Lean Logistics Staffing to Overcome High Energy Costs

By: Thomas Cutler

In the July issue of Business Excellence, manufacturing journalist, TR Cutler, addressed "Lean Logistics," and the article may be read in its entirety at http://trcutlerinc.com/Lean%20Logistics%20July%202007%20Business%20Excellence.pdf.

"For distributors to maintain margins and survive these much higher energy costs require a commitment to continued process improvement and lean principles," says Brian Devine, vice-president of ProLogistix (www.prologistix.com). "The impact of rising energy costs on the supply chain requires better methods than beating suppliers for cost reductions which do not pay in the long run, and passing costs along to customers is not a viable option. The only viable solution for the distribution supply chain is to achieve higher levels of personnel efficiency, coordination, planning and productivity."

While even the most skilled logistics professional cannot avoid passing a portion of mounting fuel surcharges along to customers, distributors can arm themselves with staffing expertise to mitigate the increased costs. Optimizing routing selection requires experienced lean logistics professionals and represents an opportunity for significant cost savings. Inexperienced staffers might have flown an order to achieve expedient on-time delivery, when in fact the same result to the customer could have been achieved by hiring a driver to transport the package overnight for a tenth the cost of air transport.

Experienced logistics personnel are able to recommend ways in which distributors can consolidate their shipments, as well as use more cost-effective transportation alternatives to reduce spending related to fuel charges. "One of the most useful tools to help our customers," says Devine, "is to place strategic logistics experts who are able to interpret the information which accumulates in ordering behavior, often uncovering purchasing patterns that lend themselves to substantial money-saving techniques. The idea of hiring the least expensive warehouse personnel always costs distributors more in the end because lack of experience has a price. Seasoned logistics professionals have already learned from their mistakes and while their per-hour rate is greater, wisdom, experience, and knowledge translates into the example of continued process improvement in action."

When lean logistics professionals perform an account review it will often reveal that the customer's embedded release program automatically schedules orders to the distributor based on preset production requirement parameters which permit opportunities to consolidate shipments. Bypassing the embedded instructions, logistics strategists make sure customers still get everything they need, when they need it, at a single freight cost versus multiple shipments.

Another cost-saving through best logistics hiring practices is in consolidating employees in the inbound and outbound logistics groups, often resulting in a single, smaller team. Typical same-day shipments improve as much as 40 percent with fewer staff through improvements in hiring efficiencies.

Necessity being the mother of invention, rising fuel costs mean that distributors must develop inventive new methods to reduce costs that will benefit the supply chain in the future, regardless of the price per barrel. "It's the nature of the logistics profession to aggressively explore ways to reduce spending, while maintaining high service levels," says Devine. "The most important lean techniques employed by distributors are found in a team of experienced lean logistics professionals, temporary or permanent, who will continue to benefit customers regardless of energy costs."

Human Resources
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