Wednesday 14th Aug 2019 - Logistics & Supply Chain

Outsourcing gathers pace

The rate of logistics outsourcing across the EU’s enterprises continues to increase according to Datamonitor’s Logistics Market Maps 2004.

According to the analysts, spend on outsourced logistics will reach E175.5bn by 2008, accounting for 45 per cent of total logistics spend. Cost reduction, high-speed delivery and tightening budgets are all playing a role in enterprises gradually moving away from inhouse logistics models.

In addition, incoming EU legislation, such as the Waste Electrical and Electronic Directive (WEEE), is putting pressure on the reverse logistics capabilities of manufacturers of white and brown goods. Likewise, the EU Food Safety Authority’s new emphasis on product traceability ‘from the farm to the fork’ will place demands on food suppliers and encourage more to outsource some logistics functions, helping to sustain the outsourcing trend. All this spells good business for logistics service providers (LSPs).

In the fashion sector, some supermarkets and vertical retailers are successfully employing high-speed supply chains as a source of competitive advantage. This is forcing rival fashion retailers to reassess their own logistics capabilities.

Tom Mills, Datamonitor logistics analyst comments: ‘Fashion supply chains are becoming increasingly geared towards a high-speed, frequent delivery model. Fashion retailers are being made aware of the potential of the supply chain as a source of competitive advantage. Logistics providers that can offer solutions to enhance fashion supply chain performance should target this business.’

And high-tech manufacturers are outsourcing parts of their logistics operations too. Many have relocated manufacturing to more cost-effective locations such as Eastern Europe or the Far East. Technology companies sourcing from the SE Asia region are finding their supply chains stretched over long distances, with increased complexity in co-ordinating inbound flows. These issues represent an opportunity for LSPs to help these companies consolidate shipments at source, handle goods and data flows from various sources and shippers and provide global freight transportation capabilities.

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