The Role of Transportation in Supply Chains and Business

7

So that's one. What's another one? Number of countries could be an issue. The geography of those countries could be an issue. Somebody else. What makes one logistics system more complex than another? Number of SKUs, number of DCs, product dimensions, product and packaging dimensions, the number of value-added services that you offer, inventory errors, blind spots in the supply chain, number of suppliers that you have to deal with. How about the number of carriers that you have to deal with? We do a lot of supply chain assessments. It will assess a company's warehouse or we'll assess their inventory manager or we'll assess their transportation, we'll assess their whole supply chain activity. So we were doing an assessment for this company out in the Silicon Valley and I went out and gave them their grades. Their grade overall was a C-. So the chief operating officer said I don't like our grade. He said you don't understand how complex our situation is. I said okay I've been around this block a few times but let me go back and redo the assessment for you. Came back to Atlanta, redid the assessment, grade was a C-. Okay, fly back out to Silicon Valley, here's your results. He said what's our grade? I said your grades a C-. He said I don't like our grade, you don't understand how complex this is. I said look I've been around this block a couple of times, this is the second time we've done this study. I dotted the I's, I crossed the T's based on all the principles and practices we have in here. (20:39 - 21:24) Your grade is a C-. He said I don't like our grade and you don't understand how complex this is. I said okay I'll do this one more time. I flew back to Atlanta, I redid the whole thing, the grade was a C- and I'm on the airplane flying back out to San Jose, California to give them their grades. And I'm thinking what in the world am I going to explain to them? And finally it dawned on me what the issue was. They had created almost all of their own complexity. That was the issue. For example, all right let's just go through the list. How do you deal with the number of carriers? Suppose somebody complains to you and says we have too many carriers, it makes our supply chain too complex. (21:24 - 25:56) What do you do? You do a project. It's called a core carrier program to reduce the number of carriers. Why is it better to do business with fewer carriers than more? Relationships. In your personal life, how many good relationships can you manage? Sometimes none. Sometimes I can't even relate with myself, okay? Okay, if you're doing really good, they say that over the course of a lifetime you have five really good friends over the course of your whole life. If I can get me, my wife, and children, that's a great day. If I get beyond that to a few good friends, I've done really well. So even in a business it's the same. You can only manage with so many relationships and then you go beyond that.

The Role of Transportation in Supply Chains and Business | © RightChain Incorporated | All Rights Reserved