Using IT tools to enhance Logistics Decision Making

Kustura Technologies has helped clients implement 9 Box Tools to improve in areas such as Inventory Control, Product Portfolio Health Analysis, Demand Planning, Vendor Risk Analysis and more. Kustura has now developed a 9 Box Tool to analyze and help improve the Logistics function.

As with the other 9 Box Tools Kustura has developed, it would be advisable to use Excel to compile the data and run the analysis for an initial period of time and only after establishing what the possible desired combinations and options should be, should the tool be developed in a more sophisticated and robust media, such as Cognos that would allow the user to select the desired combinations of Logistics’ parameters and based on those selections generate the 9 Box and its secondary files.

 

9-Box-Tool-Logistics-by-KusturaThere are many ways in which the 9 Box Tool can help in Logistics Strategic Decision Making.

Using the 9 Box Tool to classify transportation lanes in relation to their frequency and to the level of expenditure can help decide what lanes should be included in contracts with transportation entities and what should be stressed in those contracts.

 

Lanes that fall in the AL category, HIGH FREQUENCY AND REPRESENT A HIGH % OF TRANSPORTATION EXPENDITURE are those lanes for which we should definitely have contracts in place and where both reliability and cost are of the essence. We should include in those contracts rather substantial penalties for late pick-ups and/or deliveries or refusing tenders.

Lanes that fall anywhere in the H column, VERY LOW FREQUENCY, we might not want to include in a contract and we might want to spot purchase those services taking advantage of uncommon situations, such as a truck having made a delivery and returning home empty and therefore willing to take our load for a fraction of the regular cost of transportation.

Lanes that fall in the CL category, HIGH FREQUENCY AND REPRESENT A VERY LOW % OF TRANSPORTATION EXPENDITURE, are usually local lanes, maybe from a manufacturing plant to a distribution center and vice versa. Since the cost of transportation for those lanes is very low, price should not be the main concern, service should. For example, we might have a contract for 2 daily trips from the manufacturing plant to the 10 miles away distribution center and back. We should be more concerned about those trips occurring without a hiccup, more so than small differences in the cost.

As with the other applications we have used the 9 Box Tool in, also in analyzing the Logistics function there will be exceptions and reasons why our actions should not necessarily follow what the tool is telling us to do. The 9 Box Tool is meant to make us aware of opportunities for improvement and not to replace human thinking.

In a later article I will show how the other tool we frequently use, The Tradeoff Tool, can further help in the Logistics Strategic Decision Making.