Supply chain companies view their logistics service providers (LSPs) as a tactical partner who can add value to their business via technology. The value added can be in the form of electronic data interchange, real-time information, advanced analytics and data mining.
There is consensus among companies that the continued success of their global supply chains is dependent on managing data, as well as leveraging it to make better decisions. Few shippers are, however, actually satisfied with the information and inputs shared by their logistics partners. There exists a huge gap between the expectation of supply chain companies and technological inputs and support provided by LSPs.
The fact is, LSPs are a source of essential information and insights for their customers. Logistics providers possess key business facts and data that can actually add tremendous strategic value — and help supply chain companies meet their core challenge of managing volatility.
The technology gap
LSPs must realize that a company always outgrows the technology in use over a period of time. They must evaluate the rapid advancements in technology in conjunction with the growing needs of the company and take appropriate decision to upgrade their technology. The fact that only a small fraction of LSPs have the ability to provide the information and analysis required by their customer points to the gap in the expected level of technology embracement.
The LSPs are sometimes caught up in day-to-day processes that they lose sight of one of the key component that makes their core operations more effective — information technology. This gap limits the ability of the LSP to address complexities of their operations and capitalize on the opportunities it creates. Technology advancements have made communication between various software systems easier than ever and provide many possibilities for companies to exchange information.
Benefits of bridging the gap
Imagine if you start providing real-time inputs to your customers. Or if you could mine the wealth of data you have to create new product packages, value-added services or delivery options based on actual customer needs. You would be able to stand out from other LSPs and viewed as a real strategic partner as against a capable service provider.
IT capability enables competitive positioning of business by reducing the work cycle time with implementation of restructured cross-functional processes. Three factors have strongly influenced this change in the importance of information. One, satisfying the customer by serving them in the most efficient and effective manner has become indispensible for the business. Two, information is a crucial factor in the LSPs’ abilities to reduce oversights and operational roadblocks to stand a competitive chance. And three, information flows play a decisive role in strategic planning. Some organizations that have bridged the gap in technology have reaped huge gain through integration.
Exciting time for logistics
These are exciting for logistics, as supply chain companies become increasingly dependent on outsourced logistics. The key to long-term success is looking ahead of short-term tactical logistics services and becoming a strategic partner for the long haul.
Information technology is evolving. The advancement of technology is shrinking the world with each passing day. New technologies that also incorporate mobile devices are shaping the way companies communicate with one another and get work done. Logistics companies will find that their conventional integration, if they are integrated, will have to be expanded beyond their boundaries. The strategic and technological innovations will have great impact on service providers.
In order to maximize the potential of technology in delivering better service and achieving greater competitiveness, LSPS should, however, essentially have a clear vision, astute planning and strong technical insight. Technology is changing the way a logistics companies are required to do business. The companies must harness the power of technology to collaborate with their business partners and supply chains. That means using a new breed of technology application that is more exciting to work with and at the same time helps achieve the goal.
