LOGISTICS, THE BEGINNING OF THE NEW POTENTIAL

Executive Summary

Too often, business is viewed from the “oversight or high level”, consequently not enough attention is given to the critical operating components necessary for growth and ongoing performance. 

The speed at which events occur sometimes causes us to lose sight of the critical micrologistics components necessary for logistics excellence and commercial success. 

Sight may also be lost with respect to the impact that each functional responsibility, micrologistics component or department has on each other and therefore the company as a whole.

The corporate view from the logistics perspective offers every enterprise the opportunity to identify and recognize each department, discipline and respective relationship. By understanding these relationships and managing them effectively, the corporate enterprise immediately gains an excellent resource.  This resource can become an entirely new and highly energized “corporate knowledgebase”.  In order to harness this energy and focus its attention on business challenges, we must accept that interdepartmental and interdisciplinary relationships must exist.  Next, a process should be created that will channel the challenges through the corporate knowledgebase.

In addition to the standard dictionary definition of logistics, “managing the flow of raw material through the finishing process”, it could be said that, “Logistics can manage, integrate and control the flow of information, material and money”.  In our previous white paper, “The Dichotomy of Logistics” we established the two primary components of logistics:

Macrologistics is the study and management of the overall aspects, process and workings of logistics

Micrologistics the study of the operations and the application of the components of logistics, such as transportation, inventory, warehousing, purchasing and customer service

By understanding the two primary components, it becomes clear that they are highly capable of managing and operating complex relationships simultaneously.  Micrologistics components give macrologistics its pervasive license to transport itself across and through every department, both internal and external.   

The Purpose Of This White Paper is to demonstrate the importance of macrologistics and micrologistics as both a resource for corporate performance and as a tool for assisting management in identifying, recognizing and understanding the interdepartmental and interdisciplinary relationships and corresponding benefits. 

Description of the Situation

Business is dynamic!  As each element changes so will the business!  For this reason alone, each professional practitioner must understand and appreciate the importance of their role and relative role in driving corporate performance and success.  Even though reporting responsibilities are usually identified, recognized and followed, it is highly probable that the original interdepartmental and interdisciplinary relationships initially responsible for the growth, development and success of the company are no longer known and therefore incapable of being practiced.  This esoteric loss manifests itself in a multitude of unknown disconnects which seriously affect corporate performance.  As time goes by and events occur, the distance between the company’s operating departments causes the disconnects to widen to such a point that effective and meaningful discussion becomes less and less achievable.  This loss perhaps, is one of the most significant obstacles to harnessing the intellectual resources necessary for achieving excellence. 

The View from the Macrologistics Perspective

In our white papers, “Logistics is not a Chain” and “The Dichotomy of Logistics”, we identified and spoke to the two primary components of logistics:  Macrologistics and Micrologistics (MML).  When consideration is given to all of the micrologistics elements and the multitude of sub-elements, it should be clear that interdepartmental and interdisciplinary relationships are achievable and they are also manifold.  Implementing a sound macrologistics strategy coupled with the appropriate micrologistics components should identify and continue to identify the critical interdepartmental and interdisciplinary relationships that are responsible for corporate performance and success.

When a company is viewed through the macrologistics perspective, the interdisciplinary and interdepartmental connects and disconnects are highly visible and obvious.  The high visibility gained through this perspective is actually achieved by virtue of the pervasive ability of the micrologistics components, such as transportation, to penetrate departments and disciplines, both internal and external.  As an example, product shipment involves, at least, three entities, the shipper, the consignee and the carrier.  By tracking the data and information of a shipment transaction across and through these entities, the various departments and disciplines that are involved become obvious. 

