Sunday 23rd Oct 2016 - Logistics Manager

Don’t end up on the shelf

Hi-tech logistics is where all the trendy buzzwords come to life. Concepts like “globalisation”, “postponement” and “lean inventory management” are every day considerations – not just discussion points at conferences. In such an environment, demand for skilled logisticians can only increase.

The computing and consumer electronics businesses have a number of defining features: items are relatively small, have a high value, are fairly universal in their uses, and are increasingly the product of large global players. They are also increasingly seen as a fashion item – it’s only the oldest of fogies that have mobile phones that don’t take pictures, surf the net and play MP3s.

Manufacture of these goods has moved largely to the Far East so supply chain professionals need to have the skills to manage extended supply chains in rapidly changing markets.

Wincanton’s specialised business unit, Wincanton midiData, deals with the development and implementation of demanding supply chain solutions for the high-tech industry. It provides a wide range of services including medical equipment, office and IT machinery, printing and automation control systems. Wincanton says that for companies involved in the manufacture or distribution of high tech equipment, the choice of logistics partner is crucial. In many cases the logistics specialist needs to work in close partnership with the customer’s own technicians to manage the last mile and the installation process.

Tom Webber, management resourcing and development manager, Wincanton, says organisations are getting stronger at managing global supply chains. “As it’s a labour intensive sector, there’s always a strong demand for additional talent,” he says. Wincanton looks for people who have a strong commercial acumen, and are client orientated, with good people management skills. The technology within supply chains is becoming more sophisticated and people need to be able to keep up their understanding of it. This very much depends on the type of role. Webber points out that it’s much easier to recruit for junior logistics positions than senior. The people that apply for junior roles tend to have varying degree backgrounds, and can be trained in the supply chain once they’ve joined the company.

But for the more senior roles it’s important they’re able to bring technical experience to the table and have a good track record. It’s also preferable that they have a strong understanding of supply chain systems, and the IT that’s involved in that.

The rapid growth of Asia as a manufacturing centre is having a dramatic impact on supply chains globally. In a report earlier this year, IT research group Gartner said that to stay competitive in the global economy, it was vital that IT organisations implemented a “Chindia” strategy.

“Today China and India are producing some of the world’s best-trained computer science and electrical engineering graduates,” says Jamie Popkin, group vice president at Gartner and co-author of IT and The East. “Far from being simply a source of cheap labour, both countries soon will be able to compete favourably for global business – as India’s IT services firms have done – not on price, but on competence and capability.”

By 2010, Gartner reckons that at least eight Chinese IT brands will be recognised internationally. The world will witness the birth of a real IT superpower if government restrictions are loosened and the Chinese instinctive talent for entrepreneurialism continues to be encouraged.

“Whether China emerges as a global leader in science and technology innovation relevant to the information and communications technology industry is a pivotal issue for you as a business strategist or IT decision maker in Western corporations,” Popkin says. “The outcome will influence which global suppliers can establish a strong presence in China for the long haul and which of China’s strongest domestic companies can compete in international markets.”

One company that has tailored its supply chain to meet these conditions is computer manufacturer Dell.

Michael Dell, founder of Dell said in an article in 2002: “Since the creation of Dell in 1984, we have operated our organisation on the principle that a direct model is best for everyone—tech companies, suppliers, and customers. In manufacturing, a direct model means that we link supply to demand—effectively owning the entire value chain.

“Because we link supply so tightly to demand, we can forecast our product pipeline needs accurately. Essentially, Dell relies on inexpensive information rather than costly inventory. This strategy allows us to offset sudden changes in component prices-a factor that affects the bottom line and speed at which we can market competitively priced solutions.

“From a business perspective, a build-to-order model only requires us to manufacture what we’ve already sold—Dell products never grow old by gathering dust in the plant or in channel warehouses. Our customers live on the opposite end of the direct model equation, where receiving products built-to-order is an attractive prospect because it helps to ensure that customers get the precise performance they want for the prices they pay. No resellers, retailers, or intermediaries inject cost and delay into our sales model, so customers do not have to work around expensive middlemen.”

Dell’s strategy involves assembling products close to the customer, rather than in one of the cheap labour markets of the Far East. While there is a penalty in terms of labour costs, Dell’s business model gives a number of areas of saving – lean inventory management, postponement of assembly until the order is received, and elimination of middlemen.

In February of this year, Dell created a new global operations organisation with responsibility for all manufacturing, procurement and supply chain activities worldwide headed by Mike Cannon, former chief executive of Solectron, as president of global operations.

“As we continue to grow worldwide, it is important that we increase our ability, via the Direct Model, to manufacture close to our customer and fully integrate our supply chain into one global organisation. This will allow us to drive for even greater excellence in quality, cycle time and delivered cost,” says Michael Dell. “We will innovate and adapt our supply chain model to help drive differentiated product design, manufacturing and distribution models.”

Cannon leads a new global organisation that combines all of Dell’s manufacturing, procurement and supply chain activities. Dell has nine manufacturing plants in five countries and will soon add new plants in Poland, India and Brazil to meet the growing needs of customers in emerging markets.

David Richards of Hellmann Worldwide Logistics, says: “The continued expansion of China and the Far East will see a greater need for UK based logisticians to have an understanding of language and culture, as more value added functions are carried out in the lower labour cost areas before being shipped to the UK.

“Environmental awareness and product ‘travel miles’ will also demand a more direct shipping route and we will see more emphasis on green solutions which logisticians will need to be aware of.”

Richards says flexibility is one of the key skills which Hellmann looks for when recruiting. “It is always easier to take hungry, high-energy people from other industries, such as manufacturing, and teach them logistics and freight forwarding, than it is to take a logistician with limited work ethic, and instil a passion for success into them. Additionally we look for new team members who are extremely IT literate and who are at ease when developing solutions and selling their ideas to our customers. Also the ability of our key personnel to build relationships is of great importance.”

Whether or not employers recruit qualified logisticians depends very much on the type of industry, according to Richards. “A lot depends on the industry – automotive for example, requires logisticians who absolutely understand the demands and requirements of that sector. As a company, we have targeted certain key markets and we do have specialists in those fields working for us. However, there are some low-tech markets where generalist knowledge is sufficient, as there are no specific or detailed handling requirements.”

Richards says Hellmann is easily able to satisfy the personal ambitions of its employees, as its logistics product is one of the fastest growing product offerings. “Anyone within the company can, with training and development, move into any business area, providing that timings and the desire for the individual to develop, meet our expectations. We will most likely pull our next product manager from our program manager team, and at grass level we have a pool of warehouse operators who are now ready to take on team leader roles. Likewise, team leaders will move into supervisory roles,” he says.

There’s also been an increase in the number of women working in the sector. Richards says: “We’ve seen over the last few years that more female team members are joining, especially in warehouse orientated roles and customer services. We hope to bring our first female programme manager into the organisation in the next few weeks, however it has been harder to find senior female members of staff. Our split in warehousing is 55:45 male:female, and customer service is 66:33 male:female.”