It has largely been seen that there is a substantial gap between projected savings and actuals of companies when they first venture into offshoring and global sourcing initiatives. This is most often because of miscalculation of the logistics cost. For instance, they may have underestimated the amount of buffer stock that needs to be held on account of a longer supply chain. It could also be attributed to ineffective execution of a global supply chain due to poor management of logistics. The company may be said to have a reactive, rather than a proactive, policy to logistics management or they might be ill- equipped to deal with the complexities of global logistics.
Optimizing profits in the international market is all about effectively managing third party logistics, for which visibility is key. Even in the domestic market, high quality client servicing is hardly possible without relying on third party logistics solutions. The 19th Annual Third Party Logistics Study provides irrefutable evidence that investing in and managing third party logistics is integral to the success of an enterprise. According to the study published by Capgemini Consulting, effective partnerships with third party logistics impacted the bottom line in the following ways:
Moreover, the indirect advantages of a third party liaison showed an increase in the order fill rate and order accuracy, which in the long run would impact the good will of the enterprise and could potentially translate into more profits. In order to optimize global logistics, it is crucial that one is empowered by technology, such as dispatch management software and Electronic Data Interchange (EDI). The technological boost to logistics can help small companies grow into newer markets, have greater access to raw materials, automate processes resulting in greater accuracy, visualize the supply chain at every step and enhance their planning capabilities. In the light of these developments, it may be fruitful to study some of the emerging trends in Global Logistics.
Demand driven logistics: Kieth Biondo, publisher of the Inbound Logistics Magazine, said that his one point tip to enterprises is to start demand-driven logistics. This is an astute suggestion made by the industry veteran, given that not only can this help to increase visibility and drive the supply chain, it can also offset the market advantages that competitors may have.
Green Logistics: Sustainability is particularly relevant in the case of Reverse Logistics, although not limited to it. The case study of Philips Consumer Lifestyle, published in Inbound Logistics, shows how the company not only achieved its zero landfill goal, but also achieved extra profits from the venture. Moreover, reduction of one's carbon footprint is a real concern for enterprise logistics, for which various measures are being undertaken.
Lean Logistics: Interrelated in some ways to the concern of sustainability, although geared mostly by profitability goals, lean logistics refers to the elimination of superficial stages in the supply chain, which does not add any value to the product, says a post on the Logistics and Materials Handling Blog. In other words, it is an attempt to cut costs on wastage along the supply chain process. In order to achieve this, various waste fighting tools have been devised, such as Value Stream Mapping.
The common denominator to these trends is the technological advancements that allow for better visibility at each step of the supply process. In order to achieve lean goals, one needs to decrease manual processes. In order to effectively achieve demand-driven logistics, one would need to utilize the inventory more effectively, while companies can utilize software that helps increase in-transit visibility to reduce the carbon footprint. This will also help to keep a check on the increase of unexpected costs, such as demurrage, by way of timely notification of delay and its due resolution. Technological advancements have, in fact, allowed for a change of the terrain in which logistics operates, allowing for better performance and higher turnover for companies.