Back to List

Global Logistics

Finding Expertise and Accountability in Logistics

by John O'Brien

In the past, traffic managers focused principally on the rate per lb/kg a third party provider charged, customs entries and price savings. Saving money was the primary criterion that was used to evaluate their department’s performance and value. Today, however, global logistics calls for a much broader scope of expertise and accountability.

Quality is important and the price of quality is no longer viewed as a hurdle in developing a business with an international scope. It is often seen as an advantage. Quality, high levels of expertise and reliability aren’t inexpensive, though. But today, how can companies afford not to focus on quality when their clients’ requirements and expectations are involved?

In fact, sound management and business savvy can be applied to strategically reduce costs in some cases, and this can have a direct impact on profit. After all, direct freight expenses commonly consume 3 to 10 percent of a company’s total revenue. In order to manage the transportation component of your company’s supply chain costs you need a lot more than simply a discounted tariff or freight rate.

How much business, or how many customers can you afford to lose if your logistics system fails because you have only been mindful of costs?

The total supply chain needs to be measured to ensure delivery to the client is on time and that the internal processes are viewed prior to the commitment to select the right carrier.

Often, pressing circumstances dictate the price you may be required to pay. By being proactive and scheduling orders within the supply chain, based on what’s important and what’s urgent, and improving the flow of information, you will garner far more impressive results. These key steps will likely enable you to reduce inventory and cultivate significantly more control over your supply chain systems, including forecasting to meet your needs, and your clients’ expectations.

Abandoning and forgetting the old practice of looking simply at the bottom line as the justification for investing in dedicated logistics professionals is often far more difficult than having managers accept new ideas. Another way of looking at the issue, using the old traffic manager perspective, is: If you were in a country with a private medical system, and about to go through major surgery, would you request three bids and take the cheapest?

How much business, or how many customers can you afford to lose if your logistics system fails because you have only been mindful of costs? At that point, what could the responsible third party do to remedy the situation, eradicate the damage or compensate you for their failure - or even you losing your job?

If the transportation company fails to deliver on time, your customer may buy from another company in the future. You may have saved $20 in transportation costs and lost $20,000 in annual business. Who is accountable and responsible for these circumstances? In other words, who chose the transportation company and what were the criteria used in the selection process. What was expected of them?

Here are some key categories for consideration that can be used to select a transportation company. It’s important to develop the company’s profile, know the agents name, define its areas of expertise (for example, in terms of ocean, air, surface, customs, or distribution services).

Previous experience is, of course, important. Should you give all your business to one agent? What about loyalty and knowledge of your product(s) and systems? These points vary, based on the type of business and the level of transportation activity characteristic of your company.

Furthermore, it is important to recognize that not all agents are good all over the world. Some specialize in ocean freight, others focus on airfreight. Some provide valuable expertise in both areas. Some have excellent operations in Latin America, some in Asia Pacific. You owe it to your company to carefully qualify and check the credentials of the agents you choose to entrust to deliver your company’s products.

Global companies like Starber-Fritz, which offer world transportation in 48 countries, with 300 offices and a history of more than 80 years, offer a network to provide you with all the elements that support your decision process, including all customs-related information. The quality of Fritz’s products and services are always improving to meet the changes and demands of clients, including Electronic Data Interchange (EDI) and Purchase Order (PO) tracking and downloading of data.

If your customer is going to develop a long-term relationship with you and your company, they must be satisfied with the transportation services you provide. So it is vital that you take responsibility for the whole logistical movement of your product(s), and the overall quality and service that your customer expects, namely, a job well done that you can be proud of.