THE
DICHOTOMY OF LOGISTICS
Executive Summary
This white paper continues to address the notion that logistics
is comprised of two primary components: Macrologistics and
Micrologistics; and that logistics is best represented, visually,
as a set of gears driving the process (micrologistics); surrounded
by macrologistics, which manages the process.
Macrologistics is the study and management
of the overall aspects, process and workings of logistics.
Micrologistics is the study of the operations
and the application of the components of logistics, such as transportation,
inventory, warehousing, purchasing and customer service. This
description incorporates both the gears and cogs.
Our previous white paper, “Logistics
is Not a Chain”, addressed the introduction of the dichotomy—macrologistics
and micrologistics.
This white paper will:
-
Discuss The Logistics Dichotomy
-
Introduce the application of Macrologistics and Micrologistics
The Logistics Dichotomy
The traditional view of logistics, primarily because the term
is all inclusive; and its scope is so large, forces a company’s
perceived needs and the available solutions or solution path to
be equally inclusive and as large in scope. Likewise, managing
the entire logistics process is similarly perceived to be prodigious,
and extensive. This characteristic caused the method of
approach, problem identification and available solutions to be,
singularly robust. Both needs and resource identification
are best addressed when the areas of review and concern are simplified
or segmented into manageable components. The net result was a
failure to see unique problems and the denial of incremental solutions.
This overwhelming view has achieved little benefit and its propagation
will continue to drive the potential benefits of world class logistics
excellence further and further from our reach.
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The sheer magnitude of logistics and its pervasive nature positions
it to be likened to the corporate octopus. The body represents
the core competencies, while the tentacles or feelers reach into
the entire organization extracting, delivering and processing
the attributes and capabilities of logistics. Logistics
as a device, mining the data, and harvesting the opportunities,
positions it as the best corporate business discipline that is
capable of achieving profit improvement and overall success in
operating performance. The impact of logistics, more
so than any other discipline, on every business, can be so powerful
and enabling that it is of utmost importance to develop a methodology
that will allow the entire logistics capability to prosper within
an organization and amongst its trading partners.
By re-examining logistics through a telescope, it became
clear that segmentation of the term could significantly increase
effective management and operations.
Beginning with the premise that logistics could offer significantly
more to industry, economics seemed like an appropriate reference
(see, “Logistics is Not a Chain). When we compared
and contrasted logistics with economics it became clear that the
opportunities and benefits that economics achieved after its dichotomy
(macroeconomics and microeconomics) could be reasonably applicable
to logistics. By linking macro and micro to the term “logistics”
a new capability was created. With macrologistics
and micrologistics as the primary components of logistics, we
now have the ability to focus more precisely and meaningfully
on of the subject.
Macrologistics and Micrologistics, as indicated in our previous
paper and immediately above, began with our belief and the objective
that, “The impact of logistics, more so than any other discipline,
on every business, can be so powerful and enabling that it is
of utmost importance to develop a methodology that will allow
the entire logistics capability to prosper within an organization
and amongst its trading partners.”
The strength of our conviction is further supported by our belief,
“that logistics will deliver the most comprehensive, significant
and dramatic value proposition to world wide commerce, individually
and collectively”, demanded that we thoroughly examine all relevant
business disciplines that, at least, appeared to be analogous.
In our search, it became evident that economics was analogously
unchallenged.
In pursuit of our objective, we sought a methodology that could
be relevant to the logistics discipline and one that professionals
in both fields could be reasonably comfortable with. The
supportive, study and knowledge base offered by the economics
discipline provides such a fundamentally sound structure that
logistics’ acquisition of the economics principles, applications
and formula will achieve rapid improvement in the following three
areas of logistics:
Deliverables
Study capabilities
Benefits
And by linking the two disciplines and harmonizing their respective
inference bases and engines, the corporate culture is cross pollinated
and many new allies are created. Collaboration, the “holy
grail” of logistics, is now an achievable goal, worldwide.
