Friday 14th Dec 2018 - Logistics & Supply Chain

Logistics innovation drives success, says study

In a current market study, management consultancy Arthur D. Little and European Logistic Association (ELA) reveal that suppliers of logistics services can increase their EBIT margins by 8.5 per cent if they have a first-class innovation process.
By 2012, the logistics market will rely on more than just price and reliability of services when choosing a supplier. The main standard will be the meeting of customers’ specific requirements with customised innovative services and the creation of a demand for new services.
Previously innovation as a major factor of success in logistics was undervalued. New business models in trade and industry are now fundamentally changing these dynamics.
Customers are frequently, but not always, the drivers of innovation. For instance, innovation among providers of logistics services is mostly market-driven. In general, the picture is different among haulage companies who generally see themselves as the creators of innovations on the basis of their own strategic planning.
The innovation processes of service providers and haulage companies are therefore very different from whilst still being complementary. The top innovators in haulage companies are distinguished by a particularly early integration with their suppliers.Participants in the study see the greatest potential for innovation in logistics systems and networks that can be adapted to different requirements. Above all, the potential for improvement is realised by co-operation throughout the entire added-value chain.Among logistics service providers and haulage companies, the top innovators stand out by consistent market research. Among these companies, market research is conducted as a continuous professional process as part of a structured project management. In general, providers of logistics services and contractors should co-ordinate strategies, processes, organisation and resources closely in order to achieve optimum innovation management, with a balance between cost and customer focus.
Innovation should be based on a dedicated department or marketing-related line function to create clear responsibilities. Of course, innovations must be consistent with the strategic corporate goals. A direct reporting line to top management gives it the necessary weight in the business and can guarantee that any relevant initiatives are put into practice consistently.
Modularisation and standardisation of logistics services continue to play a major role. A structured continuous early-warning system to recognise new customer demands and technological trends (market and technology intelligence) is a central success factor. External partners should be involved as early as the concept development stage of innovations.
Haulage companies in particular should create a rigorous project management for all innovation activities in logistics. A clear innovation strategy must be developed and communicated consistently with overall corporate goals. All parts of the business, customers and qualified service providers concerned should be involved continuously, from an early stage.
Logistics service providers should develop and introduce a market launch and rollout concept for new products and services, to establish and institutionalise a continuous learning process and the supporting knowledge management. This will drive forward the creation of tools and methods to support logistics innovation activities.

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