Business logistics includes all related activities that are involved in movement and storage of information, goods, and services from the producer to the consumers and beyond to disposal and recycling. Logistics management is a supply chain management component that is used in meeting the demands of customers through planning, control and implementation of effective movement of and storage of goods, services and related information from production to consumption. In logistics, managers sometimes come across problems which they have little or no idea on how such problems are solved. As a planner in logistics, you will have to rely on an effective problem-solving algorithm that will help you solve the issue at hand and move forward with your life and business. The algorithm should however not make the business’ supply chain ineffective in any way (Usui, Kotabe & Murray, 2017). When correctly implemented, problem-solving algorithms can lead one to obtain the best solution to a problem. Subsequently, one will gain more experience and a greater sense of predictability and control regarding the issue. This paper seeks to discuss in detail the steps involved in solving business logistics problems efficiently, and also an analysis of some of the issues in logistics and how one can go about in solving them.
The first step in solving a problem in logistics is identifying and understanding the problem. Whenever you notice things are not going the way they should, one should first investigate to know where the problem is. Although it sounds like common sense, it is a very crucial part of solving any problem. The management should try to look at the problem objectively, without relying on potential implications or consequences of the problem (Chandra, Ghosh & Srivastava, 2016). At the end of this step, one will have a better sense of the specific problem that needs to be solved.
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Secondly, define and analyze the issue. At this point, you will have to figure out the cause of the problem, the status of the problem at the moment and the urgency of finding an appropriate solution to the problem. On looking at the cause of the problem, you might find that one problem leads to another problem which leads to another one, and the trend continues. The management should analyze all these existing issues and find the root cause of all these problems. At this point, you will also have to learn as much as you can about the problem. The approach one should use should be flexible such that you are able to look at the problem from all possible angles. After looking at the problem from all possible perspectives, one should evaluate all the possible effects of the problem on the business (Chandra, Ghosh & Srivastava, 2016).
The third step is generating potential solutions to the problem. At this point, you should brainstorm and come up with many solutions as possible. At least each possible perspective that you considered in step two above should have a solution. Creativity and innovation are required qualities at this step (Viederytė, 2016). You should not be concerned on how feasible the solutions that can fix the problem are. Come up with many options to choose from. However, in some situations, it is quite impossible to address all sections of the problem. Such situations need one to break down the problem and try generating solutions for each part.
The fourth step is finding solutions for different parts of the problem. Most times solving the problem as a whole is quite demanding or impossible as opposed to solving the problem in parts. Also, solving the problem as a single person is challenging. Therefore, you might want to involve trusted friends or colleagues. A cross-functional group, which involves different ideas from different points of view put on table for discussion is helpful. Any solution is acceptable, no matter how weird they might sound. Every comment is given and objectivity and freewheeling are key in the discussion. Use of such a procedure creates trust and collaboration, leading to great innovation and creativity (Chandra, Ghosh & Srivastava, 2016).
In the fifth stage, referred to as decision making, evaluation of the potential solutions developed in step three. Positive and negative implications of each solution are highlighted. For every solution, pros are weighed against cons. Short-term and long-term effects of these solutions are also considered. In addition, you should now include the feasibility of each solution. That is evaluate how easily the business can incorporate the solution in its operations. Each solution is marked on a feasibility scale so that it is possible to sort them out later as the team wishes (Chandra, Ghosh & Srivastava, 2016).
The final step is implementing a solution and evaluating its success. In choosing a solution, make sure you have weighed all the pros and cons of each solution. Moreover, you should start out with a solution that is of low risk and is compatible with the future goals and priorities of the business. Once a solution has been implemented, you should evaluate how successful or unsuccessful it was. If the chosen solution doesn’t solve the issue, you should go back through the steps and chose a better solution (Chandra, Ghosh & Srivastava, 2016).
There are common problems in logistics that nearly every planner goes through. Below are some problems and how you can get solutions to them. The first example is how analytics and data helped a client solve the problem of paying carriers on time and reduce shipping costs. In reducing shipping costs, we should first understand what influences the cost. There are four factors that always determine shipping costs, which are shipment size, speed, distance, and density. When the clear picture of these four characteristics has been drawn, a shipper will now understand their costs. Subsequently, you will see profit leaks that exist, mostly due to use of incorrect carrier on some lanes and outdated rules. After identifying profit leaks through data, analytics will assist shippers know whether they spend too much in the first place. Analytics help in exposing justifications and excuses that a shipper uses in explaining shipping rules. There are some statements that reflect excuses that were handed some years back. The excuses were handed from person to person through the years and they were never questioned. Therefore, the faulty logic became ingrained (Lambert, Garcia-Dastugue, and Croxton, 2008).
