A guide to logistics streamlining in municipal organizations

Eric E. Evans
Fleet Operations Superintendent
Public Works Department
City of Columbia, Missouri

I don't know what the h#!% this "logistics" is...but I want some of it. — Admiral Ernest J. King, Chief of Naval Operations, 1942

Heck, even my mom asked me what logistics is. When I told her I had received a master's degree in logistics management, she said she didn't know what it was and didn't understand the benefits. Certainly, within military circles logistics is widely understood. But once you enter the business world it begins to change. I've heard the L word used in many different settings.

Here are a couple of definitions:

Logistics (Webster's Dictionary) — the procurement, maintenance, and transportation of material, facilities, and personnel.

Logistics (military definition) — The science of planning and carrying out the movement and maintenance of forces....those aspects of military operations that deal with the design and development, acquisition, storage, movement, distribution, maintenance, evacuation and disposition of material; acquisition of construction, maintenance, operation and disposition of facilities; and acquisition of furnishing of services. (JCS Pub 1-02 excerpt)

So again, as my mom would say, what does this mean? For municipal and local governments, logistics can be defined as the actions and processes that play a supporting role to the primary task or mission. Frankly, you could probably say that everything that public works, water departments, and other utilities do is logistics if you consider their mission is to support the citizens of their community. However, if you drill down into these organizations, you will find the supporting roles that I refer to. For example, a Street Department's mission is to build and maintain public thoroughfares. Supporting the Street Department is fleet maintenance activities, building maintenance, a storeroom or warehouse activity, a fueling activity, etc. These activities may be internal to the Street Department or may be external, separate departments. Regardless of the organizational structure, these supporting activities could be described as logistical activities.

In the military and in the world of big business, a lot of time and effort has been expended trying to streamline their logistics organizational structure and logistics management practices. These efforts have been rewarded with significant cost reductions and improved operational efficiencies. However, from my perspective, logistics streamlining has not been fully embraced by municipal and local government organizations.

So how do you go about streamlining logistics in your municipal organization? First of all, identify the logistics processes and activities. Some will be easy, like fleet maintenance. Others like building or facility maintenance and storeroom activities may not be as apparent. Go ahead and take one or two of those more apparent activities and look at them first. Is the logistics activity being performed as part of more than one department within your organization? If it is, then determine if the activity or process is being managed and performed the same in each department.

Using fleet maintenance as an example, does each department have their own mechanics to perform vehicle maintenance? Are they all using the same automated system or same forms to record their actions? Do they all perform preventive maintenance services at the same interval for like equipment? Do they complete the same checks and actions for each service? Initially, try to get the logistics activities to perform their tasks in a like manner. If there are two or more departments performing like activities differently, you may wish to identify the one you feel performs the activity in the most cost-effective manner, then replicate it throughout the organization.

Depending on the size of the organization, you may wish to consolidate like logistics activities into a single department. This can offer some economies of scale advantages. The new single department would then support all the other departments for that logistics function. The original departments can now focus on their primary mission. Again using the fleet maintenance example, the managers of the original departments are no longer distracted by the day-to-day concerns of procuring repair parts, getting rags for mechanics, having the right tools, and so on, when their primary mission is street maintenance or some other municipal activity.

The argument I hear to consolidating logistics functions is either, "I don't want to lose control" or "We can do it cheaper." Both statements are simply not true. The new department with the logistics function is now more capable of performing the same logistics tasks. There are now more assets to focus on a problem or a given task. Since the mission of the new department is to support the other departments, there is no need for "control." Give the task to the new department and it will be completed as if they work for you (which they do). As far as cost is concerned, there are cost advantages to consolidating logistics functions. Tools, equipment, facilities, and knowledge can be shared as opposed to each activity having redundant capabilities. I often reply to these concerns by pointing out the Personnel or Human Resources Department. This is a consolidated activity that often occurs in government organizations without a second thought. Would it make sense to put one or two Human Resources persons in every department? No, it makes more sense to consolidate that activity. The same applies to logistics functions. Every advantage you can come up with for having a consolidated Human Resources Department, can also be applied to other logistics functions.

When discussing consolidation into a new department, it is not necessary to physically put the people and equipment into a single location. Although some of this may occur, consolidation is really placing the function under the sole management of a single department. More than one logistics support site may be necessary to perform the required tasks.

Part of the benefit of consolidation is eliminating redundant capabilities. This is where real cost reductions can be realized. However, it is important to understand that since we are talking about government organizations, some redundant capability is absolutely required in order to be able to respond to emergency requirements. Having said that, there is still lots of redundancy in municipal government organizations that could be eliminated. Let's look at some ideas for doing this.

If your fleet management system allows you to look at miles and hours accumulated on vehicles and equipment, prepare a report to look at your entire fleet. I would try to look at a full year's worth of data. If you can sort this information to group vehicles and equipment by type, that will make the data more user friendly. Now view this data in relationship to the number of work hours available in the course of a year. Let's say there are 2,000 normal work hours in a year. You will probably be surprised to find that there are vehicles and equipment with very low utilization. So if a vehicle has accumulated 40 hours of use in one year, that means it was in use only two percent of the year. If you have two or more of the same item (dozer, excavator, etc.) and added together they were used only 10 percent of the year (200 hours), then it appears that the number of those-type items could possibly be reduced. To do this implies that two or more departments share the item or that a vehicle and equipment pool be established. The same type of analysis can be done with mileage. To equate miles with hours, I use 40 miles = 1 hour of use.

The standards used in the example above should not be considered the benchmarks for making changes. Rather, the standards you develop should be what your organization considers as meaningful. If nothing else, identify everything below a 20 percent utilization rate and have the departments justify why they need to keep the item. Remember, do not eliminate nor reduce your capability to adequately respond to emergency situations.

Another redundancy often found in government organizations is in facility maintenance. Are the personnel who perform the maintenance assigned to a single department or are they in more than one department to provide coverage for different buildings? If they are assigned to different departments, do they require assistance from other personnel in the department to help with larger or more difficult tasks? Who performs lawn mowing and grounds maintenance? Has more than one department purchased tractors and mowers for lawn mowing? Could these tasks be consolidated and therein reduce the number of personnel, reduce the quantity of equipment, and eliminate distractions to personnel and management that have a different primary mission? By asking these questions and looking for redundant capabilities and equipment, it is possible to reduce costs.

Try looking at storeroom and warehouse activities. Is every department doing it a different way? Are departments stepping on each other's toes with vendors? Has the competitive bid process been used? I have seen a municipal vehicle parts storeroom that has never used the competitive bid process to support their vehicle maintenance. Their explanation was that they didn't want to change part numbers that they had become accustomed to using. They even had an automated system that would have made it relatively easy to change the part numbers. The cost reduction in this example could be significant.

I have really only touched on some of the big-ticket items in logistics streamlining. Organizational restructuring is obviously a huge task that should not be taken lightly. The other logistical management practices I have discussed are less intrusive. There are also other good logistics management practices that I haven't addressed such as vehicle replacement policy and striving for standardization of vehicles, equipment, and components. Look at all of your supporting activities, equipment, and tasks. Can they be consolidated or streamlined? Quantify the results of your examination. These actions should all be incorporated into a comprehensive logistics streamlining effort that will pay big dividends for your municipal organization.

To reach Eric E. Evans, call (573) 874-6283 or send e-mail to EEE@ci.columbia.mo.us.