Logistics providers who refuse to adapt to the changing logistics and technology industry can change key harmful mindsets to become more competitive.
The logistics and technology industry is facing an era of unprecedented change with disruptions coming from increased customer expectations (both consumer and businesses), technological breakthroughs and new tech-enabled entrants into the industry. The outcome for Logistics Service Providers (LSPs) will be to either adapt from traditional models of simply moving freight or risk obsolescence.
At Gravity Supply Chain, we recently interviewed a group of medium-sized logistics providers to see how they are dealing with the current transformative environment. What we uncovered are three ways of thinking that must be overcome to evolve with the changing environment and come out on the other side more competitive.
“Our customers aren’t asking for visibility, so we don’t need to offer it.”
25% of LSPs that participated in the study only considered offering full visibility to their customers after losing a major blue chip customer to a competitor that had offered that visibility.
Consumer expectations are changing, and this is putting pressure on the consumer goods supply chain. Consumers expect to get the goods they want, when they want, faster, more flexibly and with low or no delivery cost. So what does this mean for logistics service providers? The implications are enormous for LSPs servicing B2C companies. It’s sped up the pace of business and disruptions to supply have greater consequences for customer loyalty and revenue than ever before.
Shippers are relying on visibility to help them see what’s happening in their supply chain in real-time. This visibility enables them to proactively address issues before they become critical problems. At the heart of real-time visibility is data analytics to provide better transparency and predictability – a capability shippers are increasingly looking to their LSPs to provide, either through a visibility platform or a feature that can easily integrate with their existing systems.
“We are a shipping company, leave technology to somebody else.”
Okay sure, and Facebook is an advertising company and Amazon, a retail company. Technicalities aside, enterprises across all industry sectors are using technology to facilitate business transformation. It’s not only a way for LSPs to expand service offerings and increase customer satisfaction, but it’s also a way to improve efficiencies internally to increase profitability.
The efficiency improvements will come from the reduction of manual processes – which are costly because they’re time-consuming and humans make errors. For example, automating the process of researching and aggregating sailing schedules and freight rates can save at least 30% of a customer service operator’s time. Time savings opens up new doors for using talent resources in ways that will generate a greater ROI.
Beyond internal operations, with the right cloud-based technology you can connect to your customers, their suppliers and your partners via APIs, achieving a single point from which to manage all your supply chain operations. What’s the benefit? It allows the LSP and the shipper to manage by exception. The number of shipments that require manual intervention decrease because customers can access the status and location of their purchase orders in real time, fewer shipments requiring intervention means greater profitability per job.
“Our customers don’t need to know what’s going on behind the scenes.”
This way of thinking is for the dinosaurs. Customer expectations for more transparency are increasing alongside speed flexibility. Which isn’t a surprise if you consider one of the downsides of outsourcing logistics is a perceived lack of control - the price businesses have to pay in exchange for the efficiency and cost savings of working with LSPs. The most competitive LSPs know this, which is why they are providing real-time visibility to their customers, offering their clients the same efficiency gains with a greater sense of oversight and control.
The bottom line is customer expectations are increasing significantly, and new technologies are fundamentally changing the industry – calling existing business models into question. If you come across these mindsets in your business, you are at risk of being left behind.