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Logistics: The Powerful Force Reshaping Business Today

Every business is always looking for the next competitive advantage; the new insight, process, or idea that can help move the company ahead of its competitors, delight its customers, and make more money.

In my role at UPS, I work with companies of all sizes across multiple industries, in locations around the world. Based on my observations, I believe the big competitive advantage, the powerful force that is reshaping the way the world does business, is logistics.

Today, whole economies, not just entire companies, depend on supply chains that are stretched across oceans and continents and on customers who live and work thousands of miles away.

It wasn't that long ago that only the largest and most complex organizations could leverage logistics as a competitive advantage. Only they could afford to build, staff, and maintain the resources necessary to make logistics work. But today, the power of logistics is available to virtually everyone. It's what we call the new logistics.

Logistics redefined
So what’s “new” about logistics that could give businesses a competitive advantage?

  1. Logistics levels the playing field: The power of logistics has become accessible to even the smallest business. Companies no longer need the capital to own warehouses, distribution centers, and transportation networks. They don’t need to employ highly trained experts to make logistics work for them. They can turn to third parties to provide some or all of these functions at reasonable costs.
  • Logistics enables companies to easily expand their business: Not so long ago, if you wanted to break into a new market overseas, you faced a lot of challenges such as finding new distribution channels, overcoming cultural and business uncertainties, and navigating customs rules and regulations. Today, companies can entrust those concerns to third-party experts and discover vast new opportunities for growth beyond their domestic borders. In addition, both fixed and working capital positions can be improved, which allows for more investment to drive expansion.
  • Logistics helps businesses stay focused on their bread and butter: Some companies have a hard time understanding how improving one piece of their business — the logistics leg — can end up reinventing the whole business, but it’s possible. The “new” logistics allows businesses to turn over non-core tasks, such as managing inventories, order fulfillment, and repairs, to others so they can concentrate on their core business.
  • Logistics provides a competitive edge: Traditionally, how companies moved their goods from place to place really didn’t matter much to their customers so long as everything showed up on time and in one piece. But logistics turns supply chain management from a behind-the-scenes process to a competitive differentiator.

Transparent supply chains improve customer experience by reducing WISMO calls, and a reliable returns process can significantly improve the customer experience, driving repeat business. And those are just two examples.

It’s an exciting time to be managing supply chains. That’s why UPS is happy to participate in EBN’s new online community. And in the coming months, we hope that you will return to “Change in the Chain” for useful tips and new ways of thinking about your company’s supply chain and the role of logistics.

Charlie Covert is Vice President of Customer Solutions for the high-tech and industrial manufacturing sectors at UPS.

9 comments on “Logistics: The Powerful Force Reshaping Business Today

  1. bolaji ojo
    October 1, 2010

    Before manufacturers can tap the strength of a third-party support partner, there must be a realization within the executive team that doing everything alone is no longer efficient or advisable. Specialization continues to spread throughout all economic sectors and embracing the most cost-effective solutions is today critical to success. In any case, why reinvent the wheel?

    If some company down the road or across the world already has the expertise and can help me shave hours, days or even weeks from my supply chain delivery period, I would be loath to turn them down as long as they are cost competitive. That's a critical issue. Will it be cost-effective comprehensively to outsource logistic operations? Oh, and by the way, how about some other concerns companies in IP-intensive areas might have, such as ensuring product security when shipping to areas of the world where the rules and oversight of corporate IP are not as tough. How do logistics companies secure customers' intellectual property interest?

  2. Barbara Jorgensen
    October 1, 2010

    One advantage I can see in this outsourcing model is the availability of warehouses closest to where the customer wants materials shipped. I have been hearing a lot about proximity warehousing, but I get the impression these warehouses are still owned and operated by electronics distributors. Of course, a 3PL has certainly succeeded if it looks like the warehouse is affiliated with the distributor when the order is shipped.

    Can anyone add some insight into this? Are these proximity warehouses generally provided by 3PLs?

     

  3. DLongino
    October 7, 2010

    Proximity warehouses can be provided by 3PLs. I work for UPS and we have more than 800 located in more than 120 countries.

  4. disty advocate
    October 7, 2010

    having local wharehousing is fine as long as the associated costs are well understood. can some please detail out the additional cost for this and also some insight of how to offset those costs

  5. Barbara Jorgensen
    October 7, 2010

    Thanks DLongino. It makes sense to utilize 3PL warehouses rather than duplicate the effort every time a compnay expands.

  6. Barbara Jorgensen
    October 7, 2010

    Hi disty advocate–another reader maybe able to help you–see mesage from DLongino. Hope it helps!

  7. disty advocate
    October 7, 2010

    i did read his message that is why i posed the question. i do hope someone can provide an answer to my question{s}. Using 3pls can be very efficent {maybe} when the product doesnt need to be touched or have value add. But to add another link in the chain always adds cost. so lets open the dialog on how to elminate cost by using 3pls —–and why distys might agree to this or work with 3pls to bring the cost for wharehousing down.

  8. Ashu001
    October 10, 2010

    Bolaji,

    Your thinking makes perfect sense.

    Today SMBs(which is where most of the creative people today function,primarily because of the freedom that smaller organizations afford them);have been able to successfully launch very good quality,market winning products because they are able to successfully outsource all non-core but still important parts of the business cycle.

    This is a trend which is not going to go away and needs to be embraced with increasing regularity.for instance do I want to be the one who takes the package all the way to the Post Office and pays for it,Signs for it and then return to the office or can I not just call UPS over and get them take care of everything for me?

    Makes a whole lot of sense.

    Regards

    Ashish.

  9. itguyphil
    October 10, 2010

    tech4people,

    Great point. In runninag a small business, you do realize the power of delegation (in this case outsourcing). This totally helps to have a fixed budget allocated to certain tasks, instead of having the unknowns pop up if the same resources are brought in-house.

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