Do you ever think about the “omnification” of the supply chain? Not just the new retail consumer omni-channel, which gets discussed quite a bit, but also its impact on third-party logistics service providers and the complexity it creates for both providers and their customers. I recently had an opportunity to speak with Adrian Gonzalez at Talking Logistics to discuss this complexity and how it creates some great opportunities for providers to differentiate themselves and drive both innovation and profit margin.
Here are a few of the key takeaways from our conversation:
- The customers of 3PLs want to focus on selling things in an increasingly complex market. If logistics providers can bring them solutions that help them navigate through that complex web it helps the providers differentiate themselves and develop a high-margin business in a rapidly commoditizing industry.
- It’s estimated that 73% of logistics is still insourced. That’s a lot of business for 3PLs to go after and the best way to grab a large share of that untapped market is to offer advanced solutions that the customer can’t develop for themselves. Those logistics companies that pursue this opportunity, rather than just trying to take customers away from their competitors through cut-rate pricing, will become the most profitable logistics businesses over the long term.
- A more complex, more difficult market drives companies to focus on what they’re good at. Logistics companies are good at managing products through the supply chain, ensuring truck loads get to where they need to go and having people in the right place. But it’s difficult for a logistics or any supply chain company with a small development staff to keep up with all the technology changes going on in the industry.
- JDA has made significant investments in research and development so we can help our logistics customers stay on the leading edge of supply chain technology and, in turn, play a more strategic role with their own customers, differentiate themselves in the market and drive better margins over time as the rest of the industry becomes commoditized.