Application of Macro and Micro Logistics (MML) Relating
to Solution Selection
There are, at least, several different arguments that have been
advanced, purportedly to identify the reason that purchased and
internally developed logistics solutions have not yielded the
anticipated benefits and results. The all inclusive view
of logistics demanded that, both the problem and its solution
had to be “robust”. Constrained by the singular view of
logistics, there was a natural denial that, “simpler is better”
or that unique problems even existed, additionally there was an
unwavering belief that all problems had to be addressed by a technology
solution. Consequently, the dilemma of two moving targets
exists; instead of the problem being focused and well anchored,
it like the solution is in constant motion. Therefore, the ability
to achieve a value match on need and solution was impossible.
At best, the solutions have been relegated to, “Rube Goldberg”
symptom treatment rather than problem resolution. The result of
this failure is demonstrated by very little or no ROI, waste of
time and talent and the continuing burden of supporting a decision
whose criteria were imperfect.
Another example of this failure appears in an article published
in
Eyefortransport;
wherein it was stated, “Most shippers still have not made considerable
progress in terms of optimization, cost savings, and creating
a robust transportation network in which suppliers, carriers,
and third party providers can all collaborate and share information
to ensure the optimal balance between cost and service.”
The article goes on to say, “those who procure transportation
are under the illusion that squeezing a few more discount points
from their carriers for a few pennies here and there are the ways
that a company can ultimately lower transportation expenditures.”
The above example, while not acknowledging it, clearly supports
the importance of the logistics dichotomy, at least, in two ways:
in the first instance, the singular view only seeks a robust solution
and in the second, the trivializing of the cost advantages to
be obtained from effective freight rate negotiations. In
fact, both objectives are important; the significant difference
lies in the method of approach. The MML method recognizes the
importance of freight cost reduction in conjunction with carrier
profitability while simultaneously analyzing the issue against
the goal of world class logistics excellence. More specifically,
it provides professionals with the ability to address the micro
logistics functions of effective negotiations and collaboration
while the macrologistics impact can be measured and monitored.
This approach further benefits the process by providing a continuing
improvement cycle whereby the micrologistics functions are enhanced,
impact is measured at the macrologistics level, and achieving
the appropriate “tweaking” of the micrologistics function. The
micrologistics process recognizes unique problems and assigns
corresponding discrete solutions; it does so in conjunction with
the overall goal of macrologistics, serving up incremental discrete
information, incremental connectible information and robust information.
Decision criteria are presented at the conclusion of the analytical
phase thus facilitating the solution selection process.
Utilizing macrologistics and micrologistics the user is better
equipped and can focus more rapidly on problem resolution, process
improvement, areas of opportunity, and solutions. This
new found MML methodology significantly improves
visibility allowing the user to drill down more precisely and
to focus on an appropriate level of detail than was previously
possible. Data collection, using the MML method is more
robust, therefore data and information, using the MML method of
approach, are more prolific; process interrogation and improved
decision criteria are the result. Consequently, higher rates
of success, regarding problem identification and solution matching
occur more frequently. The MML tool continues to demonstrate overall
efficiencies and economies.
Conclusion
The information presented above, speaks to the limitations of
traditional logistics thought and presents the theoretical, practical
and general activities and capabilities of macrologistics and
micrologistics.
Our next paper on this subject will demonstrate how MML
overcomes the limitations of logistics as a singular, linear and
unfluent chain (traditional method) and how this chain is
properly replaced with the gears and cogs.
Continuation
Please consider this white paper as a continuum in this subject
area, succeeding white papers will address common issues and address
them with common solutions. We encourage our readers to
direct any specific questions or comments to
papers@transportgistics.com .
Disclaimer
The information presented above represents
the opinion of the author and not necessarily the opinion of TransportGistics,
Inc. nor is it presented as a legal position.
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Inc. All rights are reserved. The authors of the articles retain
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from TransportGistics, Inc. or the individual authors (papers@transportgistics.com)