To begin, these cases of
logistics-slips in a project
will show the vital role of
logistics in a project:
- Overseas consignment
'waylaid' or stranded during
voyage
- Pirates hijacking the cargo
during voyage
- Railway beam not cleared at a
railway crossing due to wrong
consignment height
- Material sent to site A of the
customer, instead of to Site B
of the same customer
- Vendor selling customer A's
long-lead equipment to
customer B for higher price,
immediate delivery
- Wrong material on time or
right material delivered late.
Logistics is not just the
movement of goods. Logistics
is wider than physical
handling of goods. Logistics is
"delivering the right thing, to
the right receiver, at the right
place, on right time". For
projects people, logistics is
vital for success. Project is a
time-bound activity. All things
must start and finish on
schedule. Any slip anywhere
affects the schedule.
Generally project
procurement people specify
date and place of the delivery
and then forget the whole thing.
The project manager (PM) at
site has no control of the goods
movement and just awaits the
great arrival! Expediters chase
the goods with weak overall
concept of the chain.
One way to avoid slippage is to
ensure that the information flow is
maintained, especially the
purchase orders. On many
projects we had followed this
practice with good results.
Generally the procurement people
distribute the POs to limited
agencies. We increased the base. A
PO would go to the supplier,
inspection, our own accounts, the
supplier's accounts, the site, the
erection contractor etc.
Another efficient way to ensure
the deliveries are right is supply
chain management-"the
management of the
interconnected agencies that are
involved for reaching the
equipment to the end user". SCM
is a cross-function approach. It
can include even the managing
of the movement of raw materials
into the supplier's organisation,
the internal processing, and the
movement of finished goods out
of the supplier's workshop. The
purpose of SCM is to improve the
collaboration among the
partners. This improves the
visibility of the equipment
movement and its speed.
There is one more important
factor. SCM needs a shared
database of the transportation
strategy, including the
frequency and the routes.
Importantly, it also includes the
method of payments, because
money makes things move. The
'Milestone' form of payment is
an effective and recommended
way, because there is an
incentive to reach a milestone
on time or earlier. We had good
results of this form, as a buyer
and as a seller.
In place of several agencies,
there is another centralised
method of logistics: One Point
Mode'. In OPM, the follow-up is
centralised. There is only one
agency that handles the
equipment movement from the
procurement people's PO to the
PM. Advantages: single-point
contact for the sender, buyer,
inspection etc. The logistics
agency has an effective control
on the movements and it knows
the goods status continuously.
The OPM is cost-effective and
efficient. In western countries,
the OPM is a trend. This needs
to be done in India. On a
project, several senders are
involved and all activities are
time-bound. All that the PM has
to do is to call up that OPM
agency and know everything.
Logistics and SCM are
important in India because of
the country size, geography,
population differences, vendor's
uncertain reliability and
dependability, inadequate
transport facilities, bad roads
etc. Also, logistics is a high cost
component.
Above all the project is a
time-bound activity and
anything that will 'save' the
schedule is welcome.