When you think about the currency of any business, most people will immediately think about dollar bills, and who can blame them? It’s not rocket science; the world revolves around money and the people who make the most of it. However, no one ever said currency only implies cold, hard cash. In every business, there are things just as important as money, especially in supply chain management.
Forward Air CEO Tom Schmitt has worked in the supply chain industry for over 25 years. Forward Air is a leader in the expedited ground transportation industry and offers a multitude of logistics solutions for large and small businesses. Tom joined our Supply Chain Now Radio team for an episode while onsite at EFT’s 3PL & Supply Chain Summit in Atlanta in June, 2019. While chatting with Tom about some of his practices and principles, he mentioned a few that caught our attention that utilize business aspects besides money to obtain profits. One principle is that of the flow of people, service, and profits. Tom believes in putting people first. The people then deliver the second vital principle, which is service. Finally, once the people deliver the service, then you can look forward to profits.
Tom doesn’t stop there with his threefold principles. Another aspect that he works into his business is the three supply chain currencies: money, time, and sustainability. Here are a few insights into his mindset and how he’s seen the evolution of the currencies play out.
In the beginning…
When supply chain was coined about three decades ago, most companies sought to optimize their production on a monetary level. The biggest question asked was, “How can we find the lowest total cost between moving and holding things?” In the beginning, it was about the bottom line. Is that still relevant, today? Absolutely, but it’s not that simple. With the changing consumer culture and technological advancements, sellers had to find a way to optimize their supply chain not just for profit, but for the consumer. So, in the 90’s, players in an increasingly globalized trade scene started focusing on what came to be the second currency: time.
“Punctuality is the soul of business.”
The concept of time in the supply chain industry means a few things. In some settings, it takes the form of speed. Companies must ask, “with one- and two-day delivery becoming universal options, do consumers trust us to deliver to them the products they need?” Companies like Amazon who revolutionized online delivery and eCommerce continue to set the bar for time currency. The fact of the matter is most companies must accept being David and will have to learn how to compete with Goliath. In other settings, time means reliability. Increasingly efficient inventory systems and real-time order tracking make being reliable much easier for most companies. By doing so, the consumer trusts that their needs are being met and in combination with speed, companies can successfully optimize their supply chain for time.
Doing business, the right way.
So, optimizing your supply chain for the first currency, money, is optimizing for the producer. It’s all about the lowest total cost. Optimizing for the second, time, puts the consumer first. It’s about how timely and efficiently we can have a product on your doorstep. Producer and consumer, that’s all that matters, right? Not so fast. The emergence of corporate social responsibility has skyrocketed the third currency, sustainability, into the forefront. Supply chain sustainability is the most recent addition to the currencies. For some companies, doing business the right way for the environment and the people who live in it is now their focus. They have adapted to the current political climate and believe that their efforts in minimizing their carbon footprint are just as important to their business as time and money.
Look no further than a company’s values.
There is no right or wrong way to emphasize or prioritize the supply chain currencies. Each person and organization have their own values, a purpose they believe in, and the propositions they compete with. A company is no different. Tom told me to check various company mission statements. I found a few common themes: “No one beats our price,” “We’re there when you need us,” and “We live and work in the same environment as you.” These statements tell us what the company values. It tells us what they put at the forefront, and often it tells us what currency they optimize their supply chain for.
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