Sunday 20th Jan 2019 - Logistics & Supply Chain

Logistics providers face tough choices

The logistics sector has entered its fifth age, according to Yusen’s managing director Kevin Appleton, who said firms have to face up to the choices in front of them and choose whether to be great generalists or specialist providers.

Speaking at the  3PL Conference in Birmingham last week, Appleton outlined what he sees as the four ages of logistics.

“In the 1970s and 1980s, we were living through the age of indolence, during which there was a wild approach to logistics as the sector gained momentum,” he said. “Following this was the age of management as the industry grew, then came the age of process with much more linkage, and most recently we have gone through the age of squeeze following the 2008 financial collapse.”

In the wake of the economic collapse, Appleton said that while there has been economic growth, this has accompanied mass profit warnings across FTSE 250 companies.

“This means the growth seen, has been of little value,” he said. “It has been incredibly hard to find investment since 2008. And looking further back, the availability of capital and margins has changed dramatically over the past 30 years.

“Where once it was not uncommon to experience high single digit to low double digit growth, we have witnessed a drop.”

Since the crisis, said Appleton, there has been an overall decline in the 3PL share of the market. The number of new contracts coming along has dropped, “has growth stalled, or even reversed?” he asked.

Looking ahead, Appleton highlighted that the industry is growing old, claiming that 60 per cent of LGV drivers are over 45 years of age.

“Logistics is an old industry,” he said. “But it is full of intellect and adaptable to change. The question facing providers though is this; do you want to be a great generalist of a specialist?

“Being a great generalist doesn’t position you to beat a specialist. And sometimes it can make you look quite ordinary.”
Focus on innovation

Novelty, invention and revolution: all hold connotations of innovation, but innovation is about improvement and modernisation, Mark Landmann, DHL’s head of product development, told delegates.

“Words are just that, but words are not innovation,” said Landmann. “Innovation is about improving. We can do the big bang stuff, but if that bang is all it provides, there is no point.”

Innovation must come at a time that is right for both customer and provider. And for this to be the case, Landmann said it is important that the provider understands both its own maturity and that of the client.

“There is a right and wrong time to innovate,” said Landmann. “The wrong time is when your boss or your client comes to you and says ‘go out and innovate’.”

When innovating, Landmann said, you need to deal with varying hurdles. Not least of which is convincing both your superiors and the client that they can have trust in you – trust in terms of development and delivery.

Sometimes, this means recognising shortfalls and bringing in outside parties.

“You cannot just ignore the hurdle,” said Landmann. “You must ramp up before reaching it so that you have the capability to clear it.”

Landmann, DHL has not had big bursts of innovation, but rather has been on a continuous journey. Forever updating and evolving to compete in an industry that is constantly, particularly in the past 30 years, changing.

“It’s about being able to provide a one-stop shop,” he said. “And for a one-stop shop to work, you must have confidence in it.”

With 3PLs, though, there are additional issues. If all you provide is delivery, it is difficult for the customer to see how you add value to their business.

“It is about going beyond being just a delivery firm, you need to integrate and collaborate,” he said. “From here, you can deliver value.

“Where does DHL deliver value? Through lower emissions, improved warehouse equipment, zero-landfill and enhanced technology.”

Innovation, said Landmann, needs to be contextualised because it means different things to different people.

“Since 1985, when my mobile phone was as mobile as the wire allowed, we have changed and innovated significantly,” said Landmann. “It just it may not always be as visible as the gimmicky drone.”

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