As your company’s logistics manager, you’re supposed to be a sort of company clairvoyant: someone who can expect the unexpected and plan for whatever happens. Whether it’s Brexit today, tariffs tomorrow, or a threatened dock workers’ strike next month, the logistics department is often at the mercy of forces beyond its control.
Nevertheless, logistics is often a primary driver in efforts to manage total cost of ownership (TCO), meet or exceed service level agreements (SLAs), and respond to service scalability challenges. Fortunately, there are tools available to help you succeed at all three tasks.
1. Logistics Management and Total Cost of Ownership
The TCO calculation is a complex equation because there are a lot of moving parts. A change in one variable can have a ripple effect on one or more additional variables, so TCO computations can be tricky. With logistics, some of your main TCO variables include:
- Freight costs: How can you get shipments where and when they are needed with minimal cost?
- Inventory carrying costs: There’s a fine line between carrying just enough inventory and running short in a crisis. How do you know what inventory levels work best?
- Trade compliance: Tariffs, trade regulations and customs rules seem as though they’re changing almost daily. Is your staff trained to comply with a variety of paperwork requirements and import/export regulations?
- Hidden costs: When companies expand overseas, they often overlook some of the hidden costs associated with international growth, such as increased risk associated with longer supply chains, cultural difficulties, additional training requirements, and currency fluctuations.
Controlling TCO requires a high degree of planning and risk management skills. End-to-end supply chain visibility is a must for your staff to function efficiently — and also to meet ever-increasing customer expectations. A robust supply chain software solution provides clarity because it can:
- Offer immediate visibility of all component locations and shipment statuses.
- Assist in preparing import/export paperwork to reduce the risk of customs delays and even possible fines and penalties.
- Reduce turnaround time to customer while controlling transportation and repair costs.
- Help you maximize value at the end of product life with better service supply chain management.
2. SLA Parameters Affect Logistics Pricing and Planning
It’s not economically feasible to locate a warehouse or repair center in every city where you have customers, but try telling them that! They expect 24/7 service and support. In order to meet these expectations, you must:
Know where your installed base is and what SLAs are in place, by customer.
Have warehouses or forward stocking locations strategically placed so you can achieve SLA delivery times.
Maintain 24/7 visibility into global inventory and have stocking parameters in place.
Have transportation options to cover all SLAs – with backup/contingency plans.
Manage imports/exports by meeting all cumbersome compliance rules and regulations.
Successfully ship the right spare part to the right place at the right time.
Oh, and do all this while controlling TCO. On bad days, that probably seems like an insurmountable task, but it’s not.
You just need access to crucial business intelligence that helps you isolate the variables that contribute to product failures, repair issues, and customer service problems. That data can help you find smart solutions to manage no trouble found (NTF) returns, configure to order (CTO), and product repairs.
It’s not enough to fix the product at the repair center. True success means understanding why the product failed — was it due to user error/inexperience, a component failure, or a design problem? — and taking corrective action. Otherwise, you’re stuck with a costly, never-ending cycle of ship/return/repair/replace that’s repeated until you fix the underlying problem.
3. Scaling Service and Logistics to Match Company Growth
Too many companies expand too fast. Their insatiable quest for rapid growth often overshadows the need for careful planning and preparation. Then it’s left to you and the service logistics team to support customers when demand explodes due to market desires or a warranty issue.
While customers don’t require perfection, they do demand efficiency. Every minute of downtime for your customers potentially costs them money and damages your company’s brand. Common logistics problems that accompany growth and expansion include:
- Lack of adequate transportation infrastructure. Geography matters —– a lot. Even if you overnight a critical component from the U.S. to India or a country in Africa, the shipment may take weeks to arrive at the customer’s business. In-country transportation infrastructure is one of the biggest supply chain challenges in developing economies.
- No access to basic repair metric data for your products’ mean time to repair (MTTR) and mean time to failure (MTTF). Without this information, it’s difficult to schedule maintenance and efficiently handle warranty services.
- Miscommunication between you and your customers. You have to align your repair services with the customer’s requirements listed in the SLA. Make sure you’re committing the resources necessary to support customer expectations.
The stakes are high in the global marketplace. Competitors are lurking in the background, just waiting for you to fail. Flash Global can help you succeed.
Our teams provide outsourced services in 130+ countries, with services that include:
- On-site repair and technical support at customer locations.
- Test and screen services to help identify NTF inventory quickly
- Supply chain visibility and management
- Transportation management
- Asset recovery and recycling management
- Cross-border trade compliance
If that’s something you need help with, talk with the experts at Flash Global about how we can help you delight your customers, reduce TCO, and provide support for your global operations.