Logistics audit increases the functionality of processes, by leaps and bounds
Although DYNAMIC FUTURE can prepare a dynamic simulation that is tailored to each company even without a logistics audit, they always recommend it to customers. “It will bring insight, and often an understanding of what logistics actually is,” says Managing Director Jan Šlajer, adding that DYNAMIC FUTURE uses a proven methodology established by the Chamber of Logistics Auditors for these audits
Why do you recommend using a logistics audit as part of the preparation of a dynamic simulation?
Before we start planning and implementing the optimization of business processes, we need to perform a basic analysis in order to understand the processes, and at the same time, look at the company from an outside perspective. Sometimes we discover an area that is apparently not related to the simulated process, but is connected to it, and can influence it. When, for example, we are preparing a proposal for a shipping warehouse, it is appropriate to look not only at the processes in that warehouse, but also the way it communicates with production, how the connection with the warehouse works, what style the pallets are rotated in, and so on. A logistics audit is deeper and more advantageous than a basic analysis.
In your opinion, sometimes companies do not understand what logistics actually is. What do you mean by that?
It happens that when we carry out a logistics audit, we come to understand that it is not good to look separately at the logistics of distribution, especially at the logistics of preparation, picking, vehicle logistics… Internal logistics is often not handled in a standardized way in companies, there is no strategy that would grasp it.
Will the audit direct companies to it?
Quite frankly – a logistics audit will not actually provide them with anything new. Ninety-five percent of companies know everything; we just bring them the information in a structured way. Responsible people look at the company from a global perspective, and suddenly see what needs to be focused on, what needs to be changed. Thanks to the logistics audit, they enter dynamic simulations better prepared.
So if they refuse the audit, do you try to talk them into it?
Of course not. In such a case, we analyze the processes with a generally similar result. But also with the possibility that we will not reveal all of the connections, or that we will find out during the simulations that we are missing important information with which we could be more accurate in our predictions. When we solved the demand forecasting process at Madeta, we found out, thanks to the logistics audit, that in order to carry out production more efficiently, we needed to collect data in a different way than Madeta did. It was necessary to set up an automated process of processing information from the factory so that we could set up a follow-up process and break down the next steps. If we had not done a logistics audit then, we would have discovered the problem only during the implementation of the simulation. We would have had to go back, to find and describe its cause, adjust everything, and only then return to the simulation.
How much time do you need for a logistics audit?
It is usually one month. We come to the company, most often for one or two days, analyze what works and how it works, and ask the management and employees about details. In some cases, it is not necessary to do an audit for the entire company; it is enough to focus on a certain part of the process. Then we want the customer to give us the data. We carry out analyses and go to the company once more. We add information in the next one to two days. Based on this work, we create a presentation with a description of individual processes. We validate them together in order to have a good understanding with the customer. In the last week, we create action plans on how to increase the competitiveness of a specific company, how and what to improve to make its processes more efficient. The output of the audit is, in addition to ascertaining the current state, also a proposal for steps to make that state more efficient. Sometimes it is enough to find out that different departments in the company calculate according to different numbers – planning, salespeople, and production staff work with different data – then it is clear that it is not efficient work.
What is the most surprising thing in companies when you come to present the conclusions of a logistics audit?
I don’t think there will be any big surprises. Usually, everyone knows what doesn’t work where; they “just” don’t make the necessary changes. It’s kind of a habit. It’s interesting how companies think they have a lot of data and very sophisticated information systems. Based on a simple analysis, however, it can be found that they do not use their functions in such a way as to make processes more efficient. On the other hand, they work with a number of supporting tables in Excel. I think it’s always the fault of the companies that implemented the systems. And then also the management of companies, that they manage operatives and don’t emphasize strategic management. I think this is a terrible mistake.
Can you give an example?
Dozens! But, for example, the diversion of production. Production orders reach the workers in different ways, either on paper or electronically. Based on these, they perform the production itself, and so that management knows that “it was made”, they report the manufactured items back. Once per shift, for example. This is obviously wrong for many reasons. If I don’t have continuous information about what and how we produce, I can’t manage anything. It works in such a way that different people call each other at different times, or shout to each other in the hall, for example, to ensure the handling of the pieces that have just been made. Whoever shouts loudest, the handler will get to him. At the same time, it is enough to make a very small change, and the functionality will increase by leaps and bounds.
What methodology does the DYNAMIC FUTURE logistic audit use?
We are a member of the Chamber of logistics auditors, which created a method for a comprehensive and independent diagnosis of the functionality of a company’s logistics system, if I quote directly from their website. A big advantage is that it brings together several dozen auditors with a round stamp who have worked out a huge number of audits. So we can make a benchmark according to a standardized indicator, and document the level of logistics processes in a specific company and a specific field. At the same time, we have a very good overview of how companies in various industries are doing, and we can propose measures that improve the functionality of the logistics system, and increase the company’s competitiveness. And I must add that Petr Jalůvka, Managing Director of DYNAMIC FUTURE, recently became the Chairman of the Chamber of Logistics Auditors. This is not only a sign that we conduct audits honestly, but also a commitment to the further development and improvement of audits to suit the current turbulent business environment.
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