Sage Advice: More work for the lucky few
By Wayne Bourne -- Logistics Management, 4/1/2009
As they say on the farm, this is a time when the wheat gets separated from the chaff. Or let me be a little more specific: The time has come for the elite logisticians to go to work to keep their jobs. Yes, you heard me. I said "keep their jobs," not get bonuses, not get raises; in fact, they are now working to keep their jobs.
It's no secret that due to the prolonged downturn in the global economy, many medium and large corporations are laying off thousands of moderate to very talented logistics personnel, leaving many departments in the hands of the "best of the best"—at least that's how it sounds in theory.
And for those top shippers who remain in their positions it will come with a considerable price tag, including increased responsibility that they may not be ready to handle. They will be required to trim freight and distribution expenses to the absolute bone. At worst, they will need to maintain current service levels; and at best they may actually have to improve service levels while working with carrier partners that are facing an economic free-fall.
The job of the logistician has certainly had its ups and downs in the last three to four years. Like the proverbial roller coaster, just when you think you can see the next turn, you dip precipitously and you find yourself upside down while still traveling at great speeds. The roller coaster is only fun because you know the ride will end soon; however, the shipper's three- to four-year ride is seemingly endless.
This current ride has included out-of-control fuel prices, driver shortages, insurance increases, regulatory mandates, and regional capacity shortages followed by gluts in capacity in the same regions. The industry has also witnessed a sudden increase in bid wars and reverse auctions that have rendered many "long-term" contracts ineffective.
I was thumbing through previous Sage Advice columns to get some ideas for this months' column and was particularly struck by John Gentle's column in January where he very adeptly challenged the level of our reader's relationship management skills. Why did this strike me?
Well, think about the particular skill sets that are necessary now that both sides of the shipper/carrier partnership are experiencing difficulties at the same time. What are they? The answer is easy for those shippers who have been true partners with their carriers or services providers when times were tough. Partnership transcends the external connections between shipper and carrier, it also fixes on the rapport your department has with the internal sourcing relationships within your corporation. Those internal departments create the performance requirements and therefore the demands of the supply chain.
There has never been a better time, or a more pressing need, to involve yourself directly with your internal partners, the groups responsible for sourcing products and materials. Be part of the overall plan. "Plan your work and then work your plan" as an old mentor used to tell me.
Your external partners' assessment of your commitment to the term "partnership" will be obvious to you during the next few months. Now that it really counts, will you be perceived as a true partner? How much your carrier partners will be willing to do for you and what types of concessions they'll make will in large part depend on how professionally you treated them when things were tough for them.
On the bright side, fuel is at the lowest level it's been for some time, and capacity is available in most sectors of the country, resulting in some attractive leverage for shippers. However, as the economy continues to siphon off carrier profits and they are subsequently forced to trim their equipment inventories, it shouldn't come as a surprise when capacity tightens up again. Be aware of the forces that affect not only your capabilities but those of your partners as well.
So, for those of you who still has jobs, congratulations. You made the cut. Your companies certainly did not relish terminating all those people; it had to be done to survive. Now you are challenged with the task of proving that they put their faith in the right person. You will now do what you must to survive. It will be hard, but you will accomplish more with less. And in the long term, sincere partnerships will prove to be very beneficial in these difficult times for those who have truly earned them.
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