There is a common misconception that accountability enforcement is about punishing people. However, accountability enforcement doesn’t have to be about punishing people. Proper accountability enforcement is about aligning people’s collective efforts to achieve a greater goal for an organization. In order to align people’s collective efforts, certain conditions need to be met for accountability enforcement to produce positive results.
Conditions necessary to enforce accountability:
1. Clearly defined logistical goals
In order to hold people accountable, there has to be a goal they pursue. At the beginning of a month or a week, all team members need to have a goal they are working to achieve. This can example be a productivity goal. The goal must be defined in at least two levels.
2. Operational visibility
In order to hold people accountable, leaders need to have visibility into their operational activities. Moreover, employees need to be able to readily see how much work they are accomplishing and where they stand in relation to their goal. This gives employees a chance to gage their performance and correct it if it falls short of expectations.
3. Informed stakeholders
People need to know how their contribution impacts the overall performance of the business before being held accountable to a goal. Moreover, people need to understand the impact of their actions on their performance for fair accountability enforcement. For example, if an order picker knows how much 15 minutes of idling lowers their productivity, they are unlikely to slack.
Accountability enforcement works best if people clearly understand the performance management system. It is necessary to ensure all team members understand the performance management system used to enforce accountability.
Accountability enforcement doesn’t have to be a witch hunt if you set up conditions that allow people to have better control of their performance. In the long run you get better results if you rely more on positive reinforcement other than negative consequences. Even if you have few stragglers, give them a couple of chances before you unleash negative consequences.
Global multinationals generate a lot of mixed emotions from people. To some, large corporations represent all the things wrong with capitalism. However, we are going to focus on the things which give these companies operational competitiveness.
In logistics it doesn’t get bigger than the likes of DHL, UPS, FedEx, and Kuehne + Nagel. These companies have a global reach employing hundreds of thousands of employees. They have the most complicated logistics networks that move anything from an envelope to specialized heavy freight. The big question is; what do these companies do to achieve operational excellence that allows them to thrive?
Logistics giants invest heavily in technology. They then use technology to create competitive advantage. Technology allows them to automate repetitive tasks, track operational activities, control operations, foresee bottlenecks etc. Moreover, they use technology to quickly solve complex operational problems. Technology allows logistics giants to have well run logistical operations.
Logistics giants always ensure they have complete visibility of their operations. Visibility allows these businesses to grow and maintain their size without jeopardizing control of their operations. This ensures operational reliability.
Moreover, visibility allows logistics giants to generate immense cost savings. This is because visibility helps them remove inefficiencies from their operations. Efficient logistical operations allow logistics giants to be cost competitive.
Logistics giants consistently enforce accountability. Accountability allows for these logistics giants to maintain high operational standards across their entire logistics operations. Consistently enforced accountability reduces the likelihood of operational failures such as accidents, unnecessary downtime, misplaced inventory etc.
To stay competitive, small logistical operations must follow the ways of logistics giants. This can be done by adopting best practices such as technology investment into their operations. Better yet, technology that gives you visibility and control is becoming increasingly accessible to small businesses. Small businesses must take advantage of technology accessibility in order to stay competitive.
What is it?
Logistics visibility is the ability to objectively track and monitor all operational activities within your supply chain network.
Conditions necessary for business growth:
What happens if you grow without having logistics visibility?
Logistics visibility gives you control of your operations. If your business grows without operational control, there is potential for the following to happen:
Having logistics visibility does not automatically set you up for growth. There must be a deliberate effort to use visibility to establish operational control. Complete operational control will then establish conditions necessary to accommodate growth. Logistics giants such as DHL Supply Chain, UPS and XPO heavily invest in logistics visibility because it gives them necessary operational control for growth.
What is it?
Operational visibility is the ability to objectively track and monitor activities within an organization.
What is the connection between operational visibility and costs?
Operational activities make up a significant portion of business expenses. How operational activities are carried out ultimately affect costs incurred by a business. High efficiency operational activities correspond to low expenses. While low efficiency operations are expensive to run.
How to achieve cost control using operational visibility?
• Step 1: Attain objective visibility of operational activities.
