February 24, 2017
Logistics is NOT a Commodity
By Wolfgang Marschhauser
Senior Vice President of Sales & Marketing, Transervice
I often hear people say, “Logistics is just a commodity.” Nothing could be further from the truth.
The price of a truck, salaries for drivers or technicians, replacement parts, tires and all other elements that go into a logistics package can independently each be seen as commodities. But what about the intangibles that tie all these areas together and ultimately provide you with a superior level of service each and every day, on each and every delivery?
Those are execution and expertise and those intangibles are not commodities.
Execution and expertise ensure that someone is in place who is properly trained to execute the processes needed with the proper tools and technology to positively affect their customer’s operations. Anyone can purchase tools and technology but not everyone can implement, train and put controls in place to make them work successfully for their customers.
Let’s look more closely at expertise. The logistics company you select should have a well-documented history of success. Successful partnerships are based on successful people. This means your logistics provider must have seasoned employees with the knowledge and skills required to consistently perform at the highest level.
We all know that finding drivers and technicians has been very difficult and forecasts predict this problem isn’t going away any time soon and may in fact get worse. The last thing any business wants is just another warm body filling a position because that’s when the real problems will begin.
By hiring an inexperienced technician, for example, you could be risking your customer’s safety as well as that of other people working around them.
Execution means you have all the right parts, the process and management and the know-how to link all of those ingredients together. Standard operating procedures, technology, monitoring and measuring performance become the keys to ensuring the operation goes according to plan. Experienced people have seen malfunctions in the past and will be able to react appropriately to resolve any problems that may surface to keep things operating smoothly.
Execution starts with a plan, and that is not a commodity. It takes expertise to develop and execute the plan. That’s why it’s so important to ask a potential logistics provider about their implementation success. The ability to successfully implement a plan is not a commodity.
It is imperative that you perform your due diligence when considering a third party logistics provider to determine both their expertise and their ability to execute at a high level. Ask if they have the right people in place. Are those people skilled at their trade and have they performed safely and efficiently in the past? These types of people do not come cheaply. If you’re thinking of contracting with the least expensive logistics provider, you may want to think again. It may cost you more in the long run.
Show me an organization that has a proven record of success and keeps its customers for a long time, and I will show you a logistics provider that may not be the least expensive choice, but undoubtedly the smartest choice.