Logistical logic

In my 20 years’ experience as a consultant, companies which use logistics consultants are mainly those which already have effective logistics and qualified logistics experts. In other words, companies with modest levels of logistics often turn away any form of external consultation and believe they will manage better without it. Two market surveys conducted by Miebach & Partners and the professor of technology management at the Technical College of Darmstadt confirm this view. The results of their research show that organisations with progressive attitudes and, more importantly, with good logistics, regularly employ logistics consultants.

Logistics consultants act as competent business partners to both top management and heads of logistics. They can contribute an external viewpoint to organisational development. Just like other members of this discipline, the logistics consultant considers, approves or rejects structures, free from hierarchical and historically-evolved restrictions. He develops new structures and supports companies in their move to introduce new systems alongside their daily business. What is the difference between this person and a management consultant? Merely the word “logistics”. Yet this in itself is important, because, for the logistics consultant, technique, investment and realisation are vital; that is to say areas in which the management consultant is not at home. This is the time for engineers, technological institutes and software developers to perform. Together they cultivate their vast field of technical realisation. And what of the logistics consultants? They also work on the same task and combine their experience of both organisational development and technique with their industry knowledge and their practical competence.

To put it in a different way: with the service that they offer, logistics consultants stand between the big management consultants and the organisational consultants, and between the institutes affiliated to universities and the manufacturers and general managers. Their niche lies between organisation strategy and logistics strategy. They are not research oriented, yet they are innovative. They are able to realise ideas but are independent of both manufacturer and product.

In short, logistics consultants are placed beside and behind their customer in the function of temporary logistics managers. They are trustees of the company’s interests, yet they are at the same time more independent than company members. Their relationship to their client is one of absolute loyalty. One can find logistics consultants in a wide variety of functions.

Consultants are competitors, sparring partners and spare capacity for company management. Competition stimulates business and the quality of a solution. Large organisations are allowing us to compete against their own management. This type of planned competition is often an important instrument in testing and improving the capabilities of their staff.

In the case of large investments or strategic decisions, planned competition with the outsider introduces an element of quality assurance. At the same time the outsider brings new ideas to the situation, gained through his experience of other industries. Finally, consultants act as a pool to assist at times of peak demand.

Logistics consultants integrate logistics as a business management system.

Material flow in the warehouse cannot be regarded as an isolated process.

Both the systems theorist and also the logistics practician know how much the one process depends on the other. For example, the warehouse dimensions depend on the structure of procurement and on stock and the distribution routes depend on stock location. Often, the wishes of the sales strategist and the customer coincide, yet these are not always cost-effective.

The level of service which is regarded by logistics personnel as possible is often oriented towards daily business and is dominated by considerations of cost. Logistics consultants can help sales and logistics personnel to reach a compromise.

Consultants help to formulate strategic goals in logistics, and investment and rationalisation programmes. Those organisations seeking orientation, which want to invest in the future of their logistics, must clarify their strategic goals. Ordering methods, distribution points, and delivery service requirements must be defined in line with the aims of the company.

Logistics consultants can help because they know both the strategic and also the technical side of a distribution system, the technical aspect involving knowledge of investment. They can calculate exactly at what cost and with how many staff an imaginary warehouse “x” can be operated at location “y”. Hypothetical examples that are unrealistic are virtually impossible with an experienced consultant. As soon as an investment programme is strategically fixed, the next step is to work out the technical details.

Whoever desires now well-established standards will work in the main directly together with a manufacturer or general manager. Those seeking competitive advantages within a strongly contested market, for example by means of exceptional commitment to schedule and to low rate of failure, or aiming at exceptional growth, should opt for tailor-made logistics over standards.

Manufacturers, too, frequently offer planning and development resources.

It is advisable to use them when optimising sub-systems for which the manufacturer is a specialist. An investor, who is certain that, for example, only a new shelf-system (RBG) is required, will be in safe hands with the producer of the material flow components. If he wants to know, however, whether he needs a warehouse or rather a service provider, or if a new RBG, conveyor belt or shelf-system are at all necessary, then he should plan independently of both the product and the manufacturer.

The qualifications crucial to a consultant are realisation, responsibility and realisation capability. This applies to both strategic projects and technical investments. The task is the management of structural, organisational or technical change. In the realisation of strategic goals, project management may involve convincing suppliers to participate in a procurement centre, or comparing and assessing offers from logistics services for subcontracted work. In the case of investment projects, the consultant organises a tender, assesses it and checks suppliers’ resources. He co-ordinates and organises the co-operation of all the suppliers participating in the project. In this way he acts as guarantor to ensure that all agreed conditions are adhered to such as deadlines, investments, turnover and economy.

The comprehensive planning and technical optimisation of logistics requires a good deal of time and money, and one must be prepared to take risks in order to gain vital competitive advantages. This adjustment is often a difficult and costly process. Yet both the business and the consultant learn through their interaction. Manufacturers or general managers have to be called at the more detailed stage of a project. In this situation, it is ideal to have a partnership for development between the business, the consultant and the manufacturer. All three are taking part in the same learning process. With their specific know-how, they secure the practicability, feasibility and economy of a system.

Good advice is expensive, bad advice even more so, and no advice at all costs more still. The fee involved deters many firms from bringing in a consultant. The long-term advantages of excellent customer services alongside low logistics costs far outweigh the consultant’s single payment fee.

Martin Elliott is a logistics consultant with Miebach & Partners.