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Keeping track of improvements
Page 22
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Technology that improves the visibility of the supply chain could be the answer for 3PLs keen to build on recent positive financial results.
Chris Morgan, Automotive & Logistics Datamonitor
The past few months have seen the majority of logistics companies release healthy trading statements, showing that the industry has continued to improve since the 9/11 terrorist attacks and the 2003 SARS scare.
While recent economic data has raised fears of an upturn in global inflation, GDP is still forecast to grow in the coming years, which will have a positive effect on trade and the logistics industry.
This will not automatically translate into improved revenue and profitability for third-party logistics players (3PLs). Logistics companies will still have to continually assess customers' demands, both overt and latent.
Datamonitor research shows 3PL clients increasingly want providers to be more proactive in their approach and share best practice from other customers and industries, while also offering solutions to their current problems.
Although this trend will continue to be critical to the health of the industry and companies within it, of equal importance will be creating a competitive advantage to entice new customers or lock in existing clients. One way to achieve this will be through the adoption of technology. Although Radio Frequency Identification (RFID) has been creeping into the logistics market, it is still not seen as a standard part of a 3PL service in the same way as it is in the express parcels market.
Some logistics vertical sectors, however, are increasing the pressure on suppliers to use some element of technology to keep track of shipments and improve the visibility of the supply chain for example, suppliers for Wal-Mart must now have RFID as standard.
Research conducted by Datamonitor shows that senior executives rate improving supply-chain visibility as one of the priorities for their 3PLs to tackle over the coming year. Being able to access real-time information on the location of a shipment, as well as automatically being notified of any delays, will help firms improve inventory management and reduce costs.
Moreover, given that it is such a high priority for clients, a 3PL that has the ability to provide this service will stand a better chance of securing contracts. Although it may be costly to implement at the moment, this could provide a crucial competitive advantage for a 3PL in the future, and help maintain the flow of positive financial results.