• Step 2: Use visibility to develop a thorough understanding of operational activities.
• Step 3: Establish the connection between costs and operational activities.
• Step 4: Use the connection between costs and operations to control costs.
What happens if you don't establish a connection between costs and operational activities?
Overtime, it becomes harder to objectively explain and control business expenses.
What is it?
Operational visibility is the ability to objectively track and monitor activities within an organization.
Why does it matter?
What happens if you don't have operational visibility?
Overtime, controlling operations become increasingly difficult. This leads to;
When should you start to worry about visibility?
Once a business has 40 employees or more, the management team slowly starts to lose visibility. At this point, the management team needs to rely on visibility tools to maintain control of the business.
What is the connection between logistics visibility and KPIs? Visibility is the ability to track activities within an organization. KPIs on the other hand, show performance of an organization. Performance of an organization reflects its activities. If KPIs are representative of activities within your business, then KPIs give you visibility. If your KPIs neglect to show performance in certain areas of your business, then they don't give you complete visibility.
When do KPIs fail to give you visibility?
1. When KPIs neglect certain areas of business. In some cases, businesses tend to assign KPIs only to major parts of their operations. Running entire portions of a business without KPIs limits visibility and control. In such cases, KPIs don't provide adequate visibility.
2. When KPIs are oversimplified/generalized. Sometimes businesses oversimplify KPIs for convenience. However, this can come at a cost of missing factors that influence performance. In other cases, businesses tend to generalize KPIs for all their departments. This is convenient but can miss important indicators specific to one department.
3. When the connection between KPIs and real performance breaks down. In some cases, KPIs don't get changed as a business evolves. Over time the connection between KPIs and real performance breaks down. In such cases, KPIs provide myopic visibility to operational activities.
For KPIs to provide you adequate visibility, you need to peg your KPIs to core issues affecting performance. If not, you at least need to understand how KPIs are related to real performance. For example, cost KPIs are popular in logistics operations. To get the best out of logistics cost KPIs; you need to understand that productivity is the real cost driver and cost KPIs only show the impact of productivity. High productivity reduces operational costs while low productivity has the opposite effect. If your logistics cost KPIs are showing bad results, productivity is your culprit.
1. Visibility can reduce operational costs:
Visibility can help you notice inefficiencies in your operations. Inefficiencies lead to thousands of dollars in unnecessary expenses. Removing inefficiencies reduces unnecessary expenses. Without operational visibility, inefficiencies can go unnoticed.
For example, a warehouse operator can have 15 minutes of unnecessary idle time for every hour of work. Those 15 minutes of idle time can easily go unnoticed in a bustling warehouse. If the said operator gets paid $50K a year, that means $12.5K of their salary was paid for them to sit idle. 10 of such operators could cost a business $125K in idle time expenses. Operations visibility allows you to notice and stop these small windows of idle time. For example, an operator on the clock without any movement of goods or task associated with them can be flagged as idling.
2. Visibility can help you foresee bottlenecks in your operations:
Every operation has at some point experienced a logistical disruption or bottleneck. Such a disruption can either be activities slowing down or operations grinding to a complete stop. When you have a bottleneck in logistics your customers get unhappy. Moreover, you end up spending more to deal with the disruption.
Visibility can help your business foresee and stop a bottleneck before it becomes a problem. Visibility allows you to monitor how fast goods are moving in different segments of your logistics. The logistical segment with the slowest movement of goods usually ends up being a bottleneck. If you notice activities slowing down in one of your logistics segments, you can deploy additional resources to speed things up. This will allow you to avoid a bottleneck before it becomes a big problem.
3. Visibility creates a suitable environment for continuous improvement:
"You can't improve what you don't measure" is an adage that makes visibility necessary for continuous improvement. Visibility allows you to measure the performance of your logistics. Performance measurement creates a suitable environment for continuous improvement. If you don't have visibility, you can't objectively measure performance. Thus, you can't be certain if a process improvement initiative is improving your logistics.
Visibility has more benefits than the 3 above. Visibility can also help improve reliability, accountability and operations management among other things. The most important thing to keep in mind is: benefits of visibility only come to life if there is a deliberate effort to improve logistical processes.
