Lean logistics – Why is it important
Lean logistics- What is this?
Organizations these days make concerted efforts towards improving their inherent business processes as they have realized that it gives them that all-important competitive advantage in an otherwise ‘cut-throat’ supply chain market. Reduction in inventory, time and cost are important ingredients of this improvement process and lean logistics is used to ensure the same in a faster way.
Simply speaking, lean logistics is the method of recognizing and removing wasteful or redundant activities from the existing supply chain in an organization, in order to enhance the delivery of products and services.
Lean logistics – why is it important
Before comprehending the importance of lean logistics, we need to know about the concept of ‘lean thinking’. This concept has its roots in the widely-acclaimed manufacturing methods applied by Japanese automakers. Lean thinking thrives on the idea of eliminating inventory in any form, from all organizational processes. It regards any inventory, which is not in accordance with the customer/organizational needs, as waste and tries to minimize it.
Toyota used this concept in its manufacturing process successfully to counter a shortage of resource. Soon other companies followed suit and started employing lean thinking in diverse areas such as product development and supply chain management, in addition to manufacturing.
Lean thinking is beneficial for customers too. As it always looks for maximizing the value of products/services and perfection by eliminating waste, it ensures that customers do not need to pay for the lack of organizational efficiency and organizational waste, if any.
Lean thinking has its utmost impact on the field of logistics. If an organization incorporates this useful concept into its SCM operations, it can experience immediate benefits from improved customer service, reduced environmental impact, in addition to other associated benefits of waste minimizations the elimination of waste from organizational processes reduces inventories, process time and cycle time get reduced significantly. This also helps to increase the overall flow and velocity of the supply chain.
By focusing on the value of “total cost”, lean thinking makes a big cultural impact on the entire logistics and SCM operations of a company. What separates the lean thinking is that it focuses more on the complete ownership cost, instead of emphasizing on individual cost components such as transportation or warehousing. Making important cost decisions based on total ownership provides important logistical advantages for an organization. This is so because carrying of inventory usually constitutes about 25 to 40 % of the total logistics cost and the company can make significant savings through lean logistics applications. Without this approach, organizations are forced to keep more emphasize on individual cost factors such as transportation, warehousing and obsolete sourcing practices.
Why is acquiring talents in logistics becoming a challenge?
The logistics and manufacturing fields find their place among the oldest in the world but it has been a heck of a challenge to recruit quality personnel in these fields. Many logistics giants have revealed that it has become increasingly difficult for them to recruit and maintain top-tier talents in critical lean logistics jobs as well. There is a ‘un-announced’ war for quality talents in this industry which has defined and reshaped organizational strategies for recruiting and maintaining logistics personnel. The higher demand and expected turnover of quality lean logistics employees are also contributing to this problem.
The dynamics of the SCM industry is fast changing. A lot of accompanying factors such as a narrow labor market, Baby Boomer attrition, implementation of modern technology, e-com revolution and so on are pushing the logistics operations beyond boundaries and the management are forced to redesign the way they recruit and retain their valued employees. Supply chain leaders are now thinking in terms of hiring personnel within the organization itself and preparing them for critical logistics roles through adequate training and mentoring procedures. Many logistics companies have started investing in these programs and have also started to look for other futuristic avenues to counter this problem.
The great news for new graduates is that they can look into the logistics and supply chain as a more rewarding career option. Though it was thought to be a manual labor job traditionally, the perceptions have changed entirely of late and it is widely seen as more of a white-collar job these days. Gone are those days where the bulk of the work in logistics operations consisted of heavy and manual work. These days, these have been replaced by highly automated technology which has made distribution and manufacturing environments much better places to work in.
As per a report by the Bureau of Labor Statistics (BLS), the logistics jobs in the U.S. will grow by 26 % in this decade, by the end of 2020. Unlike other markets, the impact of unemployment in logistics is significantly low. Rather, there is still a dearth of quality workers in this market and this is contributing to a huge demand for logistics/supply chain professionals and the industry is yet to come to terms with this demand. The existing logistics/supply chain workforce is also finding it difficult to keep pace with increasing customer expectations for faster delivery, fuelled by the far-reaching impact of modern technology and a stronger focus on speed. All these factors combined, specialized and quality workers have been kept on high demand and employers are left with no option but to recruit and retain the best of the talents, even with a more inflated HR budget than ever before.
Here, we will discuss what top companies can do to encourage people to work in logistics-
Attract new working professionals through adequate training
Recruiters should first conceptualize the characteristics, traits and behaviors of a new working professional/employee and should figure out whether he/she is the best fit for a critical logistics role or not. Then informative and engaging training programs should be formulated to attract the attention of such professionals. The field of logistics is an evolving one and new technologies, business models and improved processes keep coming into the systems every now and then. Therefore, professionals need to possess the necessary expertise/knowledge accordingly. An adequate training program can satisfy this need of professionals and such a prospect can attract the best logistics professionals towards an organization.
