We all know the big thing about icebergs, right? What we see on top is just a small percentage of what lies beneath the water. That can be scary for sailors and passengers on the Titanic, but if you’re the sort of person who likes to be prepared, it’s a good fact to know.
Sometimes, it can almost be reassuring, like in the case of this iceberg resembling a certain masked vigilante… If that iceberg looks like Batman’s head, then it only stands to reason that the rest of him is under the waves, right? Well, maybe not in this case.
Superhero icebergs aside, my point is a rather serious one: it’s important to expect the unseen, in icebergs, and in business. The Iceberg Principle is a popular business and systems thinking term that talks about the hidden factors in anything we see; the sources, and costs that lie hidden beneath the waves. Specifically, it’s applied to risk management.
Plenty of risks are what we call ‘known knowns’, meaning that anyone can anticipate them: broken down trucks, bad weather, and other obvious delays. The Iceberg Principle states that up to 85% of emergency costs are beneath the surface, completely unknown to most, and invisible to outsiders.
That’s where logistics management comes in. We sail these seas every day, and have a pretty clear idea of where the icebergs lie, even below the surface. Take the matter of demurrage costs. Now there’s a word you don’t hear every day. In fact, if you work outside of the logistics and shipping community, you’ve probably never heard it.
Demurrage is the charge levied by the shipping line on the consignee if a container is not cleared and returned to the nominated empty depot within a specified period of time. For many shippers, this is a standard cost incurred, but it can be avoided with clever logistics.
In fact, Matchmaker Logistics offers guarantees to some of our shipping clients that they’ll never have to pay demurrage fees (ask about the program and learn how your company could qualify too).
With professional logistics management, costs that seem standard can actually become optional, quickly earning back the costs of logistics management in the first place. And that’s the Iceberg Principle at work! It may cost a bit more at the outset, but that cost above the iceberg is quickly offset by our expansive knowledge of the seas you’ll be sailing and our ability to navigate around those hidden costs lurking below the surface.
As for that Batman-shaped iceberg, I’m gonna keep an eye on him. The last thing we need is a Batberg crawling out of the ocean to fight a Superman-shaped iceberg!
Fuel for Thought,
~Bob
