THE LOGISTICS CHALLENGE TO THE BOTTOM LINE
Written on the 2 July 2015
ONE of the most common problems for SME's is getting the logistics right in the day-to-day running of their businesses to minimise time and maximise profits.
The biggest challenges are most often for companies involved in infrastructure and transport industries.
Collette Hayman is a director of Ani Trans Transport, a specialist in the delivery of a veritable menagerie of dogs, cats, birds, poultry and reptiles in specially fitted air-conditioned vans that service the east coast of Australia.
Catherine Ardi (pictured with husband Matt Brennan) is manager of Toowoomba company Excavation Equipment, an established machinery sales and hire specialist that provides heavy equipment for construction and quarry plant requirements. It also imports and export goods for trade as well as handles land and sea logistics.
Both companies were finalists in last year's Queensland Telstra Business Awards. While they operate in vastly different business sectors with significantly different client requirements, their management approaches and solutions align quite closely.
Good planning is regarded as one of the keys to managing a business's logistics. What are the three most important business factors to consider in any plan?
Hayman: Planning is the most important key to the success of Ani Trans Transport. Timing is one of these key elements, and not only time to plan but timing of the jobs. If the jobs are not carried out in a timely manner, then credibility and reliability is lost. The second key is control. A good plan will help you to control your business now and in the future. The third key is prioritise. A plan will help you to prioritise all the events in the company; prioritise them from most important to the least important.
Ardi: Communication with our team, our advisors and also other businesses out there. This is a key indicator to know what is happening on the ground and within our local and national economies.
Good logistics management should ensure costs are trimmed. What are effective ways to ensure a company keeps on track with its day-to-day operational expenses?
Hayman: The most effective way to keep costs trimmed is to keep track of all incoming and outgoing money. Keep your books up to date so that you are aware of your financial situation at all times.
Ardi: Monthly budgeting is our best way of understanding our costs and how we may need to adjust our spending to ensure our profit margin stays intact. A small investment in quality reporting software to monitor these tasks is another way to keep administration costs down too. It is about working smarter with what we have, not harder and more costly.
What are the best ways to develop and maintain relationships with third party suppliers crucial to the day-to-day running of your business?
Hayman: The best way is to keep accounts paid and be a reliable return customer. They need you as much as you need them.
Ardi: It may sound old fashioned, however just open communication seems to be the key to any successful working relationship in our industry. If we are honest with our timeframes to our suppliers, nine times out to 10 they return the favour which means we have strong transparency of each other's business operations.
What is the single most important piece of advice you would give a company looking to make significant improvements in its logistics management?
Hayman: The best way for any company to make significant improvements is to plan, plan, plan. Obtain customer feedback and act on it and be seen to be acting on it. Customers like to know that the time they took to offer feedback is appreciated, so be visible when making improvements. Let it be seen.
Ardi: Look for ways to diversify your business as our local and international economic environment is consistently changing. Maintain a small but steady income source from one area of your business which can allow you to take well analysed risks elsewhere, which may boost your business expertise.
What are the main pitfalls and issues companies exporting or importing should be wary of and how best can they handle them?
Ardi: Costs and liability. We have a tendering policy when we engage external logistics companies to get every single dollar accounted for before we accept the offer in writing. Before we implemented this strategy, we found it difficult to keep third parties accountable. However this makes everyone work hard to ensure the costs stay the same to continue our working relationship. Insuring goods at sea is also paramount, as one shipment going missing at sea could make your business go under no pun intended as it's such a serious factor to consider.