New challenge for logistics sector
Issue: Winter 2008
As we enter a new year the logistics sector will face a new set of challenges. Richard Ellithorne explains...
By Richard Ellithorne
Some of the challenges today and for the future include:
● A requirement for further collaboration among suppliers and customers.
● A continued trend towards globalisation.
● A drive for ‘green’ initiatives.
Collaboration
Much has been written over the past few years about the need for manufacturers and retailers to work more closely together – and progressively the spirit of collaboration has started to include logistics service providers. There is a necessity for a greater insight into the planning and forecasting processes of customers to ensure that logistics service providers have the capacity and resources available when they are required in order to effect the on time delivery of goods.
Customers, quite rightly, expect rapid, consistent and now more secure deliveries meaning more tracking, tracing, and security monitoring of the supply chain – all of which add extra time. As such, 3PLs need to be involved earlier in the forecasting and replenishment process to ensure that goods really do arrive in time, and so prevent empty shelves and stock outs. This would improve retailers’ sales and therefore overall satisfaction with their service providers.
The trend to globalization
A major challenge facing the sector is the continuing process of globalisation. Supply chains are increasingly becoming international – especially for Western European companies. We no longer manufacture many of the goods consumers want to buy in our own countries and much now comes from producers on the other side of the world. International trade is at an all time high as companies broaden their supplier and customer base.
The largest dozen or so logistics service providers in the sector collectively account for only around 16% of the world’s market. There are thus a great many small businesses out there who may find survival in 2009 a struggle. They often lack the funds to invest in new or green technologies or to develop value added operations. They face two options: either to become niche market players, or to participate in the consolidation of the sector through a buy-out orchestrated by the financial community.
Environmental issues
A major challenge in 2009 will be the growing corporate, consumer and legislative interest in environmental issues. Logistics service providers, together with customers and partners, need to look at ways of reducing and replacing wasteful practices: reducing emissions and replacing polluting activities to create a more sustainable environmental model.
For example, DHL are starting to replace use of diesel in their transport fleet with biodiesel, which does not produce carbon emissions or contribute to air pollution. The transport sector should make greater use of hybrid trucks, which offer the option of switching to electrical power in towns to reduce pollution. In the ‘replacement’ category, companies should switch to solar heating in warehouses. Panels on warehouse roofs can help reduce the requirement for carbon-based energy to heat offices or water.
In summary, the future will be challenging for all 3PLs – but there are plenty of opportunities for innovative growth, enhanced performance, and environmentally friendly initiatives, if they choose to seize them.
● Richard Ellithorne is Head of Information, Forums & Influence at The Chartered Institute of Logistics and Transport in the UK.
For further information, contact The Chartered Institute of Transport in the UK – CILT(UK) on Tel: 01536 740100, Fax: 01536 740101, E-mail: enquiry@cilt.org.uk or v isit: www.ciltuk.org.uk
Published: 22/12/2008