Training can play a major part in an existing employee-management set up in any supply chain organization as well. Finding quality talents in SCM operations is a challenge faced by most organizations these days and hence, nurturing talent development is critical for companies. It is quite hard to get and train replacements for critical SCM positions which require specific skill sets including knowledge of technology and business process. An efficient and well-planned cross-functional training can be a good ‘antidote’ to such issues and will go a long way towards improving organizational resiliency. Training programs will also help in accurate skill assessment of individual employees and possible skill gaps can be identified with ease. Training programs can be designed according to meet the personal objectives, timelines, learning pace and style of individual participants – in order to maximize the outcome.
Establish relationships with schools/institutions
Forging tie-ups with adult education centers, schools and vocational institutions can be another way to bring and encourage young or entry-level workers to the field of logistics. Supply chain companies often look for fresh college graduates for entry-level positions and can recruit such graduates through campus interviews.
Relationships can be developed with business schools (that impart education/programs in supply chain management) to provide quality manpower for managerial positions. Organizations can provide apprenticeships or paid internships to students specializing in supply chain management so that young people can look at logistics as a viable and rewarding career option. This can also promote scholastic achievements which may prove to be beneficial for both students and organizations in the long run.
Enhance benefits for logistics employees
As a general practice, organizations mostly provide competitive salaries to woo high-quality workers in any field. But, more should be done on this front to improve the standard of living /quality of life for employees in the field of logistics and, thus, to keep them motivated.
Most millennials these days are worried about their financial security in the future as most of them are riddled with one or more sources of long-term debt. An effective retirement benefit program can be provided by organizations to motivate them and drive away insecurities from their minds. This way, new talents can be attracted easily as today’s generations look to have a proper work/life balance and lucrative/unique perks can work perfectly towards keeping the best young talents with an organization for long.
A combination of a well-developed compensation plan and incentive schemes should be a critical component of any employee retention strategy. Recognition plays a very important part of making the employees feel valued. When employees feel a sense of being valued/appreciated, it boosts their job satisfaction which, in turn, triggers loyalty and creates harmony in a work environment. Therefore, in addition to recruiting and training SCM talents, organizations should invest in employee retention and creating a culture of value, respect and mutual appreciation. This will ensure success to follow.
Develop a dynamic yet strong corporate culture
Salary has ceased to become the sole important criteria for younger generations to decide about a job opportunity these days. Companies these days thrive in developing a fun-filled, dynamic and social working culture so that the best of the employees can be retained with minimum effort. The new generation workers these days look for purpose and meaning in their assigned works. Treating them as important individuals and providing them with an environment full of opportunities go a long way towards securing the best of their services.
Innovation is the key
Young and quality workers are always attracted to a working environment that encourages innovation. The organization should implement the modern logistics tools and industry best-practices to attract millennials who were born in an era marked by technological disruption. They would not like to work for a company that uses obsolete processes to carry out routine tasks.
Make Investments towards the future of supply chain
Supply chain companies may invest now for ensuring the future flow of quality SCM personnel to the organization and the industry as a whole. For example, they may organize programs in college/university campuses where guest speakers can explain to the students the benefits of being in the logistics and supply chain industry or about the future career prospects in this industry. This will foster excitement and interest in students to look for a possible career in the supply chain.
Supply chain organizations may also work in collaboration with reputed universities and help them to devise courses/programs related to specific SCM job skills and make necessary changes in the curriculum accordingly. This will help the organizations to get ‘ready for work’ university graduates in the future.
The road ahead:
A marked generation shift is observed in today’s workforce and more so in the supply chain and logistics industry. The inevitable retirement of Baby Boomers and the steady assimilation of Gen Z (workers born during the period from the mid-‘90s up to the year 2000) into the industry has changed the entire perception of the recruiters. Now the recruiters are forced to devise their recruitment strategies in order to woo professionals with innovative benefit packages. Every company in the market offers competitive salaries these days but they constantly evaluate their benefits packages while recruiting as this is an important criterion for the GEN Z workers.
Companies are updating their retention strategies to become a ‘standout recruiter’ and stay ahead of competitors when it comes to wooing quality talents. Such strategies include investing a significant amount of the HR budget on the professional development of the supply chain employees. Many organizations are also using extensive mentorship programs to reinforce employee engagement.
Organizations have realized that chalking out a clear career path and providing diverse development opportunities for employees can help a great deal in the retention of quality employees in today’s competitive environment. This helps the employees too as they get a clear idea of where they will be after, say, five years from now.