How Integrated Project Logistics Can Put More Profit in your P&L

Construction, Supply Chain, Technology, Value Added Services, Warehousing & Distribution Management
April 10, 2014

Complex installation projects: from chaos to a well-oiled machine

Time is money when it comes to large-scale infrastructure and installation projects. A successful project is more than the sum of its parts. It depends on the precise coordination of hundreds of moving parts, including raw materials, components, equipment, construction and installation crews, electrical contractors and more.

Precisely coordinating those moving parts is particularly challenging in the telecom and energy sectors, where it’s not uncommon to have hundreds of construction and installation projects in the works, each supported by a discrete supply chain. Keeping a complex infrastructure project on track means ensuring that the right people, materials and components arrive at the job site at the right time. Failure to do so can quickly turn the P on a P&L statement into an L.

Unfortunately, while energy and telecom companies are experts at transforming alternative energy into usable energy or wirelessly connecting the world, few are experts at supply chain management. As a result, most large infrastructure projects are decentralized. Different functions – inbound logistics, transportation, warehousing – are handled independently by suppliers and other stakeholders. The result is typically a series of costly disconnects, delays and waste, where workers are at the job site ready to go, but parts and equipment are not.

solar farm management

So how do you keep complex cell tower, transmission line or solar farm installation projects on track? How do you source and transport multiple orders, materials and equipment from suppliers around the world to multiple job sites at the right time and in the right quantity? For many companies, the key is integrated project logistics.

What is project logistics?

Project logistics encompasses the integrated planning, coordination, management, processing and control of the entire flow of parts, products and materials to, within and from a job site.

Three keys to keeping your large-scale project moving

Integrated project logistics can make all the difference when it comes to delivering a large-scale infrastructure or installation project on time and on budget. Here are three keys to success:

  1. Advance material planning: many companies fall down when it comes to planning networks, securing transportation and coordinating inbound materials. Instead, product trickles in late and a bit at a time, delivered by the suppliers with revenue recognition in mind vs. inventory carrying costs, often using costly premium or expedited freight.

    One of the most effective ways to take control of transporting inbound materials is pre-planning your network and then managing the exceptions. Planning enables you to consolidate loads and tender to the lowest cost time compliant carrier. Instead of random supply deliveries arriving at different times, planning enables you to align them to when construction or installation crews are on site avoiding costly non-productive labor hours.

    The same goes for inventory. With a little advance planning, you can minimize the need for safety stock and associated costs, using Lean practices to pull parts on a just-in-time basis. Logistics engineers can help with standard project planning (would focus/use material resource planning, lead time, etc. type of vernacular), doing the engineering on the front end and then executing a plan. Smart pre-launch planning, including designing inbound networks, pre-executing with carriers and setting up tracking systems, can positively impact both your project schedule and your bottom line.

  2. Visibility: this goes hand in hand with pre-launch planning. With a window into what you have on site, what you need and what’s in warehouses, you won’t waste time and resources ordering and storing what you already have or paying to store safety stock.

    Supply chain visibility is also the key to coordinating deliveries and having the right inventory at the job site at the right time. Instead of relying on suppliers to ship whenever they get an order, consider implementing an inbound process based on consumption. Then, coordinate and ship freight at the right time instead of frontloading materials that have to be stored for months or years.

    Today, advanced Project Logistics Control Tower technology provides the end-to-end visibility you need to provide general contractors and keep track of everything from raw materials suppliers to regional distribution centers to forward stocking locations and ultimately, the point of installation. Control Tower technology also enables centralized shipment planning and execution, procurement, freight settlement, event management and network performance management, for a more precisely coordinated overall project.

  3. Distribution management: Say you’re a telecom company building towers at hundreds of sites across the country. Ensuring cost-effective access to parts, components and equipment means having ready access to warehouses. And when it isn’t feasible to build a warehouse for a temporary project, many companies support job sites with flexible project logistics warehousing.

    Pop-up warehouses are temporarily populated for installations, without the burden of long-term leases thus convenient and cost effective. Combining these temporary warehouses with lean practices, flexible labor pools, standardized processes and integrated Control Towers enables lean construction, lower inventory carrying costs, better quality, and improved safety and accelerated timelines.

    Planning and managing a large-scale infrastructure construction or installation project can be a huge undertaking. Especially if project logistics isn’t a core competency. For many companies an experienced partner can help improve visibility, optimize inventory management, procure and manage transportation and coordinate the flow of materials.

    Need to move parts, equipment and products to job sites faster and for less? Want to improve job site productivity and speed products to market, while reducing transportation, labor and inventory carrying costs? Consider an integrated project logistics solution.

About the Author

Tom Kretschmer joined Ryder in 1998 as a member of the Operations Management Center. Since that time he’s held positions of increasing responsibility. Currently, Tom is the Group Director in the Hi-Tech Industry Vertical responsible for the Commercial Segment. Tom has experience managing, executing and creating value for customers across multiple industry groups in the following services: Distribution Management, Transportation Operations, Logistics Engineering, Transportation Procurement, Freight Bill Audit and Payment, Cross-border transportation and both domestic and international Shipment Planning & Execution. Tom earned his MBA from Walsh College and BA from Wayne State University.

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