Companies still Operating with Silos.
Was speaking last week with our QSH&E manager Ellen Schaetzle . Ellen’s background prior to joining Wellington GOC is extensive, worked with a broker, asset carriers as well working with shippers. In addition to talking about QSH&E process to complete our ISO 9001, we talked about her time as a shipper. Ellen mentioned when working in the shipping department how sales and senior teams planned sales and marketing of their products without consulting the transportation team. This unfortunately is still happening in many companies today; ?do shippers still have departments not communicating with one another?
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In 2008-2010 when I started selling freight the market was depressed, sound familiar? ?The company I worked with then and now are true 3-4PL brokerages, they invest heavily in technology, analysts and people who understand selling transportation solutions. These companies have a wealth of knowledge throughout all departments, IT, analytics, dispatchers, customer service, accounting, security and so on. The companies provided services to food companies, electronic companies, pharma, and automotive;?these companies were attracted to my old and new company based on the technology and security applied to systems and movement of freight. ?The company I worked for and work for now had broken down the walls or as we call it today, removed the silos. Collaboration was the BUZZ word in 2008-2012, the reality was it a buzz word or did it create environments where colleagues valued input to create better solutions for their customers.
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In 2012(E Commerce was not strong) the VP at one of our customers was looking to expand revenue and sales. ?The VP of sales and VP or marketing determined the market they would look at was on the West coast. The data they had and reviewed clearly indicated there was a demand for their product in the West. The data also indicated they had similar retailers in the West as they had in the East so they should be able to grow quickly. The sales team was deployed and as per the data the orders came in fast and furious. They started shipping the product to the West coast to all their new happy retailers and consumers.
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The analysts at our company were running monthly reports for the senior team of this large client. When we ran the data on the West coast which was booming with sales, he uncovered a real challenge. The shipments going to the East coast for transportation cost .99 cent per case, all CPG companies measure cost by unit which likely is case/carton level. The West coast cost for transportation was over $3.00 per case or more than triple, the retail price was the same on the West coast as in the East. The cost to ship to the West coast was 75% of the retail value. The solution would have to change to ensure profitability in the West coast. We can address the solution to overcome the challenge, ?now we are addressing the WHY this happened.
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The challenge was created as NO one in sales or marketing asked the transportation manager or team “How much will it cost to ship our product to the West coast?”. The walls/silos existed so they did not collaborate on the overall solution to ensure they could be profitable. In the 90s and mid 2000s companies from the board or senior level provided directions, sales increase top line revenue, increase sales, production reduce cost, transportation make everything work and stay within budget or come under budget to make a bonus. The direction was given; sales did their job they increased sales as directed. Marketing did their job as they assisted sales to enter new markets and drive new sales.? Production did their job and produced all product required to meet the new orders and business.
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The transportation team tried to meet the new obligations; they obtained rates using all contacts and modes available yet could not get rates to meet the target required. When the Director or VP of Transportation goes to the meeting everyone wants to point fingers to ask why they cannot deliver? The answer, they had not been asked to provide costing to ship product to the new customers.? NO one asked them. They had not even been involved until customer orders had been secured, then and only then had they been informed they would need to ship to a new market. The silo or lack of collaboration resulted in all eyes and fingers directed at transportation.
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The VP and transportation team did reach out to our team to look at all options, within a week the two teams working together did find a solution. It required the customer to establish a 3rd?party facility in the West that we could ship full IML loads, inventory close to the customers than deliver LTL final mile. The new solution resulted in the cost coming down to $1.12 per case. The new solution and cost were presented and approved by senior manager, the biggest win for the company IMHO was they removed the silos.
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The reality is shippers are still operating in silos today. Many shipping managers we speak with still today are not consulted on cost or the best way to get the company's products to the market. There is no reason in 2024 to be operating in silos, to not understand your companies’ objectives and goals as teams. The process and cost should be transparent to all stakeholders involved in the profitability and deliverables for the company. Transparency will improve the companies’ culture, services and make the company more profitable.
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Are you still dealing with silos? Do you get to provide your valuable insight and expertise in transportation?
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Let us know how you dealt with silos, breaking down barriers to improve supply chains you work with.
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Thanks for reading
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Director of Quality Assurance
7 个月I so agree Bill, removing these walls/silos promotes a culture of teamwork and brings in amazing creativity for improvement!
Co-Founder & CEO @Mystery Minds | Boost employee engagement with our corporate networking solution. Ideal for leadership circles, young talents, onboarding, ERGs or company-wide.
7 个月Unfortunately, many companies still have silos between their divisions. We use clever matching solutions to bring together the right people in an organization, e.g., for onboarding, skill-sharing, or just breaking down barriers by meeting new colleagues from across the organization.
Shipper Turned Logistics Service Provider / Highly Experienced Strategist / Specializing In Logistics Management, Procurement, and Cost Reduction Solutions.
8 个月I could not agree with you anymore. As the Panasonic of North America National Procurement Transportation Manager, I knew from my in-depth knowledge of logistics operations that I could not?move forward profitably without getting S&OP involved. That's why RGTX Logistics Solutions knows that there is so much more involved than just moving freight. You need to know about new product launches, sales, marketing of such items, product design, product weight, claims cost per product pound, new vendors,?etc. When sitting at the oak table and planning for success, I brought my team in, including S&OP and my carriers, not to talk about rates so they would be informed, and my claim team—you name it—they were there. I overturned every rock. I'm not ego-driven; I am customer-driven by their success. I let my customers speak for my value; it has always been consistent and saved them $millions in attested savings. You must learn to ask the right questions, leading to long-term business relationships. If you encounter separate silo-run organizations, you need to justify why they must be broken?down because they are very costly. I am extremely passionate about what I do.
Owner of Eight Twenty-Eight Consulting LLC | Supply Chain & Process Improvement Advisor & Educator | Podcast Co-Host | Future Doctor of Supply Chain
8 个月In my eyes, silos are the result of a lack of process improvement and incorrect evolution. Now, I say that from a very high level. Obviously there are subsequent issues with silos: lack of communication, lack of cross-functional training/knowledge, things falling through the cracks... but when you approach it from a process improvement point of view, these issues with silos become visible. That's because process improvement isn't simply looking at the activities of a process. It's looking at the activities, systems, and stakeholders involved to find gaps and inefficiencies. I speak from experience on dealing with siloed organizations. I worked for an organization that operated very strictly within a siloed environment. This led to so many errors, delays, and things falling through the cracks. The problem within these organizations is that improvement initiatives are often focused on the wrong things and not at the root of the issues; which is the siloed environment itself.
Logistics Guru
8 个月Your right Bill, too many carriers and brokers do not know what the left hand is telling the right. Ironically, the blame is put on the lower and mid level associates. It all trickles down from the top however.