expected cost savings, capital requirements, implementation budgets and service level enhancements. This will enable the business to maximise its business results with an appropriate balance between operational logistics costs, capital investment and service levels.
At Bisham Consulting, we take a data-driven, bottom-up approach to improve performance. We match data analysis with physical observation, to ensure that our recommendations for improvements are built on a firm understanding of the current business. Our outputs are then not just theoretical but can form the basis of a business case for transformation or improvement.
An independent Network Review will enhance your business performance
Based on our consultants having conducted over 100 such reviews over the years, the key learnings in summary are;
- Define clear scope, objectives and outputs before you start. So, proper project management approach
- Set your high-level strategy first – otherwise, the scope becomes too open. Restrict the number of scenarios modelled and work to an agreed and concise timescale.
- Assess the availability and accuracy of supply chain data. The availability of good quality modelling data usually represents the biggest single project risk.
- Undertake sensitivity analysis of outputs. This will enable a degree of future-proofing which is essential for building confidence in the business for the project recommendations.
- Complete the project in a short timescale, maintaining project momentum throughout. This keeps the business engaged and promotes buy-in for the future state recommendations
- Conduct such reviews on a frequency appropriate to the rate of change in your business and when significant changes to the business occur. E.g. acquisition, new market entry, new product or new business strategy
Bisham Consulting is an independent supply chain consultancy with a hands-on, practical and highly commercial approach. We have a 30-year history of successful project delivery in the UK, Europe and around the world. We only recommend solutions which we are happy to help our clients implement.
Contact Caren Tomkins on 0044 1628 487000.