info@operationscontrol.com Prepared by Jonathan Grigg

In Brief: Always take the opportunity to review your operations for productivity and holistic process improvement. Be sure to remember the adage, “Penny wise, pound foolish” when seeking out cost savings. Ensure your operations and your presence of mind are flexible enough to adapt to the changing environment. Courage in the face of adversity will not guarantee success, thought the lack of courage will guarantee an outcome.

The Inevitability of Change – A Logistical History Lesson First Published in MHD Magazine May 2009 as

The Courage of the Logistician

Is it any wonder that, with the global economy doing back flips that business leaders look once again toward Logistics and Supply Chain to ensure survival? Flexibility and cost effective performance has always been the realm of the logistician. It has been this way down through the ages and will continue until the end of time. To explain let me take you briefly on a journey back through some of the origins of logistics. Back before Mobile phones and Computers, back even before the days of the industrial revolution. The time I want to take you back to is around 105BC, the place the Silk Road. The “road” that linked the west to the east for more than 800 years. We speak today of globalization, and some may even think of it as a radically new idea. Truly there is nothing new under the sun. The Silk Road, the name given to a group of trade routes that linked East Asia with Europe. The name implies silk trade took place, but many more commodities than just this were moved. From the raw materials; Gold, ivory, precious stones etc, to finished goods; vases, pottery, clothing and jewelry, the trade was abundant. Product is one thing, but we are here to talk process. The processes and issues facing our counterparts way back when are still present today, they may have had slightly different outward appearance but in the end the same core issues were present. Scrutiny of operations, Risk management, Specialization and finally Flexibility and Courage to adapt, are some of the issues faced both then and now. Scrutiny of Operations From the outset cost effectiveness was a prerequisite for the silk trade route to come into being. Roman commanders, wanted to ensure a fair price was paid for the silk, and so they reviewed the route, scrutinized the operations and conditions and determined that the various carriers were operating with relative efficiency considering the environmental factors. Logistics is an area which will forever be scrutinized, as long as there is business that requires the movement of goods and services, people will always want to know that it is efficient. Get use to it, besides what it mean is that we have the opportunity to constantly be pushed to achieve our best, the continual pursuit of excellence, and if that’s not enough other people will help with some of the investigation work. Risk management Not long after trade began several risks presented themselves to the logisticians. Mitigation and minimization were the charter. Environmental risks were already known and understood, the new risk was that of raiders. Again the logistics team carefully considered their alternatives and while some assistance was provided by the local governments of the day, who had much to loose if the trade route was closed(sounds familiar), the teams determined that mobile defense forces would be required. Costs were increased, margins probably cut a little and risks were managed.

info@operationscontrol.com Prepared by Jonathan Grigg

Again there is nothing new under the sun. Risks will crop up and we will have to manage them no matter what form they take. And I know what you are thinking; yes there will be someone there to scrutinize the changes to operations and make sure that they are still cost effective. Specialization The Silk Road covers some very extreme environmental conditions and while carriers stood to make increased profits the further they were able to move the products, so to their cost and risk profiles changed. Carriers not so familiar with the mountain regions risked losses due to the need for specialized knowledge. As such various carriers specialized in certain sections of the route. By specializing the carriers were further able to drive efficiency into their part of the supply chain (by this stage the Roman empire had collapsed so it was reviewed by other interested parties but reviewed none the less) Flexibility to adapt In the later part of the 7th century the Silk Road traders had another challenge to face; this time, technology. The development of sea trade, safer more reliable sea going vessels, offered an alternative to the land route. Raiding became less of an issue (until pirates got clued in, this resulting in the use of different risk management techniques), cost structure changed significantly as there was no need to feed the vehicles (wind is free, camels cost hey…� ) and less intermediary handling requirements, therefore less fees. The flexible logistician survived and moved to the sea, leveraging their land based operations in connection with the new more efficient sea operations; the inflexible logistician died. Courage This move took courage not because the technology was untested, but because the short term infrastructure costs were so high compared with the historical model. A paradigm shift was needed and then capital was required to keep the ball rolling. This sounds much like the current considerations our nation and industry leaders are working through. What are the most pressing infrastructure challenges that our economy needs us to address. I don’t profess to have the answers though I do know this. Being willing to stand and accept that there is a need for change is one form of courage. And this we have already seen of our political and industry leaders. It is the next steps that will determine the future of our industry. While life offers few guarantees, there are some. The presence of courage doesn’t guarantee success, the absence of courage does have it’s guarantees.