Work more together to obtain better results. That is one of the main conclusions of the annual study “The state of logistics outsourcing”. The work, through interviews with shippers and logistics providers, detects what it considers to be the main trends in the world of supply chain and in the relationship between customers and suppliers.
“Since the study began 21 years ago, researchers have seen a continued improvement in the strategic nature of relationships between shippers and logistics providers,” says the study, conducted by the consultancy Capgemini and Dr. C. John Lagnley. And it is that the trend shows how shippers and operators are increasingly aware of the advantages that a quality supply chain can offer, based on a deep relationship between both parties. Leaving behind the increasingly outdated models in which the obsession above all else was cost, also understood in a superficial way. Valuing only the rates instead of the actual optimization of processes.
The benefits of working with a logistics provider seem clear: 91% of users of external logistics services and 97% of providers state that their relationships are successful and that working together is producing positive results, according to the study.
And it is in these fruitful relationships that cost savings really come, hand in hand, in addition, with customer satisfaction. “75% of shippers and 93% of logistics companies said that the use of third-party logistics services contributed to a reduction in logistics costs overall; and 86% of the shippers and 98% of the operators stated that this outsourcing of logistics services contributed to improving customer service”.
The importance of Big Data in the supply chain
Another aspect whose relevance has not stopped growing in recent years is the use of Big Data. Data analysis helps both parties to better anticipate transportation needs, sales forecasts, demand behavior, etc. However, while shippers and providers agree on its importance, there are some nuances.
“There seems to be a slight disconnect between logistics providers and their understanding of the importance of Big Data to shippers. Among the latter, 79% said that their supply chain sees significant value in the use of Big Data, compared to 65% of logistics providers who responded that their customers’ supply chains see this value in the use of Big Data. Data”, maintains the work.
Despite this slight difference, logistics providers are taking steps to offer better information and data-driven solutions. To do this, according to the study, they are expanding their services, increasing their staff and the skills of their organizations, expanding their geographical coverage and investing in new technology. This shows that there is sensitivity to meet the growing needs of customers.
And the fact is that the increase in the use of information technologies and analytical systems to make decisions seems unstoppable. This is because both logistics operators and shippers have to move in a changing environment: fluctuations in demand, in loading and transport capacities, dealing with more complex supply chains, etc.
“73% of shippers see a significant involvement of their logistics providers in the transformation of their supply chain”
The importance of people in the supply chain
The use of data and technology, however, will not eliminate the human factor from the equation. The study asked respondents which resource was most important, choosing between people, processes, technology, and the execution and implementation of initiatives. And, while the results were tight, people were the most valued resource for both shippers (26%) and logistics providers (30%).
This is easy to relate to other variables that the analysis asked about: the importance and involvement of logistics operators in the transformation of their customers’ supply chain. This involvement between both companies and the ability to design new solutions require -although they are helped by data and technology- the human hand that thinks about them, designs them and makes them possible.
“73% of the companies that outsource logistics indicated a significant involvement of suppliers in the processes related to the transformation of the supply chain, with 9% suggesting a very significant involvement, 28% with a significant involvement and 36% as counselors”, reflects the study.
The reverse logistics opportunity
This closer relationship between companies that outsource logistics and their suppliers is also echoed in the final part of the supply chain: reverse logistics. The greater integration and trust make companies delegate more activities to their suppliers. Among the shippers, 41% stated that they did not participate in the processes at the end of the product’s life cycle. And the same percentage said they would prefer a third party to handle all aspects of this end of the cycle, including picking and processing.
Among the reluctance to outsource this part of the supply chain, 34% of the shippers attributed it to the demand of the clients themselves, and to their requests and expectations. 22% indicated product responsibility as the reason. However, as product life cycles continue to shrink, the importance of reverse logistics will increase, along with the possibilities for shippers and suppliers to collaborate on it.
In summary, we can see how many repercussions the tendency to strengthen relations between logistics operators and between companies that demand their services has. Deepening collaboration and mutual understanding will have an impact on service quality, real cost savings from process improvement and innovation, and new improvement opportunities for both.
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