Shortening the logistics pipeline is key

CUTTING CUSTOMER costs is not about cheaper rates, but rather about adding value along the supply chain to create a win-win situation for all involved. “Essentially we move clients’ inventory and we need to do it more quickly and with greater transparency,” says Cargocargo MD Roland Raath. And that cuts to the heart of the matter in logistics terms. “Not only does time represent cost to the logistics manager, but extended lead times also imply a customer service penalty,” says Martin Christopher in his book “Logistics and Supply Chain Management”. “As far as cost is concerned there is a direct relationship between the length of the logistics pipeline and the inventory that is locked up in it. “Every day that the product is in the pipeline it incurs an inventory holding cost.” Long lead times, says Christopher, mean a slower response to customer requirements. “In today’s internationally competitive environment, this combination of high costs and lack of responsiveness provides a recipe for decline and decay.”