In many supporting parts of a business, Logistics isn’t given a fair shake. If you’re a project manager for an IT or Marketing department for instance, how often do you come in contact with your logistics department. Monthly? Yearly? Never? Yet logistics project management, that is to say making sure your stuff gets from points A to B, is ingrained in almost every project or initiative you take part in.
Think about it: Have any of your projects required movement of people or technology in the last year? Have you purchased hardware from a vendor or ordered a new product line from a company overseas? Did you just spin up a new store or consolidate warehouses?
If so, then you’ve handled logistics project management, you just haven’t necessarily called it that.
Why is logistics project management important?
Ask 3 project managers what the most important part of their job is and one thing is sure: you will get 3 different answers (I can say this as a PM myself!). It’s a result of the term “project manager” encompassing millions of individuals from all industries and experience. No surprise here.
However, what most should agree on, is that a core part of the PM job is to surface the unexpected, hopefully BEFORE is creates scope, schedule or budget issues. This is why logistics project management is important. It is a material cost, that (often times) goes overlooked, and that the right PM can turn into an unexpected budget boost.
“But shipping is a small part of our budget”
This is a phrase I often come across when approaching this subject. This is especially prevalent in large, complex programs where there are huge licensing fees or other costs that seem to dwarf most smaller budget line items.
Now of course all costs need to be put into perspective, including shipping, but if you are looking to increase your ability to improve project delivery, then you need to think outside of the box on this one. Let’s examine a few sample line items:
Even while Infrastructure as a Service continues to increase in popularity, purchasing hardware, especially in large organizations, always takes a huge chunk out of a budget. And in many cases, ordering in bulk is the name of the game. But have you ever taken a look at how much you may be paying in shipping to get this equipment to your location?
One of the biggest mistakes companies can make is to think that the cost of shipping is tied to their contracts and that they have no control over it. Seriously – get out your contract and take a look or pull a recent invoice. I would bet a Chipotle burrito that if it mentioned shipping beyond a simple “Company X will ship product to customer at a fee” that it 1) doesn’t put any limits on your vendor around the costs of shipping and 2) says nothing about restricting your ability to handle shipping yourself.
This concept applies to almost all physical products ordered in bulk. Let’s look at another area:
Another great goldmine for this type of analysis has to do with working with facilities. Depending on the organization, any major change in office space can involve multiple teams, different process owners, and lots of vendors. And in most of these activities are more logistics costs that need to be managed.
New desks and chairs, updated printers, brand new signage for the building – yep you guessed it: similar to our IT Hardware situation, all of these items have hidden shipping costs associated with them.
So what do I do with these costs?
This is the easy part – once you have visibility you can take action. The good and bad of the situation is that you are usually going to fall into one of two buckets: either these costs are already managed by some logistics function, which is unlikely but a positive find, OR (more likely) that you are sitting on a large new budget line item. So now it’s time to do what you’d do with any other cost – dig in!
Shipping is a service, and like other services, you have options. You can shop around, you can negotiate with your vendor, you can engage your logistics team, or you can hire a 3rd party logistics service. The goal is to shine a flashlight on this cost first, and then find ways to increase efficiencies around the spend.
Running projects in today’s global enterprises is anything but easy, but luckily having access to solutions that provide data and information is becoming more common. Logistics project management is an under looked area that can provide huge savings/insight when handled properly. Do yourself a favor and take look, you might be surprised at what you find.