Lack of internal communication drives up logistics costs, says Virtualized Logistics

News Release Virtualized Logistics ( UK - Corporate head office ) July 22, 2011

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LONDON, 22 July 2011 – Companies are accruing
unnecessarily high costs within their supply chains because different
departments do not communicate across functions, says Tony Leach, Solutions
Director at Virtualized Logistics, a new consultancy set up by logistics
specialists SBS Worldwide. 
 
“Each department is so
focused on its own activity and targets that it does not consider the impact of
their actions or policies on the rest of the company can have further up or down
the supply chain,” Mr Leach explains. “Some are obvious. The purchasing
department bulk-buying to achieve lower unit costs causes chaos for the
warehouse manager who is tasked with reducing inventory.
 
“But others are more
subtle. For instance, a change of packaging – for cost, point of sale or
environmental reasons – has been known to force wholesale alterations in
container utilisation and/or cost of last leg distribution.”
 
He cites another example
where the purchasing team had described a product in a certain way which the
import department then used when selecting a commodity for Customs
classification declarations. This resulted in the company paying higher than
needed excise duties, because another suitable category was not chosen instead.

 
Virtualized Logistics is
dedicated to assisting its clients build effective supply chains to achieve high
performance from strategy development through to implementation. It gets under
the skin of business and re-engineers the supply chain around the business case,
making staff more productive, increasing efficiencies across the business and
enabling organisations to seize opportunities as they arise,” says Mr
Leach.  
 
“It’s all about
communication. You can have the best software in the world to create the most
cost-effective supply chain, but it needs all the relevant information, in order
to achieve maximum benefit.
 
“We must apply business
specific visibility tools that people benefit from as part of the daily
operation. If you can’t pull the data into the planning tools with integrity so
that people trust the data and know that it’s current, they are not going to use
that planning tool.”
 Mr Leach, as you
might expect, advocates the use of advisors such as Virtualized Logistics to
conduct a Supply Chain Health Check. “An independent expert, with no
preconceived ideas and no particular loyalties to one department or another, can
make a huge difference in a relatively short time.”
 
Mr Leach and Tyrone
Omidi, Technical Director, have already been instrumental in designing an
enterprise supply chain software solution for their associate company SBS
Worldwide. This has recently been launched in the book publishing industry,
after in-depth consultation with publishers worldwide. One publisher is set to
save $400,000 on shipping costs this year (see separate case study for
Wolters Kluwer).
 
Steve Walker, Chairman of
SBS Worldwide, says the process of developing the end-to-end supply chain
software in close collaboration with the publishers revealed how important the
consultative process was in developing the ultimate logistics solution – and how
much value his staff’s expertise and knowledge brought to the
process.
 
 “We
know that the supply chain can be used to give companies a competitive advantage
and Virtualized Logistics is the ideal vehicle to help them do that. Then, where
appropriate, the application of systems and the SBS operation can be brought in
to deliver the solution,” he explains.
 
Initially, Virtualized
Logistics will be targeting medium-sized companies, especially those sourcing
from India or China. “We look at their whole business case, not just the
logistics element but where they want their business to go, and align logistics
with that,” explains Tony.
 
“We have been amazed by
how many companies do not really know how much their logistics, or other
processes, cost them. So, of course, they do not know where to start to create
efficiencies. And, needless to say, we want to improve customer service at the
same time.”
 
Unlike most other
consultancies, Virtualized Logistics does not walk away once it had presented
its results and recommendations. If requested, a tailored solution will be
designed and SBS Worldwide will be introduced to implement and operate the
logistics section of the total solution.
 
Steve Walker sums up: “We
already have a proven record of delivering benefits to both our clients and
their customers through this ‘holistic’ approach, so we are sure Virtualized
Logistics will be in great demand for its consultation services.”
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