Logistics – the unlikely hero of business transformation
A big part of what I do in my day to day work is business restructuring. Now, in my line of work, there is a lot of confusion over exactly what restructuring involves. A lot of people think of it as a slash and burn exercise where we grab anything of value and sell it off to the highest bidder while the rest of the business goes down the toilet. But, in reality, what it really involves is reorganising the business – its ownership, structure or operations – to make it more profitable and better organised for its future and present needs.
A company that has been restructured effectively will, in theory, be leaner, more efficient, better controlled and better focused on its business. It will have a revised strategic and financial plan, and all of that will often mean that it is worth more should anyone want to sell it.
In my experience, at the heart of this transformation, sits and unlikely hero – logistics. Remember, logistics is not an industry, it is the function of movement. That’s why it accounts for up to 80 percent of everything that happens in our economy and that’s why any kind of business transformation should start with an examination of the logistics of the business.
As I am fond of saying, logistics is where real change happens. Revolutionary logistics solutions have regularly changed the social and economic landscape – think the motor vehicle, printing press, email and, most recently, the cloud.
Logistics technology changes everything. Cloud-based computing has emerged as a kind of digital warehousing, accessible anywhere, reducing the need for physical infrastructure. 3D printing will eventually eliminate much of the global shipping trade for manufactured product, and the continued growth of online retail will continue to knock over traditional supply chains and those who participate in them.
The rate of change in logistics is truly startling, but the point is that those operating any kind of business and looking for an opportunity to transform that business need to adopt a logistics mindset. They need to look at their business in terms of how everything can be moved more efficiently – not just physical goods but everything. They also need to examine the various business functions from a logistics perspective instead of the perspective of whatever the discipline is traditionally called.
Let me give you an example. Is a ‘waiter’ a hospitality worker, a customer service representative, or a logistics manager? The most backward of mindsets would define the waiter by the industry they work in. Someone more progressive might look at them from the point of view of their interaction with the customer and the value that adds. But the most progressive will understand that the vast majority of their job involves moving the orders from the kitchen to the table. They are logistics managers and anything the business can do to make that movement of goods more effective, more efficient and more customer focused will have a far greater impact than the marginal improvements offered by the narrow definitions of ‘hospitality’ or ‘customer service’.
Think about it. Business transformation involves making fundamental changes in how a business is conducted so it is better able to cope with shifts in the environment. In the modern world, most of those shifts are the result of changes in logistics. It makes sense that business transformation is best achieved by realigning the business to a logistics mindset.
First published in the April issue of Prime Mover.