A company, many times, becomes a customer of RateLinx because they have a tactical issue that they can’t solve. In this case, one customer had an issue with paying carriers on time. From the client’s side, there were many issues that prevented them from clearing their freight bills. One of the problem was that the amount indicated on the invoice would sometimes match their contracted rate but sometimes it wouldn’t. Also, sometimes invoices from the carrier did not have a rate for the carrier in the company’s system. With all these unrelated variables, they did not have a place to begin solving their problems from (Lambert, Garcia-Dastugue, and Croxton, 2008).
In solving the above issue, we started with Intelligent Invoice Management (IIM). In diagnosing the issue we were able to contact the carriers and transmitted the freight invoice to IIM. The freight invoice was then standardized and cleansed off data (Sheffi, 2012). The clean freight invoice was transmitted back to the customers for payment. Subsequently, we were able to receive data that was required in diagnosing the problem without internal IT resources. The data that was flowing through the IIM was made actionable by the analytics. We were, therefore, able to collaborate with carrier and the customer to find the correct solution.
In finding the correct solution to the problem, we must first correctly define the problem. Through analytics, we found three different problems that should be addressed. The first problem was that miles were incorrectly calculated by the carrier. Secondly, the tender passed to the carrier was incomplete. Lastly, addresses that were outdated were used on the shipper side and the carrier side. Once the root causes of the problem had been identified, strategies to fix them were developed and deployed. The solution to the first problem was talking to the carrier and inform them about the exact setting that they had wrong on their mileage calculation. The second issue was solved through updating the tender record that was transmitted to the carrier from the TMS to ensure it had complete shipment instructions. The third problem was solved through having the carrier system and the master data in the TMS updated with the right addresses (Sheffi, 2012).
The analytics also helped the company know of a fourth problem the customers weren’t aware of; a problem of incorrect routings. Some customers were using a routing guide that was outdated for some lanes. Ensuring that all locations use the latest routing guide enabled the customer prevent freight invoices that did not have a rate from entering the system. Hence they were able to leverage the right carrier at a low cost. The solution was able to save the customer up to 5 percent on freight expenses without any internal IT resources needed. Through using analytics to diagnose the issues, the company has cleansed and standardized data that they can use in diagnosing the next issue, strategize and deploy it for the following freight savings (Sheffi, 2012).
Another problem-solving method is the use of reverse logistics. Reverse logistics, as a complex and nuanced process, presents a manufacturer with problems that can be solved through effective application of business software (Gunasekaran, Subramanian & Rahman, 2015). An example of a problem that is solved through reverse logistics is handling contractors and dealers. Since these are not part of the company, the software for reverse logistics should take into account the quality and nature of the business relationship they have with the company. The software is set up to notify the company whenever there is a business activity with the external entity. Tracking the interaction of reverse logistics between parties that are trading manually or in a computer that is not designed for the job sometimes is impossible. Maintaining track of products in a value chain using reverse logistics is an important financial consideration. Therefore selecting software that performs these functions should be considered (Gunasekaran, Subramanian & Rahman, 2015).
In conclusion, a planner should be able to effectively handle problems related to business logistics using an algorithm that they find best to use despite their little or no experience. Through effective implementation of either reverse logistics or the six-step problem-solving algorithm, one is able to effectively solve problems in business logistics.
References
Chandra, S., Ghosh, D., & Srivastava, S. (2016). Outbound logistics management practices in the automotive industry: an emerging economy perspective. Decision (0304-0941) , 43(2), 145-165. doi:10.1007/s40622-015-0122-0
Gunasekaran, A., Subramanian, N., & Rahman, S. (2015). Supply chain resilience: role of complexities and strategies. International Journal of Production Research , 53(22), 6809-6819. doi:10.1080/00207543.2015.1093667
Lambert, D. M., Garcia-Dastugue, S. J., & Croxton, K. L. (2008). The Role of Logistics Managers in the Cross-Functional Implementation of Supply Chain Management. Journal of Business Logistics , 29(1), 113-132.
Sheffi, Y. (2012). Logistics Clusters: Delivering Value and Driving Growth . Cambridge, Mass: The MIT Press.
Usui, T., Kotabe, M., & Murray, J. Y. (2017). A Dynamic Process of Building Global Supply Chain Competence by New Ventures: The Case of Uniqlo. Journal of International Marketing , 25(3), 1-20.
Viederytė, R. (2016). Organizational and Process Innovations in International Logistics Companies: The relevance and expected benefits. Regional Formation & Development Studies , (20), 134-146.
doi:10.15181/rfds.v20i3.1350
