What’s Keeping Your Logistics Moving?
With market pressures and ever-increasing risk, are we about to see an evolutional shift in how logistics are managed? Procure4’s Logistics Category Expert, Dan Withers, says now is the time for organisations to optimise their supply chain logistics.
Selecting the right logistics partner is crucial to manage risk and the key to unlocking the hidden value in your supply operation.
As supply chains and logistics operations become ever more fragmented and complex the pressure and risk to the chains’ harmony increases, exposing both the logistics operators and their clients. While many large organisations dependent upon a seamless logistical operation have worked hard to cultivate relationships, long-term success may lie in value engineering your supply chain model.
Dan has brought innovation and operationally-focused procurement expertise to major organisations’ supply chains across a wide range of industries and sectors, engaging and energising busy logistics stakeholders to support change and lock it in. “Clients need to recognise the risks as well as the sometimes hidden opportunities within their supply chains to unlock true value” says Dan. Constantly reviewing and innovating the supply chain is a full-time role, however this is where the true potential lies. Off-setting work with others in order to optimise your network, selling capacity to other providers or decoupling logistics spend from other areas, are all potential routes to success.
The logistics market is fraught with risk. Geopolitical events such as Brexit are bound to make an impact, with a potential “No Deal” departure from the European Union, supply chains face further uncertainty through currency hikes, new trade deals, increased tariffs and potential quota restrictions. These concerns, when coupled with skilled labour shortages, rising fuel costs and increases in the minimum wage, mean logistics firms are looking to stabilise their bottom line, and fast. “The logistics market is really up against it, and there is a real sense of uncertainty. Organisations have to get smart in order not to have their own profitability impacted, however facing such risks can often drive true business innovation” says Dan.
The logistics market has been driven by consolidation over the last 20 years, with many organisations seeking fewer, larger providers that are able to manage complex supply chains on a global basis. This, however, is an area where Dan sees opportunity. “Improving operational efficiencies and streamlining core processes has always been the focus. However, as organisations grow in size, and the 3PL’s subcontract elements creating 4PL’s, significant cost efficiencies could lie in eliminating the now traditional 3PL’s business model in favour of in-sourcing or hybrid model, or decoupling 3&4PL.”
Procure4 have averaged savings of around 7% though bringing in new suppliers, centralising operations, buying into the core fleet or working smarter with partners, which are also ways in which logistics operations can mitigate risk. “The key is finding the right solution and partner for your business, which often requires true market insight” says Dan. “The solution has to fit the operation and due diligence is critical when introducing new suppliers into the chain.”
The multitude of external risks facing the logistics market place are vast and out of an individual organisation’s control. The need to mitigate such risks is a catalyst to drive true market innovation and re-evaluating the business model; and by introducing specialist Logistics procurement expertise into your organisation you will bring focus and a different perspective. Understanding the supply chain and working with your logistics partners, on an individual, level will see your organisation gain insight into the full supply chain and release the true value.