Logistics: Right time, right place, right cost

LOGISTICS FOCUS 2011

RIGHT TIME RIGHT PLACE RIGHT COSTLogistics is one of those terms that seems to have a different definition depending on who is asked. In war, logistics can literally mean the difference between life and death as armies scramble to keep supply lines open and troops marching. However, in business, and particularly in the secondary wood processing industry, logistics has its own meaning that has little to do with life and death, but perhaps everything to do with maintaining competitiveness during challenging times.

For Hans-Jörg Heiland, a consultant in the industry for Kraus & Heiland in Toronto, the definition of logistics goes as follows: “It is the whole process of an operation that is measurable, from taking the order to shipping it out, and whatever comes in between, which gets the materials from the suppliers and transfers them into goods for the client.”
For Jim St. Germain, operations and human resources manager for West Bros Furniture in Hanover, Ont., the meaning of logistics might have a slightly different take. According to St. Germain, “Well, logistics is a multi-faceted concept that has applications throughout a business like ours. What we try to do is not only make sure inventory is transformed into finished goods efficiently, but that the service the customer receives is paramount.”
Inventory management
One important part of logistics for the wood industry is in fact inventory management. Just in time (JIT) inventory systems have become standard both in terms of school theory and practical use. However, different economic circumstances might place different kinds of pressures on any inventory system, including JIT. During good times, suppliers at top production may be capable of keeping their customer warehouses stocked for just in time use. During recessions, this process may be more challenging.
However, Heiland doesn’t have much time for discussing the differences between booming times and recessions. According to him, just in time should be used all the time, and there really is no reason for businesses to do otherwise. He says, “There sometimes is a temptation to use just in case instead of just in time. In other words, businesses want to keep inventory in stock ‘just in case’ they need it, which of course runs against what just in time needs to be about.”
Heiland continues, “What we stress to clients, and what has worked in this industry, is maintaining just in time standards as often as possible. It really can be the difference between a business that succeeds and one that doesn’t. By taking the time to evaluate inventory processes, reduce bottlenecks, and create efficiencies in terms of both time and dollars, the client is best served and the business is most likely to prosper.”
St. Germain agrees that a successful implementation of a JIT system is necessary for his business to succeed. However, where St. Germain hesitates somewhat relates to the effort involved in achieving that successful implementation. He says, “We just have so many component parts that go into the making of our product, and they all have different lead times. Getting them all to come together at the right time and place is sometimes like having to use a crystal ball.”
No crystal balls
To take some of the guesswork out of making a good inventory system work, St. Germain says that the company he works for, West Bros, is starting to implement material requirements planning, or MRP, which is a software-based inventory control system used to manage manufacturing systems. According to St. Germain, “We think it is a tool that will add to our ability to predict and establish lead times so that products are manufactured exactly when needed.”
Both Heiland and St. Germain are advocates of using time measurement and motion studies to ensure that the logistics of a company are top-rate, which they believe translates into a more profitable business. According to Heiland, “What a good company does, or should do, is engage in a process where all their processes are measured, in terms of time and cost, so that ultimately everything comes together in the most efficient manner possible. For example, if a business is making a dresser, all the pieces needed to put together a dresser should come in at the same time. You can only do that by measuring the lead times, for example, and adjusting them accordingly after careful study.”
Another point of agreement between St. Germain and Heiland is the importance of labour in implementing efficiencies in logistics. According to Heiland, “The only way a company in our industry can become efficient is by convincing its personnel to be on board. Unless they understand what needs to be done, and are motivated to contribute to improved processes, any manager will have a hard time making it work. It’s about a culture as much as it is about a plan .”
According to St. Germain, making a wood-processing facility more efficient shouldn’t have to mean slashing jobs or cutting the workforce. He says, “For example, we have bought a number of CNC machines over the past few years. However, this has not resulted in a lot of layoffs for us. What it has done is make our operations much more efficient and flexible, so that we’re a lot better at meeting our customers’ needs. And we did this with many of the people we already had.”
“Go local”
When asked about logistical challenges for the wood industry in general, consultant Heiland had a rather simple term to suggest: “Go local.” By that, Heiland means that, whenever possible, wood processing companies should avoid overseas entanglements when procuring raw goods and materials. He says, “Look, Europe makes high quality machinery, and Asia ships materials cheaply, but places like Canada can produce high quality components and products at affordable prices. I think it’s a trend we’re seeing more of lately, and will continue to do so.”
St. Germain completely agrees with this sentiment. He adds, “We can put the same kind of product on the floor alongside something made in China, for example. But what we emphasize is this: What happens if something goes wrong? If you call the company in China, you’re never going to get an answer. I know they’re trying to change that message, but I’m still seeing different. We, on the other hand, genuinely bend over backwards to ensure our customers get what they need when they need it. I think that makes for good logistics.”
Indeed, St. Germain likes to look at both sides of the business equation, so to speak, when discussing the topic of logistics. In other words, for him, it’s not only about procuring materials to make goods, but it’s about shipping the final goods to a satisfied customer. He says, “For example, shipping, trucking, and delivery to the dealerships is a big issue for us. We find companies that provide good service. In other words, that don’t break the stuff half the time. Once we find a good company at a decent price, we like to stick with them if we can.”

Sticking to a formula that works is crucial for logistics to work in a wood processing environment. Although what’s at stake isn’t life and death, like it is with war planning, good business logistics can make the difference between success and failure. By evaluating a company’s processes, and ensuring everything comes together at the right place and time, efficiencies are achieved, costs reduced, profits enhanced, and jobs saved. In other words, taking care of business logistically often means it’s being taken care of logically, too.

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