Micrologistics and Interdepartmental and Interdisciplinary Relationships

Because business is dynamic it is dependent upon the interaction of a multitude of events, functional performance and the inter and intra-departmental and inter and intra-disciplinary relationships and of everything relevant between the vendor and the customer.  Therefore, a sound corporate strategy is required that is capable of continuously processing information that is collected in the transaction stream.  The dynamics can then be effectively understood and managed.  Because MML is a focus through which continuously refreshed data flows, coupled with its ability to manage complex relationships, it is best positioned to address these concerns.  The relative position of the Logistics Department as it relates to the entire company and its role as a functional provider of services, such as transportation, allows it to deliver information to the corporate knowledgebase and report any deviations rapidly.  As an example, a consulting engagement with a prominent cosmetic and fragrance firm demonstrated that failure to include the logistics discipline into the corporate knowledgebase resulted in an immediate report.  However, the damage had already been done; the promotion was complete and ready to ship. Failure to recognize the importance of interdisciplinary relationships resulted in an unnecessary freight expense in excess of $1,000,000.

“It is very typical for the Sales and Marketing departments to develop promotional products.    By the time the promotion was ready for shipment, the Transportation Department discovered that the packaging for express or parcel mode exceeded the maximum size requirements by two (2) inches.  Consequently, the promotion was forced into motor freight transportation, and each of the thousands of shipments incurred a minimum charge that far exceeded the cost for express or parcel service.” 

Departments within an organization must be held together.  How they are held together is one of the key challenges that every administration must effectively deal with.  If an organization believes that glue is the agent, others might believe that it is too binding and therefore restrictive.  On the other hand, if the cohesive agent is fluid, one that lubricates the process and also has the appropriate binding capacity to allow reasonable freedom so as to achieve the flow of information, the probability of utilizing the relationships effectively is significantly increased.

Micrologistics Provides New Opportunities

Logistics, for many years, existed and perhaps continues as an oversight or high level understanding of a business process or operating component that remains, by performance that which only describes an entire process.  For too many, this word remained and still remains “bundled” and accepted singularly as a complex process.  In an attempt to better understand and to apply the principles of logistics, some clever people conceptualized “logistics as a chain”.  However, as shown in our white paper, “Logistics is Not a Chain” we presented the natural dichotomy of logistics.  By breaking logistics down into its two primary components, MML, logistics practitioners have been given a new freedom and ability to better understand and utilize more of the discipline and in more ways than ever before.

With the restrictive chain being thrown aside, transportation, as an example, is now a micrologistics component and it is therefore capable of taking on far more meaning than it had in yesterday’s role.  In one of its new roles, it can be a “penetrator” that is a device that can travel through and across departments and disciplines, placing and extracting data and information, but always collecting and processing as it moves.  By studying and managing the overall aspects, process and workings of the transportation component, macrologistics is positioned to identify, recognize and understand the inter and intra-departmental and inter and intra-disciplinary relationships.

Logistics, Managing the Flow of Ideas and Information

Macrologistics and micrologistics, has positioned us to understand that logistics is not only capable as a business tool in its traditional form; it has allowed us to understand that, as a discipline, it could be used to manage the flow of information, and the flow of ideas.  After all, since we know of its performance ability to manage the flow of raw material through the finishing process, it is not a quantum leap to consider the process as being capable of managing other flows.  Logistics’ inherent ability to manage complex relationships simultaneously, clearly makes it the best candidate to identify and manage inter and intra-departmental and inter and intra-disciplinary relationships. 

In order to achieve and sustain success, the logistics practitioner must be fully conversant, at all times, with the MML process and components.  Their recognition of the component coupled with their understanding of its function along with its relative role within the company provides a perspective uniquely available to the logistics professional.  This perspective empowers the practitioner with the ability to identify, recognize and understand the inter and intra-departmental and intra-disciplinary relationships.  The natural advantage of this process enables optimization of the corporate knowledgebase.

Conclusion

Logistics is a highly robust business discipline capable of providing industry with important tools and a new corporate knowledgebase.  Its inherent capabilities offer industry a platform from which the intellectual promise of cross cultivated intelligence can be realized.  This fresh look through the newly discovered macrologistics management process and the micrologistics components, coupled with the pervasive nature of logistics identifies the internal and external interdepartmental and interdisciplinary relationships capable of driving the next wave of successful companies.

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 herein represents the opinion of the author but not necessarily the opinion of TransportGistics, Inc. nor is it presented as a legal position or opinion.

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