“if you have limited awareness of logistics, then you are not much different than a lot of people who inhabit this planet.” (Murphy and Wood)


What is logistics? Most academics in this field tend to adopt the Council of Supply Chain Management Professional’s definition of “Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.” This definition begs to be broken down further to aid understanding. First, logistics is part of supply chain management. Second, it consists of many different activities, chiefly planning, implementing, and control. Of what? The flow of three major things: product/services/materials, information, and capital (money). Third, the flow goes forward and also backward. When it goes forward, we call it forward logistics, and when it goes backward, we call it reverse logistics. Lastly, the flow is from the point of origin (usually the raw materials supplier) to the point of consumption (usually the customer but rightfully should be the consumer) and backward in the case of reverse logistics.  

The world of logistics has evolved far beyond the definition of logistics mentioned above. Many terms were coined to refer to logistics, such as materials management, physical distribution, and supply chain management. At present, the interest is in what is termed as “World Class Supply Chain Management”. What constitutes a world-class supply chain management? Many have given their thought on this. The Michigan State University first initiated the Global Procurement Benchmarking Initiative in 1992 who benchmarked over 300 global companies, and set forth principles that became the foundation of a “world-class supply chain”. Most of these principles focus on driving down costs, but this traditional way of thinking does not work in all situations. Many have begun to realize that just driving down costs would not solve problems. So, begin to look at a comprehensive strategy throughout the supply chain that particularly emphasizes supplier relationships and embracing technology. Still, a “world-class supply chain” is not an easy concept and means different things to a different industry.       

Malaysia is well set in the path of being world-class, at least in the pharmaceutical distribution industry. In recent research conducted on a local pharmaceutical distribution company, it was found that this company, with specific performance elements (reliability, responsiveness, agility, cost, and asset management) benchmarked against general industry standards, has stacked up well when compared to other industry players in the world. We could safely say that at least when compared to general industry players' benchmark data, this company has achieved world-class status. What is more interesting is finding out what made them a world-class company.

A recent article by Jen Rizzo from Aveva, a digital business solution team based in Houston, Texas, outlined five ways to spot a world-class supply chain organization: talent, collaboration, communication, cost-conscious, transparent and accountable, and embrace technology. This was her takeaway from an annual supply chain symposium in Texas on building world-class supply chain capabilities. Interestingly, some of the factors that contribute to the pharmaceutical company’s success are spot on to what Rizzo said (collaboration and communication and embrace technology) with our take on a world-class supply chain's characteristics. Let’s see what those factors are.

Talent + Culture

From the top management to the floor personnel, the same reliability performance metric prevails. Everyone in the company knows the required delivery date, for example. At first, it could stem from fear of being penalized by their client (which could run to thousands of ringgit) if the delivery date was not met, but it has now become a culture across the company. It could be said that everyone interviewed seemed to share the same vision. This vision is beautifully simple. There is certain delivery date for each customer, and this delivery date must be met at all times. This makes the company’s score superior in terms of reliability. This is also a comforting thought. In the pharmaceutical distribution industry, any delivery failure of medicine or drugs to hospitals, clinics, etc., could probably mean a life and death matter to some patients.

On top of that, people in the company share the same culture: “Do it Right,” which later evolved into “Do it Right the First Time,” with every staff practicing this mantra. Ultimately, this “Do it Right” culture became the overarching culture in this company. Literature concurs that one of the factors contributing to a successful supply chain is the people in the company and its corresponding culture and (the company) have these aplenty.


The technology used in the company was developed by an in-house expert, one of the top management personnel. This system enables complete visibility of the flow of materials or SKU (stock-keeping units) and aid in inventory management in the company. This visibility is paramount to the success of the company because the company knows exactly what the inventory level is when they should be ordering, a complete list of all the suppliers, a complete list of all the customers etc. the best part is that this in-house system is integrated with their ERP system using Oracle. This would mean that the company has successfully integrated both off-the-shelf systems and its customized system.


Every morning, the heads of department will have a morning briefing with their staff. Here they talk about the issues or challenges they face the day before and discuss how to solve these issues. Any directions from the top management are also communicated during this time. One of the most interesting things is that, at these early morning meetings, spiritual talk or in Malaysia we call “tazkirah” were also given to the staff because the company believes that good work comes from a good conscience. Interestingly, during the interview session with the staff, there is a pervasive feeling that these are good people who genuinely care and are passionate about their work. This kind of attitude is pretty rare, especially when it is not forced from the staff.

Continuous Improvement


In an interview with one of the warehouse floor personnel on how he thinks he can make his particular task better, the staff said that he suggested a different color basket for order receipt (they use this for order picking in the warehouse) to segregate the order importance. For example, “Red” basket for “Urgent” order, “Yellow” for “Important”, and “Green” for “Less important” orders. They will then do the Red basket first and make sure that it is clear before moving on to the yellow basket. The Head of the Department implemented his idea, and they were able to pick the orders with speed and accuracy. This is the very soul of Kaizen, do small things to improve the process continuously.