Ask ten people what “better logistics” looks like and you’ll probably get ten different answers, ranging from lower costs to faster deliveries to fewer things going wrong on a Friday afternoon. The truth is that logistics performance improvement isn’t about any one single factor, It’s about getting a the basics right, and then steadily getting better at them over time.
Ultimately improving logistics performance is not rocket science…it can be frustrating, but perseverance and commitment to your goals can get you to a better place.. What you do need is clarity, consistency and a willingness to look honestly at how things actually work day to day within your operations. Here, we set out five practical steps that underpin most successful logistics performance improvement programmes..
Logistics performance – What does this mean to you?
Before you can improve anything, you need to build an understanding of what logistics performance actually means for your business. This sounds obvious, but it’s often where things go wrong. Performance isn’t just about cost, or speed. It’s a combination of service, efficiency, reliability, capacity, sustainability and flexibility.
For some organisations, logistics performance is all about hitting tight delivery windows for demanding customers. For others, it’s about coping with volatility, seasonal peaks or awkward product profiles. The key is to define what “good” looks like in the context of your business. If everyone has a different picture in their head, improvement efforts tend to pull in different directions. Sometimes the Chief Exec will only want to focus on service and sustainability, because that is what is important to your customer base, while your direct boss only want to know if you’ve hit your cost numbers.
Taking the time to agree what really matters creates focus. It also helps avoid unnecessary over-reactions to individual issues. A late delivery might feel like a failure, but if overall performance is improving and the root causes are understood, it becomes part of a bigger picture of improving service, which in turn creates a positive message.
Logistics KPIs
Once performance is defined, logistics KPI (Key Performance Indicators) give it quantum. They turn general ambitions into something measurable and manageable. The mistake many businesses make is either having too many KPIs, or tracking numbers that don’t actually drive better behaviour.
Good logistics KPIs are simple, relevant and actionable. They help teams see whether things are getting better or worse, and where attention is needed. Measures around service, cost and efficiency usually form the backbone, but the exact mix will depend on the operation. It is highly advisable to keep your headline KPIs to no more than 4-5 real key measurements, but select them well. Select too many, the objective of each becomes diluted, select too few and only a limited scope for improvement exists.
What really matters is how KPIs are used. If they only appear in a monthly report that nobody reads, they won’t improve anything. When KPIs are discussed regularly, understood by the people doing the work, and linked to real decisions, they become a powerful improvement tool. They can also be really handy to reference back to when you are making decisions about the future, when considering how your business has changed over time.
Logistics optimisation
Logistics optimisation is where improvement starts to feel tangible. This is about making better use of what you already have before going all out for big changes. Often, there is much potential locked up in existing processes than people realise. (Please also note that often there is much potential locked up in the people as well).
Optimisation might involve rethinking how work flows through the warehouse, how delivery routes are planned, or how responsibilities are split between teams. Small changes can have a surprisingly big impact when they remove friction or simplify decisions. Technology can play a big role here in helping to remove some of that friction or creating simplification.
The important thing is to look at the logistics operation as a whole. Optimising one part in isolation can sometimes make another part worse. True logistics optimisation considers how changes affect service, cost and workload end to end, and can often impact multiple sites and nodes in your network in different ways. For example, electrification of your delivery vans in and around London or Manchester may be a great idea, but take that solution to the rural areas such as Cumbria or mid-Wales, and the solution just would not work versus traditional motive methods.
Continuous improvement in logistics
One‑off improvement projects can deliver results, but they rarely sustain them on their own. Continuous improvement in logistics is about building a habit of regularly asking “how could this work better?” and acting on the answers.
Continuous improvement is often about culture as much as process. If you foster a ‘can do’ culture where your drivers and warehouse staff are encouraged to be proactive and make suggestions to improve your solution, it will reap rewards. Take a ‘top-down’ or ‘JFDI’ approach, and you are never likely to achieve the cultural ethos that will bring improvements from the ground up.
In the context of logistics operations the other cultural aspect That can often impact the situation is the age-old battle between warehouse operations and transport operations. In positive can do culture you avoid the ‘them & us’ scenario that so many organisations have fallen into where each blame each other for their failings. Quite often when they’re not blaming each other, they’ll be blaming the buyers or commercial teams or other supply chain team members for making their life hard. So as a quick pointer, the can do continuous improvement culture needs to run through the whole organisation and cannot just be foisted upon one department or another.
Transportation costs management
In much of the modern world logistics cost management has to some degree been taken out of the hands of management and business owners. External factors often driven by government behaviours have created a situation where managing your costs is sometimes not within your own sphere of influence. The perfect example is the impact of the national living wage on warehouse workers and sub LGV driver populations.
Keeping white costs down was once a function of logistics management that is now very hard to continue in the way that it once was. Outside of high wage areas such as London, the hourly wages for warehouse staff have now effectively been caught up by the national living wage. This means that businesses no longer compete for individuals based on perhaps the hourly wage rate but now more hangs on the terms and conditions and working culture of the operation.
This does not mean that you cannot control your logistics cost, what it means is that you need to look at productivity rather than cost bases. Put it in its simplest terms to optimise your logistics costs you need to attempt to do the same work with fewer resources, less people less vehicles and less equipment.
Forward thinking businesses are using technology and advanced planning techniques to optimise transport and warehouse performance. Those slower on the uptake oh no longer wondering can they keep their warehouse staff hourly rate low because they no longer have that as an option. Whilst this has driven considerable wage inflation in the long term this is likely to lead to much better focus amongst logistics leaders.
In summary, logistics performance improvement works best when these five elements are viewed in a joined up and consistent way. Clear definitions of performance guide the right KPIs. KPIs highlight where efforts should focus. Continuous improvement keeps progress moving, and effective costs management ensures gains translate into real financial benefit.
This is about creating a situation where perfection becomes the enemy of the good. Logistics will always carry a high degree of uncertainty, compromise and the occasional let-down. The aim is simply to be better tomorrow than you are today, through positive cultural development and by developing the right environment for service cost and sustainability to work together, not pulling apart.
ASCALi Logistics consultants offer a wealth of experience and knowledge to help organisations improve efficiency and cut costs. Why not take a look at our logistics consultancy pages today to find out more, or alternatively, Book a free consultation now to find out how we can help you set the right logistics strategy for your business.
