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Managing logistics chains effectively

PR-Logisticar's logistics management system – Logisticar – is based on a refinement of ABC logic, which has been applied to analysing sales, purchases, company management, inventory management, production management, personnel time management, and customer inventories.
PR-Logisticar Oy Ltd.

Logistics – covering information, material, and monetary flows from primary suppliers to end-customers – is a key issue in terms of business success today. Optimally managed logistics provides an essential competitive edge. Not least because logistics, particularly in the areas of purchasing and inventory processes, involves such large amounts of money. Finnish industry alone spends some €50 billion on purchasing goods, and monetary flows are ever greater in importing and retailing. Inventories tie up capital valued at some €20 billion. By managing material flows, production control, and purchasing more effectively, industry can make significant savings.

The key to more effective logistics is a steering system that is capable of measuring and managing the entire supply chain. Based on ABC logic and Pareto's 80/20 Rule, and the realization that a small component of a larger group can have a disproportionately larger impact, the Logisticar system is designed to do just that. ABC logic has been further refined in the Logisticar system, and applied to analysing sales, purchases, company management, inventory management, production management, personnel time management, and customer inventories.

Clearly defined targets and key figures

The Logisticar system comprises data warehousing, real-time analysis, simulation tools, and efficient reporting. The Logisticar data warehouse collects all the strategic data on inventories, purchases, customers, sales, and production required to calculate reports to support efficient steering.

The deployment of a Logisticar system always starts with an analysis of a company's current status, which is then discussed with the customer. The outcome of this analysis and discussion serves as the basis for defining a customer's logistics strategy and purchasing policy, and establishing targets and key figures.

Specific goals are set with the customer for IT inventory turnover, availability of stock, service levels, routines for purchasing and sales, increases in sales and profit margins, as well as customer satisfaction and return on intellectual capital.

Based on results

The Logisticar concept comprises two integral parts: software and extensive training. Step-by-step training starts with a group session, and advances to personal and practical software tutoring. The role of training in reaching set targets is essential, as no software, however powerful, can change a company's key figures or improve its profit margin on its own – only users can do that. User training is supported by Logisticar courses in purchasing, consultative sales, inventory control, and company management.

Logisticar's philosophy is that its software must yield a tangible financial benefit for the customer. This is reflected in Logisticar's commitment: customers can acquire the Logisticar system by paying a fixed fee or for free, if set targets are not met 100%, or a combination of the two. This type of commitment, with the vendor making a 100% guarantee of this nature, is unique in Finland, and in Europe.

A number of major companies, in areas such as retailing, importing, and manufacturing, are already benefiting from the Logisticar system. In Finland, these include Ensto, iittala, Kalmar Industries, the K-rauta retail hardware chain, Rautakesko, Onninen, Outokumpu Stainless, Porkka, and Finland Post. Outside Finland, system users can be found in Sweden, Estonia, Russia, Latvia, Poland, Austria, and France.

It's all about simplicity

“When aiming for new levels of effectiveness, tasks need to be carefully prioritised, and Logisticar is just the right tool for this,” says Seppo Ojaluoma, Business Development Director at Onninen, which uses the system to manage its logistics in Finland and Sweden.

“Based on ABC thinking and its roots in the Pareto 80/20 Rule, Logisticar highlights the fact that 20% of customers often bring in 80% of sales. Logisticar clearly brings out issues like this, and forces one to recognise facts.

“The guiding principle of ABC thinking is that everybody in an organisation – from the shop floor to directors – must be trained to understand it and its role in business development, and apply it. This has frequently enabled brilliant new ideas to come up through the organisation'.

“When people are first introduced to ABC thinking, one often hears the question: How can something so simple actually work? Real-life examples help them see what it's all about, though, especially when the results start coming in.

“Logisticar presents facts that decisions can be based on. It helps redirect attention to what's really important, enabling you to reduce the time spent on routines. ABC thinking really improves availability, service performance, and customer service, and generates greater efficiency and customer satisfaction. It really is that simple,” says Ojaluoma.

> Petri Riski
(Published in High Technology Finland )