LOGISTICS FEATURE
LOGISTICS LEADERS OUTLINE CURRENT CHALLENGES
C
omplex global networks, increased volatility and online channels are driving the need for faster response times and prompting logistics
firms to look again at their networks and services, according to industry experts and business speakers at Barloworld Supply Chain Software’s 2015 Smart Supply Chain event. “Managing the basics and understanding supply chain channels can help even the biggest and most established businesses to raise market share,” said supply chain expert Alan Braithwaite, visiting professor at Cranfield University School of Management. “However, to truly transform their proposition, organisations need to move from value-added services and adopt service-dominant logic.” Many firms don’t always get the ROI they expect from supply chain
initiatives because of a broadening skills gap and lack of investment in the processes needed to deal with a more complex way of operating. “Strong performance in today’s supply chain requires up-to-date
capabilities,” said Barloworld CEO Richard Forrest. “Firms that continue to rely on outdated systems or don’t have the flexibility to adapt will struggle to keep up.” “Increasingly, we are seeing shortening of contract terms and a
commoditised approach to buying logistics services with more fixed-fee contracts,” observed Gist development director Phil O’Hara. “At the same time, more globalisation and volatility in the supply chain results in lower margins and returns for 3PLs. In response many providers are consolidating operations in order to retain a presence in the market. As it becomes increasingly dominated by fixed-fee arrangements 3PLs working to this commercial construct have little room to manoeuvre or to innovate which can lead to ‘just good enough’ mind-set because there is no incentive to over-deliver. Today’s 3PLs and their clients need to focus on value creation and delivery. This means aligning reward with risk and incentivising collaborative generation of value. Our approach is to identify and fully understand clients’ business issues and objectives, design a commercial and operational solution to meet these needs and deliver it. “This is supported by operation modelling technology tools that support
value-driven supply chain design and performance optimisation as well as demand and supply planning. From globalisation to market volatility and SKU proliferation any logistics provider or organisation in the supply chain knows that things are changing fast. Logistics services must have a proper understanding of the customer’s requirements now and in the future and provide enough flexibility to meet evolving trends and needs.” Paul Glanville, VP of major projects at DHL observed that a shift in consumer behaviour is putting retailers and their supply chain partners under pressure to get to grips with new buying channels, increased choice and 24/7 retail access: “Increasingly, business-to-consumer supply and delivery models are becoming more flexible and intertwined with pricing structures partly because rising consumer expectations are impacting business decisions and b2b relationships. “Understanding cost-to-serve, where to stock products and how much to keep, getting to grips with the amount and complexity of data and turning it into actionable insight are key to adapting. To provide customers with choice requires having access to and managing what are often complex networks. With the right planned route it is possible to move goods quickly at low cost. However, in order to offer flexibility to customers you need information – in advance.”
www.barloworldscs.com / MATERIALSHANDLINGLOGISTICS MATERIALS HANDLING & LOGISTICS | SEPTEMBER/OCTOBER 2015 S9
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