Why Due Diligence Is Essential When Managing Logistics

December 4, 2015 | Charles Bowen

Logistics Savannah

Getting goods from their point of origin to the point of consumption requires an incredible amount of organization, planning and scheduling. This has never been truer than it is today, when goods are imported and exported to and from every corner of the world. In the current environment, retailers depend upon just-in-time inventory and security concerns are heightened.

The Council of Supply Chain Management Professionals (CSCMP) defines logistics as “that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.”[1] Managing everything from handling raw materials, production, packaging, transportation, security to inventory and warehousing is a gargantuan task.

The Importance of Logistics In Today’s Economic Reality

As the effects of globalization continue to be felt, companies are increasingly recognizing the challenges and opportunities that are constantly emerging in a highly competitive marketplace. Excellent logistics and supply chain management are now seen to be a vital part of most any firm’s competitive advantage. On the other side of the coin, poor performance in logistics can be the undoing of an otherwise successful company.

Savannah’s Unique Position of Opportunity

Boasting the second largest and fastest growing port in the U.S., Savannah is uniquely poised to lead the way in the field of logistics and supply chain management. Risk management, however, is going to be the key to success. We looked at the security issues facing the Port of Savannah in a previous blog (you can read it here), but there are more potential challenges to be faced.

A 2013 survey conducted by Deloitte[2] found that 71% of the executives believed that supply chain risk is a significant factor in their corporate strategic decision making. Furthermore, 53% of them found that supply chain interruptions have become more costly and 48% of them do not feel completely confident in their risk management strategies to deal with possible interruptions.

Interruptions Can Have Disastrous Results

One doesn’t need to look too far to find examples of supply chain issues leading to catastrophic results, such as Hershey Foods problems with their warehousing and order management process which delayed the shipment of Halloween product and cost them over $150 million in revenue.

Any logistics manager worth his or her salt will tell you that impeccable attention to detail and the ability to plan for contingencies is an absolute must. This should include continuously preparing ‘what-if’ strategies to minimize the risk and consequences of supply chain disruptions. It should also extend to performing the due diligence required before purchasing and implementing new technologies, investing in new facilities, or partnering with or acquiring other entities as a measure to improve your supply chain. Without including due diligence as part of a good risk management strategy, the consequences could be disastrous.

 

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[1] Source: https://cscmp.org/sites/default/files/user_uploads/resources/downloads/glossary-2013.pdf?utm_source=cscmpsite&utm_medium=clicklinks&utm_content=glossary&utm_campaign=GlossaryPDF

[2] Source: http://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-risk-ripple-effect.html

Topics: Logistics, Port of Savannah