Management by Exception in Logistics – No Rule Without Exception

With the management technique “Management by Exception,” managers leave the handling of routine cases to the employees in charge. Management steps in only in exceptional cases such as tolerance violations or the occurrence of unforeseeable events.

This concept has also proven useful in the logistics sector for several decades and is increasingly being used with the rising automation of processes. As a rule, there is no 100 percent automation in logistics, but in some areas only 5 percent is so-called “exception handling.”. This means that the employee only intervenes in exceptional cases that require special experience and competence. The prerequisite for this is constant monitoring of real-time information about the logistics processes. On the one hand, this allows improvement potentials to be identified in the long term, and on the other hand, the responsible employee is informed when an exceptional case occurs in which he should intervene. Let’s take a look at two examples from the field of logistics, which show what possibilities this type of process control offers and what advantages it has for users and companies.

Example 1 – Truck supply control

A truck supply control system is intended to ensure the supply of production and assembly sites, transshipment hubs or warehouses. In the planning and control of deliveries and collections, however, unforeseeable events often occur, such as delayed trucks or urgent spontaneous deliveries. Such events are usually no problem for modern, intelligent planning systems, as they can flexibly integrate this information into the planning process in good time through real-time truck tracking. However, if, for example, an accident occurs shortly before the plant or a ramp cannot be approached spontaneously, the dispatcher must intervene. In these exceptional cases, the employee has information that is not available to the system at the time. Or, based on his or her experience, he or she knows which additional measures need to be taken.

Exceptions that have not been sufficiently resolved and the subsequent customer dissatisfaction can have far-reaching consequences for truck logistics. For example, penalties can be imposed for late deliveries. It is therefore important for the scheduler to react on-time and appropriately, for example by increasing the number of employees.

Example 2 – Internal logistics

In internal logistics, too, unforeseeable eventsoccur which even intelligent transport control systems cannot plan in time without hindering an optimal material flow. Various criteria such as distances, order priorities, deadlines, loading capacities, technical and organizational framework conditions are already considered by these systems during planning and control, which relieves the dispatcher in a large part of the planning and optimizes the planning. If, for example, material is made available late or is temporarily inaccessible – possibly due to other pallets – the dispatcher must intervene and take countermeasures to continue to secure production supplies. Here, too, timely action is crucial to prevent negative consequences.

No exception: the advantages

The prerequisite for Management by Exception is the use of intelligent systems. Only the relief of the employees from routine tasks and the time gained in this way create the space for important decisions or quality improvement. For example, by monitoring processes in real time, a dispatcher can see at a glance that a department often receives the wrong product and can initiate appropriate countermeasures such as the temporary scanning of products. This process transparency enables the responsible employees to react quickly at any time and prevents deadlines from being exceeded for customer deliveries.

Conclusion

Management by Exception is a concept that has proven itself in logistics for a long time and offers companies flexibility to react quickly to changes. Apart from a few exceptional cases, this means for the dispatcher: The system plans and controls tasks efficiently and he can concentrate on other tasks such as process improvement, where all his experience and competence take effect.

How do you plan the logistics processes in your company? Do you already work with “Management by Exception”?

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