Traditionally, most third-party logistics companies have focused on creating value for customers by taking over their transportation and warehousing operations, and through economies of scale, systems and best practices, removing excessive costs.
Although this ability to help customers reduce supply chain costs remains important, the outsourcing cycle for warehousing and transportation management has matured for many companies. Efficiencies have been gained and easily identifiable costs wrung out.
Where will logistics providers find the next level of value for their customers? I see it in three areas, all of which drive toward one goal: delivering competitive advantage.
First is innovation. This applies to systems and work practices. We must provide supply chain analysis, process engineering and systems capabilities that support customers’ needs for superior functionality and improvement. This is an exciting area where evolving technologies hold much promise. 3PLs will need to make critical decisions and investments in this area to bring customers that next level of value.
Second is operational excellence. We have to continuously examine, question and improve every process, every work task we touch. Lean methodologies offer the ideal foundation for this challenge. Lean tools such as value stream mapping provide the framework to remove waste and to design and engineer the best process for a given task, from the warehouse floor on up.
Third is collaboration and connected services. Logistics providers are strategic partners, in effect connecting a business to its suppliers, manufacturers and customers. Clients rely on our ability to flex with their business, to collaborate with their suppliers, plants and customers, as seamlessly as possible, across regions, countries and processes. It’s both science and art. At the same time, we have to provide the same level of process consistency and operational excellence at every point we touch the supply chain.
Delivering effective, reliable solutions in these three areas is the key to getting to that next level of value, and the next great growth opportunity for global logistics and supply chain management.