Honest Abe Says "Get Going"

I recently had the reason to travel to Springfield, IL for an unexpected funeral. Having been immersed in the “Land of Lincoln.” I have a renewed interest in the wisdom and insight of our 16th president these days. Particularly, his thoughts on adapting to a shifting landscape:

"Change is the rule of life. Those who expect to live forever in the same conditions must expect to die young."

"Change is not always easy, but it is always necessary."

The economic climate in the United States is always morphing but over the past three years (’21-‘23)… especially so.?In our current cycle we lay witness to:

1.???The rise of e-commerce: E-commerce has grown rapidly in the past few years, and more businesses are competing for the same logistical resources. Players must be able to get their products to even more customers quickly and more efficiently. This naturally puts strain on….

2.???The changing cost of transportation: The cost of freight has been on the rise in recent years, which has put pressure on businesses to find ways to reduce their shipping costs. This has led to an increased focus on efficiency and consolidation in the distribution industry. Which leads to…

3.???The growth of international trade: Despite attitudes of nationalism, international trade has also grown significantly in recent years- which has created new opportunities for businesses. However, it has also made it more complex to manage supply chains and comply with regulations.

These factors ratchet up the urgency for manufacturers to get the number and locations of their distribution centers right. Will businesses have to do a lot of work just to keep up OR can they expect a payback to their optimization efforts? I see payback, with multiple avenues for immediate returns:

• Minimizing inventory costs:?Having the right number and locations of distribution centers can help businesses to minimize their inventory costs. This is because businesses can store their products closer to their customers, which reduces the amount of time that products spend in transit.
• Improving customer service:?Having the right number of locations of distribution centers can help businesses to improve their customer service, delivering more products to more customers quickly and efficiently.
• Enhancing brand image:?Getting the “where” and “how many” of distribution correct can enhance a business's brand image. This is because businesses that deliver on time in full are seen as being more reliable and trustworthy (“Why Brand Image Matters More Than You Think”, Forbes, Oct. 2016).
• Reducing freight: finding the optimal spot within customer volumes should improve turnaround times on trucks, not only saving fuel but potentially reducing the required number of vessels.

For operations that are considering optimizing their networks, I submit the following guidance:

• Do your research:?Sometimes a change seems so obvious it should just be a matter of implementation.?This is a trap. Conduct your research and go through the process to understand the factors that will affect your decision. This includes factors such as the cost of transportation, the requirements of your customers, the growth prospects for the geographical market, and the competitive intensity.
• Consider your long-term goals:?When making changes to your distribution network, keep in mind the long-term play. This means thinking about how the changes align with the company’s strategic plans.
• Get input from all stakeholders:?It is important to get input from all stakeholders before making any changes to your distribution network. This includes customers, suppliers, AND employees. People who know me know my magic word: syndicate!
• Be prepared to adjust:?Don’t paint yourself into a corner. Since the business environment is constantly changing, it only makes sense to stay nimble yourself. Consider non-permanent solutions that allow for flexibility, such as portable storage units or partnerships.
• Be wary of complex mathematical models: Use data analytics to support your efforts, but don’t rely on them to give you the entire answer.?There are many other factors you will need to layer in once you have decided on theoretical locations. Examples include labor availability, access to interstates and feasibility of leases.

Abe Lincoln's words are still relevant today, and they offer valuable insights into the importance of change. If we want to be successful in the long run, we must be willing to scrutinize our positions in the shifting sands around us.

?About the Author: Next Level Essentials, LLC serves mid-size to Fortune 500 companies by driving transformational change, leveraging profit opportunities, and putting structure to problem resolution. We collaborate with organizations to achieve results that result in direct contributions to profitability.?