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Logistics Service Providers –Prepare for the Imminent – Part 1

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Logistics-Service-Providers-–Prepare-for-the-Imminent-–-Part-1

 

One day or day one … you decide: Paulo Coelho

 

The entire logistics landscape is at the crossroads today, looking for smart, effective, and sustainable solutions that will help them sail through the never-ending storms of disruptive changes. Yes, these winds of changes are great, taking the logistics ecosystem towards a customer-driven and efficient dimension. However, the unpredictability of these changes is not giving stakeholders a chance to get ready with the right armaments.

 What are these changes? What are the catalysts initiating them? Are there any solutions? This series of blog posts attempts at giving you these answers.

We will look at some interesting twists and turns that are shaping the journey of the logistics industry, as well as emerging business models and technological innovations that are changing the pace of this landscape.

But let’s start at the very beginning. What or who has really precipitated all this talk about change? It’s your customers, of course!

 Challenges of rising customer expectations

This is the fast food era, where every aspect of life is accessible at a click or swipe, and where customization is a way of life. With online retail businesses picking up at an unimaginable pace, the logistics industry has come under tremendous pressure to keep up with their customers' expectations of receiving goods faster, with multiple delivery options, but almost zero shipping and return costs. Their brilliant user experience while making a purchase, right from the wide range of options to product customizations, sets high expectations when it comes to product delivery. However, when they are forced to wait for a long time to receive the products they purchased within a minute, their user experience plunges exponentially.

 Where’s the gap? The answer’s simple – while most of our customers have embraced new technology with ease, the logistics sector is still struggling to keep up.

We have not yet cracked the enigma code of delivering almost in real time, even when the customer is willing to pay a premium for this as an additional service.

We have also not yet resolved the issue of dynamic pricing of parcels, where customers are expected to pay the same price for shipping regardless of seasonal overbooking challenges that the Logistics Service Providers (LSPs) might be facing.

The need for real-time information forecasts from extrapolated data and timely decision making necessitates LSPs to seek complete visibility across the supply chain, which is a challenge given the innumerable variances that obscure the entire ecosystem.

The current rage for omnichannel operational models across the brick and mortar, online, mobile, and other retail channels necessitates delivering a seamless brand experience to customers. However, LSPs are not part of this spectacular experience and are practically invisible to the customers, except in terms of their expectation to receive their goods with zero additional shipping cost and almost in real time.

Today’s digital world demands speed and efficiency and today’s customers expect seamless real-time services. The entire landscape is hence under stress, looking for viable operating models and innovative technologies that deliver efficiency and profitability despite meeting all the current service and cost expectations of customers.

Technology to the rescue

 Technology has risen as the trustworthy key to open the locks of rising customer expectations. Multiple approaches, from the intelligent use of technologies such as AI and IoT to effective data analytics, deployment of integrated platforms and adopting smart AIDC methods including physical internet, are redefining the pace of the logistic ecosystem, lowering operational costs and enhancing efficiency. The industry has realized that “digital fitness” is the only solution to overcome the current crisis; however, working on developing the perfect formula is not so easy. But there are some accurate indicators of where the landscape must focus and these are the areas that we will be looking at in more detail in this blog series.

Let’s explore three key disruptive business models the industry is experimenting with today.

Sharing is caring

 The current logistics challenges cannot be battled alone. You’ll need a collaborative environment to tick all the points on the long wish list. So sharing space, data, and technology are poised to be a huge agenda for LSPs now. From Uber-style approaches of supply visibility to more formal partnerships at the corporate level, the whole sector has no option but to re-define its outlook on collaboration. But collaboration is hinged upon trust, visibility, and a connected business model. Moreover, collaboration needs to foster a relationship of equals. This would require the current market leaders to create space for new entrants without compromising their own lead. Overcoming these barriers would indeed be a challenge.

 Startup earthquakes

Astute new entrants or startups in the LSP space have caused quite a stir – the seismic movement is palpable but not yet fully acknowledged by the big players. Many of these bright new stars are harnessing data and new-age technologies to attack some of the toughest challenges of the industry. For example, they have mastered the last mile cliffhanger challenge by exploiting new technologies like platform and crowd-sharing solutions. These startups collaborate directly with carriers for mutual profitability. The forwarding industry is next in line for a similar transformation. These bright spots are definitely worth watching and a definite threat to the experienced masters in the industry.

The complex competition matrix

Everyone is taking a plunge into the logistics market nowadays. From industrial giants and retailers to FMCG leaders and suppliers, organizations are looking at options to take over the reins of the logistics play area themselves, not just managing their own logistics but turning this expertise into a profitable business model. Retail Goliaths such as Amazon have already taken the plunge. Although these are early times, LSPs will need to watch this space closely.

LSPs survival kit – intelligent use of technological innovations and smart business models

 The logistics landscape entered the digital era quite a while back, but this is the era of physical internet, data sharing, and collaborative business models. There’s only one decision you need to make right now – are you going to dive in one day or on day one. If you are postponing your brilliant transition to “one day” – you’ll be quick to perish in this race of more than equals.

 

In our next blog post, we will take a closer look at some brilliant technological innovations that have the potential to simplify the LSP’s burden and enhance their efficiency, starting from solving their routine operational issues to enabling a secure data-sharing environment.

Related Posts
Six Disruptive Forces Shaping the Future of Logistics: Force 5 -The Evolution of ‘Uberization’ of Logistics
Six Disruptive forces shaping the future of Logistics: Force 3 - Robotic Process Automation (RPA) in Logistics
Six Disruptive Forces Shaping the Future of Logistics: Force 2- Risks and Business Continuity Plan (BCP) in Logistics

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Logistics Service Providers –Prepare for the Imminent – Part 2

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