Turds of Wisdom

Recently, I was reading a blog post that sent my blood pressure skyrocketing and reminded me that “best practices” are like bananas – they ripen and then stink in short order. What bothered me most was that the “expert” advice in the post was dated and anyone who heeded it would end up being just slightly better than today’s average fool. My conclusion is that best practices should be thought of as temporal. New business processes and technological changes are continually obsoleting what was once considered “best”. The lesson for supply chain and logistics professionals is that resting on the merits of your last “best practice” success may have already or shortly put you behind the competition.

Let me explain. In the case of the blog post I mentioned above, the “expert” was proposing that a best practice was making sure that trucks are sent out fully loaded with as little empty space as possible. When logistics technology was simple, this was as good advice as any. The problem with this “best practice” is that it is focused on a single metric, capacity utilization which is an indirect measure of business performance. If you focus on utilization, you could end up spending all of your full truck load savings and then some, driving all over the place to unload that full truck. Today’s better practice is lowest total delivered cost which is based upon the direct business metric. Lowest total delivered cost balances utilization with the cost to deliver all of the deliveries that could go in the truck. A lowest total delivered cost focus can be counter intuitive. For example, in the case of a fleet owner, it may be more cost effective to park a truck and use a contract carrier than incur high costs to drive to some remote customer location.

Geoffrey Moore, the technology marketing guru wrote a book called “Living On the Fault Line” that does a great job of summing up the challenge for supply chain and technology professionals. The basic context behind the book is the advances in technology diminish capabilities that were previously considered differentiating. You need to understand this march and continually obsolete what you have done before someone else does. The same can be said for supply chain or logistics business processes. Look at what happened to Dell. It dominated the PC market with its superior build-to-order supply chain model. Eventually, the competition found other ways to compete, while Dell largely stood pat. Over the last number of years, Dell has struggled and recently went private for a fraction of the value it had during its hay days.

So what is your “second act”? How are you continually challenging the best practices of your organization? Do you know if any of your best practices are in fact leading edge or current? Here are a couple of examples of ways to know where you stand. First, how many of the operational metrics you use to make decisions are indirect indicators of business performance? Second, what do your customers say about your supply chain or logistics performance? Is it the reason they buy or buy more from your company?  Third, how long have you been operating the way you are today? If your business practices are based on decisions made in the 1990s or earlier you stand a good chance of being a supply chain laggard.

The term “best practice” can be like the siren song, an alluring qualifier that is as likely not be true and certainly not permanent. What are you doing to better your current best practices? How do you know if you have achieved “best” status? Let me know.