The Achilles Heel of Logistics

The Achilles Heel of Logistics Ensuring sound financial operations to support the logistics sector


Surprisingly, access to vital financial and performance data is still the Achilles heel of the logistics sector. Despite significant advancements in technology and its deployment, companies struggle to access management information on demand and to exert true financial control across operations. This is largely due to archaic, non-integrated finance, warehouse management and traffic management systems that require much-needed resources to maintain and support, even though they can’t deliver business performance data without a lot of manual intervention. Even then, the information is often doubted and usually too old or too late by the time it is checked. It’s not a good basis for making critical business decisions.

The inability to seamlessly integrate financial systems with specialized or custom-built operational systems such as freight and container management systems is all too common. Without integration, users have no real-time visibility into sources of revenue, expenses, supplier performance and statistical data. There are infinite ways to classify, measure and analyze profitability, including by shipment, vessel voyage, container and bill of lading. To remain competitive, logistics companies must leverage their data and the analyses that can be gleaned from it.

Logistics companies often have a dispersed organizational structure, which makes finance particularly central to smooth business operations. By reviewing and replacing systems from finance outward, financial transparency can be ensured across the entire business and work to optimize profitability and competitiveness. The right financial software can help deliver new standardized processes and total vision across the business.

Challenging issues to improve cost control and efficiency can be addressed a number of ways, such as:

  • Automating existing systems and procedures.
  • Replacing local processes and systems with standardized, centralized ones, for example, through a single global instance of the accounting system, which not only facilitates shared service centers or business process outsourcing, but also supports multiple locations, countries, currencies, languages and operating companies.
  • Improving management information, such as determining profitability by trip, voyage, passage or business lines to allocate resources for maximum benefit.
  • Achieving greater integration, including how a business can overcome the islands of information created by separate operational systems to deliver essential integration with financial information.
  • Coping with the changing global business environment, for example, ways businesses can reduce the risks and maximize the opportunities of doing business globally and address challenges such as currency, language, localization and technology.

Selecting a new finance system is complex. Start by working with your CFO to document key requirements that are not being met or will not be met in the future. Assess whether each requirement has a financial value and if so, what that value is.

Typical requirements include access to useful management information and reporting data. Can you perform analytics and performance reviews in a way that benefits the organization? Another key consideration is efficiency. How quickly can you produce bank reconciliations, annual budgets and month-end reports? How easily can you upgrade or enhance your current application and how reliable is it?

IT, finance and the lines of business should work together to review user benefits and ease of use. Systems should:

  • Support the successful execution of the organization’s business strategies.
  • Enable the finance function, fulfilling a more strategic role within the organization.
  • Support a move to shared services or business process outsourcing if that is a consideration for the future.
  • Be able to scale or adapt to mergers and/or acquisitions.
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