“Amateurs talk strategy, experts talk logistics.”
- Common US Army saying
Barataria has been discussing some of the key skills and perspectives that define the next economy with an eye towards teaching them to the next generation that will need them the most. Cooperation in competition is certainly rising in importance in a higher technology world, as is the need for a flexible workforce and a greater reliance on automation.
All of these come together with a greater need for strategic thinking, and its related leadership models, but are executed with the great challenge of a time when everything moves faster every day – the art and science of logistics.
Logistics is much more than moving stuff around, but that’s the main emphasis.
Logistics is usually defined by the need to move supplies to where they are needed, putting a heavy emphasis on transportation. But there is much more to it than that as skills and workers have to be brought to bear on a project in an organized way that gits ‘er dun.
These skills are taught well by the military, which invented the concept even before it was marshaled into use by industry. It’s also the bane of military operations which require troops to be fed and supplied before they can fight. A great example came during the last Iraq War when an armored division easily took Baghdad with the incredible destructive power of their M1 Abrams tanks, but was soon stuck in place as they outstripped the supply lines that keep the famously thirsty beasts in motion with fuel.
This bridge was completely gone in 56 hours.
A better example with great public spectacle can be found in highway construction. This last weekend the Minnetonka Boulevard bridge over MN highway 100 was removed in just 56 hours as part of a reconstruction and improvement to the postwar highway. In order to do this, crews all had to shut down entrances along the highway, prepare the bridge for demolition, remove the pieces, and clean up the highway. It happened with incredible precision as the workers, equipment, and supplies all moved in a metallic dance of cranes and trucks.
Such operations are quite routine, and happen daily everywhere.
Logistics is, in many ways, nothing more than the execution of a properly designed strategy. As Barataria has discussed before, a strategy is nothing more than a roadmap of the territory to be crossed to reach a goal. In this analogy, logistics is the practical operation of moving across the map from one landmark to the next.
Warehouses like this are simply not needed anymore.
In business, the process is known as “Supply Chain Management”. A modern factory is a dynamic beast that takes in semi-finished goods and raw materials and delivers the finished product to the buyers just-in-time with a minimum of inventory. Quality is actually easier to manage on the fly when materials don’t sit in a warehouse for days as a problem lingers, and the cost of semi-finished goods is minimized. The concept is “inventory turns,” or the total time it takes to go through the plant, and it is usually measured in hours or days, not weeks.
In the ideal sense, a customer might order something online and pay for it before it’s even made, with a factory cranking it out to hit the mail the next day. This turns manufacturing plants into net capital generators based on the float between the time they get the customer’s money and when they have to pay for the goods they used to make it. Capital management is turned upside down – with the right attention to logistics.
Double-stacked containers
What came to define the last 20 years more than anything was the global reach of logistics, most vividly demonstrated by the humble cargo container. Little was made in the US, the world’s largest market, as shipping became easier and cheaper. Cheap labor, defined by both exploitation and currency manipulation, is a commodity.
Yet as powerful as globalism has become, managing supply chains that stretch across the planet while maintaining just-in-time operations has become difficult. Cargo ships are great for bulk products, but they are slow. Personalized or unique items are always more valuable, perhaps moreso all the time.
Along with a general evening-up across the developing world manufacturing has started to pick up in the US – largely to shorten supply chains and take advantage of the efficiency and quality control that they deliver. That cost savings, along with automation, makes the cost of labor far less important than the skills of the workers and the integrity of the supply chain.
Make what you want, when you need it – and get it right to your door cheaply.
What then is logistics? There are many industry publications that get into the details with the precision that you might expect from people who are part of it. In general, it’s a very dynamic approach to project and process management that emphasizes time as much as material flow. The next generation needs to know a lot more about logistics, and outside of the military the techniques and processes are showing up as courses and certifications at the nation’s top engineering schools.
The concepts, however, are the key to the next economy – which promises to move even faster than today’s.
There are many links in this to current news items as well as Barataria posts that cover the subject at hand in more depth. If you have any questions, the links should help answer them. Thanks!
Filed under: Money, People & Culture