British businesses are among the best in the world but there is more to be done to become the best and reap even greater benefits. If the UK’s productivity levels matched the US, output would be £6,000 per person more each year. Logistics has its part to play to achieve this improved productivity.
People often mean different things when they discuss logistics. It could refer to transport and distribution systems which move goods from factory gate to customer or it could incorporate the whole supply chain including transport, storage, information flows, and commercial relationships. However, one thing remains true: improved logistics can cut costs, speed work, and improve customer service.
Logistics has emerged as a critical discipline: getting the right balance between ways of buying, moving and storing goods involves complex decisions that affect performance. Getting it right is extraordinarily rewarding. Immediately, businesses can take a lot of non-value-added waste out of their systems. With the use of appropriate process and technology innovation, it will add value to their activities, make them more competitive and squeeze important savings out of the supply chain.
Whether in logistics or any other area, one way that businesses can add this value and become more efficient and profitable is by applying ideas and approaches that other organisations have successfully used to improve performance and productivity. Businesses testify that learning from other firms is a powerful means they can adopt to achieve measurable and sustainable productivity improvements.
Achieving best practice in your business is a key theme within DTI’s approach to business support. By showing what works in other firms, it can help others see which approach can work for them and then support them in their implementation. These can be applied specifically to logistics and the supply chain. The latest survey from the European Logistics Association shows that after 15 years of highly successful cost control, the supply chain sector is likely to see fixed or even increasing costs in the future. However, it also identifies two of the key strategic differentiators helping leading companies buck this trend and continue to drive profitability and control costs. These are increasing integration of processes across the supply chain and effective collaboration with suppliers and clients.
Given that around 70% of business costs are supply chain related, increasingly, leading organisations are discovering that by integrating all their internal and external business processes they can speed up processes, improve customer/supplier relationships, drive profitability and deliver cost and time efficiencies as well as a better service to the end user. This can apply to any activity from order processing, purchasing, forecasting and planning, through to materials handling, warehousing, distribution and customer service.
The Chartered Institute of Purchasing and Supply estimates that working more closely with suppliers can reduce purchasing costs by 10%. Leading businesses are becoming aware that customers, suppliers and competitors can achieve mutual benefits by co-operating and adopting new processes. Some companies are seeing big successes by implementing these strategies. By showing others how they are achieving it and encouraging them to look at how it can be applied in their own firm, DTI’s Achieving best practice in your business can help them realise the same benefits. To learn from other companies’ successful strategies and processes can have a significant impact in terms of knowledge advancement, innovation and current learning and development initiatives. n
Michael Bond is with Business Link Northamptonshire.
k DTI Achieving best practice in your business provides support and guidance through Business Link and an extensive network of industry-wide and trade specific partners in th public and private sectors. It also includes a range of innovative and effective publications and business tools available free online and offline. Visit www.dti.gov.uk/bestpractice or call
0870 150 2500.
k A necessary expense, p36.
