The Role of Transportation in Supply Chains and Business

9

SKUs are profitable, about a third of the SKUs are breaking even, and about a third of the SKUs are losing money. Do you have to have all those distribution centers? No. (25:56 - 27:36) What's that project called? Consolidation, network rationalization, supply chain optimization. We can do the whole class right off of this sheet of paper right here. How about the education of the workforce? This is a penny-wise dollar foolish deal. I would rather have half the workforce and pay them twice as much for the education because there's this idea out there that somehow we can pay people at the very bottom of the wage scale and get the best workers out there. It doesn't work that way. Even if you pay them one dollar more per hour and they create half the errors. Think of the complexity that just came out of your supply chain. I think you get the idea. The point of all this is the more complex the system is the worse the performance is going to be. Most of the complexity you created yourself. Is there a way to deal with it? Yes. That's this set of projects and pretty much that's the outline of what we're going to be doing in here these four days. It's taking complexity out of the supply chain. If you don't intervene though, if you don't have people dedicated to taking the complexity out, guess what's going to happen? It's just going to grow. Usually we'll recommend that a client have somebody who is just dedicated to strategic planning for the supply chain and it could be a whole group of people. (27:39 - 29:13) And we set them aside and say that's your job. That's all you're going to do. Why would you need to set somebody aside to do that? It's related to a game played in the arcade with gophers. Whack-a-mole. Anybody play Whack-a-mole? That thing in the arcade and those things jump up when you beat them back down and the winner is who can beat down the most moles that jump out of that hole. Who are the real winners of that game? The ones who never play. There's some cultures that reward firefighting. There's some cultures that reward firefighting. Why is there a fire to put out? Probably because somebody wasn't doing their job. So we'll set aside a group and say your job is to make sure there aren't any fires that come up in here. Otherwise you're just going to wind up back in the same scenario. That's entropy related to logistics and transportation. It's the idea that if you never did spring cleaning what would your house look like? I remember one time this lady raised her hand and she said it would look like my house. I never knew if she meant literally my house like lady or if she meant her house. Never really did understand what she was saying with that but you get the idea. You got to intervene. You got to have people intervening along these lines. That's how you stay out of as much of this trouble as you can stay out of.

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