Zupplychain recently attended the Women in Logistics (WIL) Conference. Though men are welcome to attend – and several of the speakers were men – we sent a woman to report back.
From a full day of talks and presentation, our delegate chose three specific ones - all relating to procurement in logistics: ‘Inside the head of the logistics buyer’ (Jo Godsmark); ‘Levering logistics – value creation in procurement’ (Malcolm Pope) and ‘The benefits of IT in the tender process’ (Lynn Parnell).
Inside the head of the logistics buyer
Jo Godsmark is the director of Labyrinth Logistics Consulting. Previously, her career has spanned both sides of the buyer/supplier relationship. The focus of her talk was the thoughts and processes that a purchasing department use when selecting a logistics partner .
Jo’s starting point was from the point of view of the party selling the logistics. Any half decent salesperson will start from the premise of ‘get to know your buyer’ but, in logistics, that question may need preceding with ‘who is your buyer’ – is it procurement? Is it the logistics function? Or is it product management? What may be true is that the buyer does not have the knowledge of logistics of the seller – she knows what result she wants but may not know by what route. This presets an opportunity to contribute to best practice thinking and/or discover hidden or peripheral motivations which could act as USPs or picing levers, such as ethical or environmental issues.
Next, in outlining the steps of a procurement strategy, Jo emphasised:
- Know what you are buying and what the spend is. Sounds obvious can be easy to allow project drift/inflation.
- Preparation is key, from which one can start to identify priorities (spend analysis; supplier SWOT; business criticality issues)
- Focus on the other party as your friend, not foe: use their terminology to increase your influence; identify joint action plans live; talk to the person behind the purchaser’s mask!
Levering Logistics – Value Creation with Procurement
Next up was Malcolm Pope, Global Procurement Lead of Ideal Standard and previously with Tibbett & Britten, RHM Plc and HJ Heinz.
Malcolm commenced the session by posing the question, ‘Is logistics interesting to a buyer?’ and moved straight into evidencing his ‘Yes’ hypothesis:
- 800 billion Euro spend on logistics for the top 100 users.
- Logistics services are business critical to many businesses; representing significant proportions of income plus high execution risk.
- There is a wide spectrum of complexity in businesses’ requirements.
- Logistics is technically very challenging; possibly more so post Brexit!
- There is huge potential to buy and manage logistics better.
Notwithstanding it’s significance both as a cost centre and a key strategic lever, many businesses fail to understand their logistics spend in sufficient detail or clarity to optimise it’s purchase or operation. Understanding spend by category is a pre-requisite - e.g., transport (inbound/outbound), FTL/LTL/Specialised; warehousing (outsourced/insourced); property leases; manual handling equipment; vehicle capital/leasing costs; vehicle running and maintenance. From analysing logistics spend both horizontally and vertically, opportunities to reduce cost or improve execution can be identified through standard business tools such as strategic reviews, network analysis and supplier consolidation;
Malcolm also gave some hints and tips for companies looking to source a new logistics supplier:
- Research the supplier from reviews to financials.
- Engage with the supplier pre-tender; build a relationship – this may help you get the best price from the best supplier, not just from the lowest cost.
- Be clear about your business critical requirements and what the supplier needs to deliver against these.
- Set your expectations, aims and timelines for the tendering process. Consider the suppliers’ ability to respond to these.
- Examine seasonal pricing trends across the year to see if running tenders when prices are low possible.
- Have a forward plan of opportunity that you share with the prospective suppliers. Dangle that carrot!
Finally, Malcolm closed his session with some thoughts on the future of logistics procurement. Interestingly, most reflected the shifting dynamics of the market that inspired Zupplychain:
- The "Uberisation" of Logistics.
- 4PL – the much wider outsourcing across the entire supply chain
- Intelligent benchmarking to support negotiation.
- Collaborative Procurement.
Focussing on the benefits of IT in the tender process
Lynn Parnell was the next speaker. Lynn formed Logistics Partners in 2000, a logistic consultancy that specialises in Supply Chain Systems and Logistics Technology.
Lynn started with the statement that Excel is still widely used by many companies in the reporting of data. On top of osmosis or a unwillingness to invest in systems, recent data breaches have also made companies wary of third party data management packages . Lynn believes that a radical rethink of data collection strategies is required in IT and logistics tendering processes, starting with strategic planning right through the nuts and bolts of contract renewal, transfer or exit.
Lynn then highlighted why IT needs to be given the highest priority in logistics tendering processes:
- Technology is key for efficiency and cost reduction.
- Software interfaces can provide ‘End to End’ visibility and tracking.
- Software often provides a direct benefit to the end customer.
- Big Data – data gathered is now key for future planning.
- Software can provide governance for processes.
- Data protection and data security.
Furthermore, the specific benefits and also the risk to a logistics purchaser using the logistics provider’s own software;
- Logistics provider chooses the solution, although there is a risk that it is not compatible with the purchaser’s systems;
- Encourages innovation but the solution may not give the purchaser what they fully want;
- Can reduce costs as being used for other customers however it may not allow differentiation from the purchaser’s competitors
A key debate is whether the logistics provider provides the IT solution or the customer imposes it on the provider; the former almost certainly lower cost and better execution; but has interface issues. Lynn believes the best solution can be a combination but, if not, best to exploit the logistics provider’s systems.
Lynn’s final words of advice were as follows:
- Agree how future IT changes will be funded.
- Think about data protection and security.
- Consider how both parties access data during the contract.
- If TUPE, how can staff be trained/involved/retained?
- At the end of the contract, who owns what?
- Agree common vision and goals.