Jamison Day is a professor at the University of Houston, C.T. Bauer College of Business, with special research interests in supply chain management, enterprise resource planning, and advanced planning and scheduling optimization. While teaching at Indiana University, he won the Panschar Award for Outstanding Associate Instructor of the Year. Prior to teaching in Houston, Day worked as an independent consultant for Microsoft Corp. and was chief technology officer for a southern Indiana technology and business incubator.
Q. What can a company add or eliminate from its transportation logistics strategy to save money?
If transportation logistics isn’t part of your core competency, outsource to a third-party logistics provider. If you have efficient transportation logistics, you need less finished goods to buffer error or inaccurate consumption estimates. This means less warehouse space is needed and possibly fewer employees. This would mean that the stock you do have is sold or about to be sold, allowing you to increase your realization of revenue, since this isn’t calculated until after the goods are distributed.
Q. How can transportation logistics improve a company’s bottom line?
Efficiency can reduce the need and cost of labor. Efficiency also means better customer service, reduced lead times and reduced cost to produce [goods]. This is a sustainable improvement and affects revenue. With this accomplished, customers will be more loyal and willing to pay you more for a job well done.
Q. Is there a particular error that businesses tend to make in the shipping process?
Yes. Relying on human brains typically settles into using inefficient routes and policies. Technology that uses ant colony logistics or makes your transportation method run like an ant colony, means you will drive less [and] eliminate people’s likeliness of doing stupid things that costs time and money. Software can reduce overtime costs and reduce driving time. Accepting technology isn’t always easy, but it is the best route. The technology doesn’t replace the humans, it augments them. Technology will free up workers to perform jobs that didn’t exist before. Looking at lean principles and designing logistics to ease all partners in the supply chain is the way to go. When using a third-party logistics firm or consulting an ‘expert’ on software, make sure they aren’t simply selling their own systems.