This post is based on material from the 2013 Spend Matters / Procurian research brief: Logistics Category Perspective: Strategies and Trends in Trucking and Intermodal (free, registration required). Contributors from Procurian include Ed Sands, Global Practice Lead-Logistics and Scott Youngs, Logistics Category Management Group Leader. Spend Matters contributors include Jason Busch, Executive Editor, and Pierre Mitchell, Chief Research Officer.
Sizing up the sophistication of a logistics procurement team is relatively straightforward. There are really four questions in particular to consider that reveal how sophisticated the organization is. These are the questions:
- Do they have current category plans?
- Do they help manage the budgets within the department?
- What is the sourcing strategy? Is it strategic or just tactical (e.g., when rates are going up)?
- What are internal goals owed to organization?
Beyond this list, which the Procurian team created to effectively and quickly gauge transportation maturity, I would suggest that it is relatively easy to also apply these strategies to other categories. But from a logistics perspective, they are quite powerful in collectively assessing the relative strength of a team. For example, a category plan will tell you whether or not they are thinking about transportation spend management outside of tactical event-to-event savings and whether there is a longer-term process and strategy in place. The same applies, of course, to whether a sourcing strategy is tactical or strategic (but even tactical sourcing can bring material benefits when executed effectively, given volatility with fuel/energy and capacity).
Perhaps the most important of all in gauging maturity and contribution to an organization’s strategy is whether a logistics team, as noted above, is contributing to the internal goals owed to an organization. These might include, for example, improving end customer metrics (e.g., fulfillment, on-time-performance, quality, total cost, etc.) based on the contribution of logistics sourcing to overall efforts.
Without these types of goals in place, procurement organizations will always optimize transportation metrics in a bottom-line vacuum that does not necessarily take into account how logistics can be a strategic advantage outside of just managing cost better than the competition.
For further analysis of this topic, download the complete Spend Matters and Procurian research brief today: Logistics Category Perspective: Strategies and Trends in Trucking and Intermodal.