Note to CEOs (Part 2): Your Logistics People Can’t Do It Alone. They Need Your Support!

Halliburton's chief executive last week said that in the first quarter he 'learned more about train logistics than I ever dreamed I would.' He might be about to learn even more."

-Wall Street Journal, May 1, 2018

Why would the CEO of Halliburton be receiving a crash course on logistics? Because managing freight costs in 2018 is shaping up to be a very challenging proposition. The rapid rise in freight costs are finally causing CEOs to pay attention to transportation and logistics issues. And the increased attention means that transportation and supply chain professionals are finding themselves under the microscope.

CEOs are asking a lot of questions, and some of them are wondering, “Do we have the right people running their transportation and logistics areas?”

Just the other day I received a call from a friend who is the president of a company that is experiencing the same blown transportation budgets as many others, and he asked me point blank if he should fire his logistics team!

Since I know many of his employees, I assured him they were not the problem. In fact, they are actually quite competent. But there was something else he needed to change. I told him, “Your company is going to continue to have problems until you accept that controlling freight costs is a ‘Top-Down’ proposition. If you are serious about reducing your costs, it starts with you. You need to visibly and tangibly support your logistics team.”

I could say that to him, because we’re friends and he wanted my honest opinion. But I know many logistics professionals would be reluctant to march into their CEO’s office and deliver that message for fear of killing their career.

Allow me to make it easier for you. Here are some practical things you can ask for from your C-Level executives, so they understand exactly what supporting the logistics team looks like. And for you CEOs reading this, take these four items to heart!

1. Own the challenge. Recognize the need to develop and hold to a comprehensive, documented Transportation Spend Management Plan.
2. Provide your transportation and logistics teams with the human and financial resources they need to do their jobs most effectively.
3. Invest in the technology and I.T. support your teams need to eliminate time-consuming and costly manual processes.
4. Use your authority to tear down the silos that are preventing your people from having the intracompany dialogue they need to have in order to address the sales and procurement processes that impact freight costs.

For CEOs asking if it’s worth the investment, bear in mind that Halliburton’s CEO isn’t the only executive suddenly getting an education on the importance of transportation. According to Sentieo Financial Research 148 companies in the S&P 500 have mentioned “freight,” “shipping,” or “trucking” on their earnings calls during the last four months.

If you are a logistics professional and still aren’t sure about talking to your executives, simply send them this blog. Or even better, check out this presentation, Beyond the Perfect Storm, which is designed specifically for the C-Suite to give them an overview of what’s happening in the industry, why it’s happening, and what actions should be taken.

This presentation has been viewed by hundreds of executives over the past month and is proving to be effective at getting teams together to understand the marketplace and brainstorm strategies to help them get their freight costs under control.

CEOs are asking questions. Now you can have answers.

Read Part One of our Note to CEO's series.