The Role of Transportation in Supply Chains and Business

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where we've been able to get that language across, it's powerful what you can do with it. When you can start to use logistics to maximize the financial and the service performance of a business is powerful. So for just a couple of minutes I want to talk about that and the role transportation plays in it. So first of all, there's a fundamental definition we work from. It goes like this. First of all, logistics is flow. Flow is a good thing. What happens to water when it stops flowing? It stagnates. When it stagnates, what happens? Things grow. Then insects come. It's not good. What happens to blood when it stops flowing? It coagulates. Now that is a fancy term for somebody's gonna die. In logistics is three things we're concerned with. Material, information, and money. Ideally they move simultaneously in real time without paper. Let me say that again. (47:55 - 50:15) Ideally, in fact you can evaluate a supply chain based on this, those three things need to move simultaneously in real time and without paper between consumers and suppliers and that takes care of that reverse logistics thing. I never got the reverse logistics thing. I never got that. There's this whole almost industry around reverse logistics, but that's just forward logistics from somebody else's standpoint. So I never really quite got that, but anyway between consumers and suppliers. That's where this starts and then you build around that. Now you don't have to take that definition of logistics. You can take some other one. The most important thing is to have one. That way you avoid a phenomenon called scope creep. What's scope creep? In a project, the tendency is to keep adding things on until the project can no longer support what people are adding to it and it's a interesting phenomenon because if you get a successful project going, people want to add things to it that the project was never intended to do. So you got to have almost a bad guy to say we're not doing that. We're not going to do that function. This software will not do that. This third-party logistics provider never contracted to do that, etc. etc. So you got to have a definition to start with. We did a project with another large retailer. We were asked to go over the contract they had developed for their new 3PL provider. They were outsourcing all the distribution centers. This is major leagues. This is 2 million square foot of distribution space. Some of the most highly automated in the United States. Brand new warehouse management system.

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