Logistics visibility is the ability to objectively track activities within an organization. The extent of visibility can vary as follows:
1. Complete visibility in which you are able to track all activities; and
2. Partial visibility in which you are not able to track all activities.
Example: Visibility in trucking operations (similar logic can be applied to manufacturing and warehousing)
If you can easily access the answers to the following questions, then you have reasonable visibility in your operations.
1. How many trucks are available for use?
2. How many trucks are on the road?
3. How much weight are the trucks on the road hauling?
4. Where are your trucks heading to?
5. How much time will each truck take to complete the delivery process?
6. How many hours of work is each driver scheduled to work?
7. What is the maintenance history of your trucks?
8. How many trailers are available for use?
9. How many trailers are currently in use?
10. What is the current level of trailers, trucks and cross-dock utilization?
11. What are the operational activities at your cross-dock facility?
12. What is the current level of inventory to be shipped at the cross-dock facility?
13. How much are the operational costs?
14. What are your cost components and their relative size?
15. What is the current performance level in relation to performance targets?
16. How many shipping requests are in progress?
17. What are the details associated with current shipping requests?
18. What are the details associated with outstanding shipping requests?
19. How much revenue is being generated from current operational activities?
Being able to answer the above questions is one step towards attaining visibility. The second step is figuring out the accessibility of operational information. Thus, visibility can also be classified as real-time or delayed depending on accessibility.
Real-time visibility: the ability to get real-time information from logistics operations. The best example of this is real-time information through dashboards. Another example is real-time access to logistical data. Real-time visibility allows you to respond to logistical challenges as they happen.
Delayed visibility: operational information is not accessible in real time. Most logistics operations fall into this category. Delayed visibility does not allow a real-time response to logistical challenges. Even with its’ shortcomings, delayed visibility is better than no visibility.
Businesses should not chase after full visibility without a clear strategy on what to do with the visibility. Visibility is only useful if it helps improve logistics outcomes. To get full benefits of logistics visibility, it needs to be paired with other best practices such as accountability and a culture of continuous improvement.
"You can't manage what you don't measure" is an old adage that is true in logistics. Thus, you should measure and analyze all aspects of your logistical operations.
Benefits of measuring and analyzing your logistical operations:
Slotting is the process of determining the most efficient arrangement of items in a warehouse, which promotes easy access to items that are frequently used. Most examples of slotting have been drawn from kitchen arrangement: We naturally place items we use the most in a close vicinity to where we stand while cooking. This helps to reduce the time and trouble of digging for these items from the back of kitchen cabinets.
The same logic applies to warehouse arrangement. You want high-selling products nearest to the access point in order to minimize travel distance. High travel distance in a warehouse means low picking efficiency, and low picking efficiency means added time in your order fulfillment cycle. Adding too much time on your order fulfillment can affect your customers, especially if it leads to late deliveries.
However, in most cases, poor slotting adds small windows of time to an individual order. Because the added time is short, it usually goes unnoticed. But over extended periods, those small windows of unnecessary time due to poor slotting can quickly add up to a lot of hours. For example, if a warehouse processes 900 fast-moving orders a day, and poor slotting adds a minute to each order processing time, that adds up to 900 minutes spent on unnecessary labor — in a single day. In a year, that translates to about $90,000 in unnecessary labor expenses, and that’s just one of the several expenses you incur due to poor slotting. You also incur the opportunity cost of unnecessary travel time and extra machine usage, further eating away at your profitability.
Below is an illustration which shows how a slotted warehouse looks like.
In the slotted warehouse, all fast-moving products are close to the warehouse access point. This allows pickers to quickly access the products and complete their orders. In the poorly slotted warehouse, pickers frequently travel to the back of the warehouse to access fast-selling products. This adds unnecessary travel time and increases the order fulfillment cycle.
Most warehouses skip on slotting optimization because they don't realize the benefits. Others skip on slotting because they think it is complicated and requires expensive specialty software. But slotting optimization can be done in Microsoft Excel, a common and simple program. The initial set-up might take a couple of hours, but soon after, you can optimize slotting with a click of a button.