Logistics’ role is increasing

02 May 2005 00:01  [Source: ICB]

Logistics will play a central role in improving competitivity, according to David Garman, chief executive officer of TDG.

‘Logistics must be seen as a source of competitive advantage and not as a cost to be cut,’ Garman told delegates at last week’s Logichem meeting in Antwerp, Belgium.

Historically, logistics has been seen as providing a supporting role. But Garman said that the emphasis is changing and logistics professionals are becoming increasingly important and influential.

However, as the supply chain plays a greater role in improving efficiency, managers are facing new challenges. The interface with outsource providers is currently sub-optimal, with transport capacity running at less than 25% utilisation, noted Garman. ‘You would not expect a plant to operate at those rates,’ he commented.

In addition, the tendering process for outsourcing contracts is very ineffective and costly. ‘Unuseful (sic)’ legislation, such as the Working Time Directive, has not helped either, with related costs in chemicals nearly double those of the consumer sector, as chemicals is heavily biased towards outsourcing.

For Garman, selecting a strategic partner and extending the relationship into new areas of opportunity is an effective way forward. In his view, more sharing of forward strategy would make a huge difference in opening up fresh opportunities.

Managers are too focused on the short term and key performance indicators, Garman said. He added: ‘Managers must have vision and not be managed by numbers.’

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