What you really need to operate in logistics: lessons from a pandemic

Many years ago when I started in this business, it was a common adage that to operate as a freight forwarder all you needed was an office, a desk and a telephone. With the advances in technology, the telephone has been supplanted by a personal computing device of some description, but the necessity for a dedicated office and desk is now questionable. As many of us are working from home due to the current pandemic, how likely is it that the existing way of doing business will endure once lockdowns are lifted?

Just after the UK government advised everyone who could work from home should do so, Ti published some ‘work from home’ guidelines covering good practice, security and courtesy, along with some technology tips to enable robust connectivity. But the great unknown is how many people will discover that working remotely does not have any material impact on their productivity while improving their quality of life.

  • Will the ability to spend more time with family highlight the wasted time commuting to an office to perform tasks that they were doing to the same standard from their homes?
  • Will regular video calls become a habit and consequently change peoples attitudes to face to face meetings?
  • Will the unintended comedy of trying to establish a conference call with late arrivals, technically challenged participants and poor connectivity, give way to less unnecessary calls and more focused interactions with the key participants only – rather than the longer lists of people that want to be ‘seen’ attending specific meetings?

The answer is we don’t know and may not know for a while.

There will undoubtedly be people that cannot wait to get back to their desk in a physical office, either because it was impossible for them to be effective from home, or they are not equipped physiologically to work in a solitary manner. But for the majority, I suspect that they will be happy to continue working in a way that suits them and their paymasters and will probably not mean a full-time return to a conventional office. Clearly, this only applies to activities that involve digital rather than physical operations. Manufacturing, fulfilment and shipping all require significant hands-on work and for the time being, impossible to completely perform remotely. But for many companies, I’m sure they will be evaluating the requirement for physical office buildings that may no longer be desirable or necessary.

Office politics also has a role to play in this calculation, as in many organisations, a persons perceived power and influence is signalled by the size and location of their office. Many of these ‘managerial’ roles evolved over the years as a consequence of information flows and the requirement for the flows to be controlled and managed. If these roles also involved a large number of underlings required to capture, qualify and pass up the tree to the manager relevant information, so much the better. The manager became the gatekeeper to the information, enabling them to grant or share ‘access’ to it, reinforcing their importance to the enterprise. But technology and information systems can perform the same tasks more effectively, much more efficiently and faster than any human. Highlighting the fact that unless an individual is adding value to an enterprise in terms of knowledge or skills, they will be surplus to requirements.

Technology-based knowledge businesses are less hierarchical than traditional business and their flatter structures enable data and information to be shared much faster. This usually enables a more collegiate environment that will improve analysis and decision making. The lack of hierarchy helping the more reserved, but no less intelligent, staff members to be more forthcoming with their insights. They are more likely to be part of a collaborative network of companies that are able to compete with much larger established enterprises, as they will probably be more agile and dynamic in their approach to tasks and challenges.

Freight forwarders have always been information brokers in the logistics universe. Their role in connecting, advising and orchestrating physical flows across numerous parties in the global supply chain remains necessary. But if I were to establish one today, what would it look like?

1) It would not seek to own any physical assets (e.g. trucks and sheds) as the cost of that ownership will always be a factor in designing solutions for customers. The resulting solutions will be compromised by the desire to feed the asset, that may not be the most optimal solution for the client.

2) It would recruit the best people possible because ultimately it will require smart, adaptable and technically savvy employees. They would need to be a blend of deep industry experience, business and data analysts, enterprising millennials who will challenge any assumptions that are not well thought through and a leadership that understands the value of sharing knowledge and leveraging networks and partnerships.

3) The intelligence to exploit the best technology platforms available. They may not need to be ‘owned’, as a smart combination of various subscription services covering planning, visibility (across the whole supply chain and not just transportation), operations and customer support services, should provide enough competitive advantage. A federated approach to application capability will enable frequent additions as technology evolves and the replacement of outdated modules without the cost of complete system replacement. This approach illustrates the transition away from technology being a capital expense (Capex) to the business, towards an operational expense (Opex), similar to utilities such as water, power and telecommunications. The more you use, the more you pay, and when you use less, you pay less.

4) Access to high capacity fibre broadband and network management capabilities that are focussed on delivering secure, seamless connectivity for anyone connected to the enterprise. Also, rather than company-issued devices, many millennial employees will choose to use their personal devices and it will be the responsibility of the company to ensure this is possible in a secure manner.

5) A physical location will probably still be required for formal meetings/presentations and informal social interactions for employees when necessary. This should also be in a serviced facility but on the terms of a short term contract. A physical vault for essential company papers should also be established.

This list is not exhaustive but illustrates the primary ingredients for effective operations. It does contrast with most of the established companies operating today. These companies have evolved over many years into enterprises with asset bases that have an intrinsic value, but are usually inflexible in the face of seismic external events that completely disrupt ‘business as usual’. Although they may have enough resources to get through the disruption, they may be constrained in how they can respond to any new opportunities that emerge subsequently.

In summary, the present extraordinary circumstances will reshape many of the players in the logistics industry. A highly leveraged, asset-intensive company will be vulnerable to any new players able to exploit modern technology and industry knowledge, with personal customer service and low prices. It is a theme we have often highlighted over the past few years as technology transforms the industry. The current pandemic may have accelerated this transformation beyond the point of no return.

Source: Transport Intelligence, April 16, 2020

Author: Ken Lyon