Logistics and the Corporate Battlefield
Politics prevent teams from accepting logistics as an equal partner; businesses could take a lesson from the military

by Damon Schechter

With the war on terror in full swing, the American military is taking a lesson in logistics from the success of Operation Desert Storm. American business still needs to heed that lesson.

In 1991, the U.S. VII and XVII Corps secretly moved 150,000 troops across the forbidding Arabian desert. When they arrived, most of their advanced weapons, ammunition, and supplies were already waiting for them. Simultaneously, the U.S. 82nd Airborne Division rampaged 250 miles across Iraq, with no hitch and with ample support. Both at his famous press conferences and later in his memoirs, Norman Schwarzkopf called Desert Storm a "logistician's war," handing much of the credit for the Coalition's lightning-swift victory to his chief logistician -- Lieutenant General Gus Pagonis.

Pagonis was able to readily adapt many of the strategies and tactics he developed to move mountains for the U.S. Army to his subsequent position as Vice President of Logistics for Sears, Roebuck, and Co. On the morning of September 11, 2001, General Pagonis was able to tell his CEO and commanding officer where all of the company's trucks were, which ones were stranded, which couldn't get through customs, where his containers were, which stores were closed, which malls were closed, which tunnels were closed, and so on and so forth. Even with FedEx grounded for three days, Pagonis and his team were still able to deliver the goods.

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However, for Pagonis, the logistical ignorance of American business still continues outside the shipping room walls. A decade after taking the job at Sears and shortly after September 11th, Pagonis told me, "people just don't pay attention to logistics, and I try to use whatever technique I can to get visibility for it to show that good logistics equals sales and profits." To be sure, studies show that while logistic inefficiencies waste up to 25 percent of a manufacturer's cost, few U.S. companies have made a meaningful start on improving this fundamental process.

All the knowledge and tools are in place -- the trained logistics managers, the sophisticated computer technology, and so forth. So why isn't American industry getting with it, logistically?

One problem is that much of the growing body of reliable and usable knowledge about logistics is somewhat boring, and difficult to understand. My new book, Delivering the Goods, hopefully rectifies this problem by showing how logistics is important to success on both the military and corporate battlefields.

Another problem, of course, is corporate politics. It is one thing for a logistically enlightened corporate general, such as Pagonis, to recognize the importance of logistics. It is another to get the people who work in production, finance, product development, and so on, to accept a logistician as a co-equal, or to surrender funds, authority, or personnel to him. If politics are preventing your team from accepting logistics as an equal partner, you may want to sign them up for our new workshop, Delivering the Goods 3-day Workshop™.

The central obstacle to logistic awareness in today's firm, however, remains the stubborn persistence of the idea that creating demand constitutes the whole of the marketplace challenge. This short-sighted idea has governed American business for most of the post-World War II period.

Our new workshop, Supply Chain-Centered Leadership Week™, provides a structured learning environment for understanding that in the wake of the burst of the dot.com bubble, logistics -- and logisticians -- should move closer to the center of the corporate stage. More of America's business leaders need to return to the early twentieth-century equation which held that creating demand was only the first half of the marketplace challenge, and that satisfying demand was the other requisite half.

Satisfying demand is just as, if not more, important than creating the demand for a product or service. Ask the CEOs of Wal-Mart or Dell, whose much-lauded victories are due, as much as anything, to the fact that they and their planners have properly recognized and managed their respective logistics, and have obtained the strategic cooperation of all their trading partners -- not an easy thing to do. Indeed, as emerging companies look for new ways to expand their markets, as well as reduce the cost of doing business, they will inevitably find, to paraphrase Brutus, that the answer is not in their marketing "stars," but, truly, in their logistics.

Damon Schechter is CEO of LOC Global. His best-selling book, Delivering the Goods: The Art of Managing Your Supply Chain, is published by John Wiley & Sons. No part of this article may be reproduced or reprinted. Click here to contact Mr. Schechter.