Business Performance Management: A System to Achieve Success Through the Consistently Increasing Challenges of the Logistics & Supply Chain Industry

Joshua Gore, Director of Sunland Management Solutions, Sunland Logistics Solutions

Third-Party Logistics (3PL) is the lifeblood of all supply chains, ensuring the seamless movement of goods from manufacturers to consumers. Effective Business Performance Management (BPM) is crucial as 3PLs expandinto regional, national,and globalmarkets. This article explores BPM within the 3PL industry by taking a look at how Sunland Logistics Solutions monitors its five major Management by Objectives (MBOs) which are aligned to the key components of its business system.

Sunland’s Business Performance Management departmentutilizes the cloud-based project management platform / CRM platform, Monday.com, to track and monitor MBOs across its network of warehouse operations and customer accounts in real time, while managingseveral of the industry’skey challenges.

1. High Performance Team (HPT):

A High-Performance Team is the critical starting point for success in the 3PL industry, exhibiting synergy while working towards a common goal. 80% of success depends on the Team and 20% on Process & Technology. By establishing precise and measurable MBOs for specific key performance indicators (KPIs) such as Injury Frequency Rate (IFR) reduction, Sunland can prioritize employee safety and well-being, fostering a safer workplace environment. Simultaneously, tracking Employee Retention allows Sunland to measure employee satisfaction, engagement, and long-term commitment.This dual approach not only reduces workplace injuries and costs but also retains skilled talent, resulting in improved safety, lower absenteeism, higher team morale, and a stable, productive workforce.

2. Process Leadership (PL):

Efficient process leadership is crucial for smooth logistics operations. Utilizing Business Performance Management (BPM) to monitor PL (MBOs) Process Execution and Process Auditingwill yield significant benefits from workflow efficiency, error reduction, and cost reductionensuring compliance and quality control. Process documentation and process auditingdrive standardization of key processes to guarantee consistency and foster continuous improvement that will make Sunland more agile inrespondingto its customers’ evolving needs and providing scalable solutions.

3. Advanced Technology & Innovation (ATI):

Leveraging Business Performance Management for Advanced Technology & Innovation MBOs leads to a better understanding of both internal and external customers. Clear Internal Surveys MBOs measure employee feedback, fostering an innovative workplace culture. Simultaneously, tracking Customer Survey feedback aligns technological advancements with stakeholder needs. This integrated approach enhances responsiveness, encourages innovation, and results in higher customer satisfaction, loyalty, and sustained growth.

4. Quantified Value to Customer (QVC):

3PLcompanies aim to deliver quantifiable value to customers, and BPM is essential for achieving this goal. Sunland measures quantifiable MBOs,such as Annual Customer Satisfaction Surveys, toenable systematic measurements and responses to customer feedback, aligning products and services with expectations. Simultaneously, they track Customer Retention metrics to enhanceunderstanding of loyalty and long-term engagement.The result: enhanced satisfaction, brand loyalty, and an improved“Servant Leader” mindset. BPM keeps Sunland agile and customer-centric, driving sustainable growth by delivering quantifiable value to customers, especially in Sunland’s case as its company purpose is “We help our customers do what they do…better.”

"Efficient Process Leadership Is Crucial For Smooth Logistics Operations"

5. Financial Performance (FP):

Maintaining sound financial performance is essential for sustainable growth and the business health of all stakeholders. Sunland’s BPM focuses on EBITDA and Business Growth metrics. Clear and measurable EBITDA MBOs prioritize profitability and operational efficiency, while tracking Business Growth metrics provides insights into market expansion and competitiveness. This strategy fosters financial sustainability and growth, ensuring both short-term profitability and long-term viability, allowing swift adaptation to economic shifts and market dynamics.

Challenges in the Supply Chain Industry

There is increasing Volatility, Uncertainty, Complexity, and Ambiguity (VUCA) in today’s supply chains being compounded by challenges around labor shortages, shifting geo-political dynamics, environmental concerns, and increasing costs. With so many impactful variables outside a business’ control, it is essential to focus on what is within its control like an effective process for Business Performance Management that is aligned with its organization’s strategy.

1. Labor Shortages and Wage Discrepancies:

Hiring teams use BPM to identify labor shortages' causes and locations, enabling them to concentrate on recruiting and retaining skilled labor in key markets. This ensures competitive wages, enhancing employee retention and lowering recruitment and training expenses.

2. Facility Lease Increases:

Escalating lease prices for warehousing and transportation facilities have added to cost pressures across the supply chain.A good BPM department should always know when a lease increase will occur, ensuring that all escalations are covered in an operations budget planning cycle.Whenever increases are missed, P&L’s canbe negatively impacted.

3. Contract ManagementChallenges:

Contract management can become complex with evolving market conditions and client needs. BPM enables companies to proactively oversee contracts, allowing sufficient time for preparation, scheduling, and communication of renewals and COLA increases to customers. These challenges demand careful management and can significantly affect profitability if mishandled.

Effective BPM is a cornerstone of success in the 3PL and logistics industry. Leveraging BPM tools to track and observe MBOs enhances a company's performance and competitiveness. Adapting to ever-changing market conditions by utilizing BPM tools and adopting a customer-centric approach positions logistics companies for sustainable growth and success in a demanding environment.