You can be king!

By Lou Buratti -- Logistics Management, 1/1/1998

If you work for a manufacturer as an in-house traffic professional, it can be pretty frustrating trying to get the people in the upper echelons to understand your needs. The traffic professionals I refer to are the global distribution managers, traffic managers, and shippers--the thousands of people who keep things in this country moving on a daily basis. Unfortunately, many times these people are not taken seriously. Usually, upper management views their departments' budgets as a utility bill--that is, something that is necessary, not really to be discussed much or examined, a low priority.

Then, a consultant or third-party logistics company comes on the scene and shows them how to reduce their expenses by 10 to 50 percent! They're amazed! Shocked beyond belief. How could this have happened? They wonder how they could have overlooked this expense for so many years?

Transportation always has been at the bottom of the totem pole--an area almost never focused on. Incredibly, it is oftentimes where companies can realize the greatest bang for their buck with regard to cost reduction. There are not many areas left where a company can slice 10 to 50 percent off expenses. When a third party comes in and clearly demonstrates this, all of a sudden the whole company is listening. They become focused on saving that money. It becomes a sin now exposed that must be addressed. To overlook it would be an even greater sin.

The point I am making is that many times the in-house traffic professionals tell upper management the same exact things the consultant does, but nobody listens! In-house traffic professionals request computers, reference books, memberships to associations --many of the things consultants suggest. The trouble is the corporate "bean counters" simply see expense, they do not see savings.

If you are a traffic professional and you need or want something, nobody really cares. Why spend money on your department? It's the same factor every year, X percent of sales is the transportation budget. Why buy things for transportation? There is no value added.

That's what the in-house professional, many times, fails to point out. How does your request translate into "valued added" for the company? How much money will be saved? By what percentage will expenses be reduced? Heck, we charge hundreds of thousands of dollars and nobody even bats an eyelash! Why? Because we show, as well as guarantee, savings in the millions of dollars, or at the very least, double the cost of our services.

Let me explain something, "bean counters" do not care about anything but beans! It's their world! If you cannot show them cost reduction or validate your expense, you are doomed. However, if you can show how the purchase of that computer or membership will save money, that's a different story. You must define the savings, though; show examples, graphs, and charts and guarantee what you say! That's what they want. But make sure you can document what you say, because they will ask you to prove it after the fact.

The other day a global distribution manager showed me an internal letter he had written to the "big wigs" five years ago. In the letter he talked about reducing cost, eliminating distribution centers, using a consolidation service, and a lot more. It was amazing that five years later, my firm was suggesting and doing all the items he recommended in the letter.

The mistake he made was sending a letter with no hard numbers--no proof, no data, no guarantee with regard to the outcome. Your proposals, your requests must be backed up with facts and guaranteed. That's what makes them move.

Remember, the people upstairs usually know nothing about transportation. They simply have no clue. To them, transportation is an expense, that's all--a number that reduces the P&L statement. If you, as a transportation professional, can reduce expenses while improving service, you can be king!

Louis G. Buratti Jr. is president of LGB Traffic Management Consultants, Leominster, Mass., a company that offers freight payment, freight audit, and consolidation services as well as logistics consulting. He can be reached at (978) 466-6918 or by e-mail at lou@lgbtmc.com.