JUNE - 20198 MANUFACTURINGTECHNOLOGYINSIGHTSIN MY OPINIONIn Logistics services, the management of capacity plays a significant part in the overall cost profile of the logistics operation. The Logistics CPU (Cost per unit) is often under-scrutinized, and the proportionate relationship between customer demand and actual cost isn't adequately managed. This article focuses on defining a working/operating model for a client and its logistics partners to keep the expenses reduced and to adopt a dynamic capacity profile to the changing demand situations. Traditionally a Lead Logistics 3PL (3rd Party Logistics) company will generate the capacity plan for the fixed assets that it operates and for the variable resources it needs to execute the operations in line with demand profile from a B2B or a B2C operation. This serves to successfully satisfy the required service level agreements (SLA's) that a client requests. A secondary result of this process is to provide the client with a budgetary profile for the Logistics Company to run processes to satisfy the SLA's. However, there is often a miss-alignment in the business drivers between the client and 3PLs, and this can lead to certain behaviors and business rules that prohibit true efficiency realization. A discussion on "Open Book versus Closed Book" contracts may naturally occur when raising this observation, but my experience has shown that inefficiency is inherent to both commercial models. On one hand, an open book means that resources must be produced as a tangible cost to run the SLA's. It does not say that the modeling and business rules applied delivers a truly efficient workforce. Time & attendance Logistics Optimization through Business Process Services.By Ashley Naughton, Managing Partner & Head of Supply Chain Practice, Tata Consultancy Services
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