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Managing logistics through a downturn

Many executives responsible for logistics are feeling battered and bruised right now. Hit by one event after another, there’s little time to regroup or reflect, and the top of a corporation can be a lonely place. Profit warnings, share price pressures, mergers, reorganisations, relocations, disposals, painful layoffs and great geopolitical uncertainties can sweep away even the most comprehensive logistics strategies – and that’s despite outstanding management over many years.

These are exceptionally difficult times and it has never been more important to connect logistics planning to executive board thinking than now. It’s easy to lose sight of the bigger picture in the rush to cut infrastructure cost and conserve cash. Hopefully you succeed in protecting the business, satisfying shareholders and analysts, but what about capacity and flexibility, morale and momentum?

To be a logistics winner in the next three years you need to use the downturn to reshape for growth, propelled by an unshakeable conviction that your mission is still important, that more prosperous times lie ahead, and that in some way your company infrastructure is helping to build a better kind of world. Your own passion for running the race matters most of all in a downturn when people are insecure, see only savage cost savings, and loyalty is tested.

Your corporation’s future will be dominated by six factors, or faces of a cube, spelling F U T U R E. So if you are going to cut, then cut carefully for healthy fresh growth.

Fast

The world is changing faster than boards can think, and far faster than logistics can respond. Gone are the days when grand plans could be made with confidence for a post-merger HQ. In today's economy you may be overtaken by further consolidation and perhaps even by the entire reorganisation of the corporation. We have to think differently. Survival means scenario planning as far as possible before events happen, with rapid response plans, making every logistics dollar count. Market research can’t predict the future in a rapidly changing world – it just shows what consumers and internal clients think. We need bifocal leadership: clear short-range thinking and sharp action now to steer through the downturn, as well as accurate vision and steady nerves to see beyond.

Look out for the next big wave of techno-change which will profoundly alter office and manufacturing requirements as well as client relationships – we are still in the first day of the digital age, and many corporations are distracted by other pressures. Who’s watching your radar screen? Where does your own team get fresh insights from? Who’s bringing external perspectives to protect you from institutional blindness? Who’s watching your own back? New technology is dramatically speeding up back-end integration of incompatible IT systems but this will continue to be an area of major concern and should be at the centre of thinking about every new IT project.

Urban

Big demographic and social “lifestyle” shifts will impact your logistics requirements in this new decade with profound changes in working practices. Every aspect of life is being transformed with fickle fashions, ageing but wealthy populations, retired people inheriting trillions of dollars, aggressive war for top talent, female consumer influence, designer biotech life, human cloning, medical breakthroughs, virtual relationships and a host of other factors, including the huge untapped challenge of megacity markets in emerging economies. These society changes are fundamental to the future shape of your business, in many ways indirectly because they will alter how people think and feel. Soft factors may create your greatest new business opportunities. But are your teams gearing up to exploit them?

Tribal

Although the world is increasingly globalised, tribalism is the most powerful force on earth, when a group of people identify only with each other. It’s more powerful than nuclear bombs, or the combined might of the US, Russian and Chinese military. We see it around the world in 100s of tribal conflicts and tensions and in recent events, fuelled by growing global inequality and anger at perceived injustice. Attention will be focussed around the world on these issues. Terrorism will continue, but will not win. Individuals will respond by sacrificing personal liberties for increased security, and by resolving that normal life must go on.

Yet tribalism is also a huge positive force. It’s the basis of every family and every neighbourhood. Tribalism makes us proud to be who we are, and gives us national identity. It also affects us all through niche branding and product loyalty: every one of your successful products creates a tribe and every successful organisation is one. Tribalism is the secret of your strongest teams, corporate character, people movements and product lines. The key to all successful mergers and leadership is harnessing tribal culture. Team leaders manage up to twelve others, but tribal leaders create dynamic people movements of more than 100,000. Are you making tribalism work for you, rebuilding group confidence and a sense of belonging at a time of workforce reductions?

Are you paying enough attention to tribalism when planning and running global operations? The current geopolitical situation makes it even more important that all operations on the ground are conducted with utmost sensitivity to local customs and culture.

Universal

The opposite of Tribal is Universal. Globalisation, the emergence of the global super-brand and huge pressures to manage global logistics operations more effectively, using new technologies, emergence of virtual teams and companies.

We are still playing games with globalisation. Many executives I know are already spending more than six weeks a year at 35,000 feet, and it’s no fun anymore. Successful multinationals need totally new management models to grow beyond constraints of constant air travel to meetings. Daylight is now the biggest barrier to the global village – because people have to get out of bed to attend virtual meetings.

The future of Europe – growing soon to over 22 nations – will be dominated by conflict between two equal and opposite forces: tribalism is causing many European countries to fragment, and universalism is welding these same fragile nations into one super-state. It is strange that countries are rushing into total one-ness at the same time as neighbours kill each other for speaking with the wrong accent or language. Low-grade ethnic cleansing by intimidation and violence is a daily reality in Europe – not only in bits of former Yugoslavia but also in the UK (Northern Ireland) and elsewhere. Tread carefully in pan-European business deals. It may all look Euro-ised from the outside, but beneath may be pure tribalism.

Globalisation will dominate the shape of all large corporations as competitors realign through rapid mergers, acquisitions, disposals or new partnerships. However reactions to globalisation will grow and require careful handling. Powerful global structures will emerge and affect your international interests. Are you being radical enough in globalising your operations and structures?

Radical

Few of your workforce or clients are likely to be active members of political parties, compared to the vast numbers who have signed petitions or campaigned for causes. With the death of left / right politics and weakening of “big” government power, corporations are increasingly vulnerable to attack by single issue groups. Examples include the war against terrorism, animal welfare, and child labor in the textiles industry. As Swiss banks found with Nazi gold, Shell found with oil rig dumping, Nestle found with baby milk products, Nike with factories in emerging nations, and MacDonalds with beef-contaminated French-fry oil in India, these issues strike hard and their impact can be hard to predict. Clear policies, strong values and rapid media response teams are vital.

Logistics is particularly vulnerable to single issue campaigns - for example on the environment. Are you monitoring this area sufficiently?

Ethical

What kind of world do you want to live in anyway? And what about your children or grandchildren? Whenever I talk to CEOs about the future, they end up talking about the personal concerns they have, their values, priorities, ethics, motivation, and spirituality – and all these will be key issues for large corporations, even more so following recent events.

The heart of our society has always been stirred by more than money, but even more so today. For example in countries like the US 60% of adults and teenagers give time to causes they believe in – an average of 200 hours a year each, equivalent in value to 4.5% of GDP or 12% of the Fed budget. We’ve seen a huge increase in a decade. You’ll learn more in five minutes asking a colleague what organisations or causes they give time to, than in five months working in a team planning a new office, call centre or factory.

Retaining and motivating top executives will mean far more than money in future. Personal work motivation has already changed dramatically in the last five years and will continue to do so. It’s much deeper than work-life balance. The key to capturing people’s passion will be showing how your operations and infrastructure builds a better kind of world, not only for individual people and their families, but also for the community and for the whole of humanity. Then people will be proud to work for you, and to by your products and services. How do you measure up?

And finally…

The six faces form a cube but the cube is weighted. Most logistics executives see the world mainly as Fast, Urban and Universal – but how many people in a nation need to be very Radical, Ethical and Tribal to change your world? Fortune 500 CEOs and Chairmen usually tell me just 0.5-2%. And just one shareholder on a mission to change a corporation can be enough to keep a CEO awake at night before an AGM. You can’t keep all the faces in view at once so… keep turning the cube.

Article written in 2002.

 

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