Transformation of market-leading Logistics Companies

By | Sep 29, 2021 | Featured, Logistics, Opinion

For many years it has been common that the roles of the Transport sector in general were separated. From freight forwarders (who only carried out international transport), customs agents, warehousing companies (in all their varieties, cross-docking, logistics and bonded warehouses), long-distance land transport companies (national and/or international), to local distribution companies or last mile companies as they are now called. Each one was specialized in a single activity.

But as any of these companies has been acquiring greater presence and volume of operations, it has become a Logistics Operator, whose definition would be that of an integral company of transport services, and which brings together all the roles of transport as its own services, allowing it to provide a comprehensive, fast and competitive service in terms of costs, i.e., to achieve excellence in its services.

E-commerce, the implementation of Just In Time in production chains, and the emergence of express services in transportation by the large multinational logistics companies (e.g. Amazon, UPS, DHL, etc.) have accelerated this level of demand for service excellence.

Transportation companies that cannot achieve this excellence in their services are beginning to see how they are losing market share and how they are beginning to be left out of large operations (Contracts/Tenders) or important market segments (Food, Pharma, e-commerce, ... ) or flows of goods, and have to settle for smaller and smaller local or sectorial clients.

At this point, companies in the process of transformation to a Logistics Operator undergo important changes in their structures, of which I will mention the five that in my opinion are decisive in this transformation:

  1. IT Department: They require an important IT Department, which is able to provide internal support and service to the continuous changes and needs of the company, especially in the part of customer integrations. The logistics of the future will be connected or it will not be logistics.
  2. Technological Solution: They require a vertical ERP, specialized in Logistics, that manages, coordinates and optimizes the total operations of the Operator from origin to destination, starting with the International Transport (Ter/Sea/Air), the Warehouses (in its three modalities), the national and local Distribution, the Customs and finally the areas of Commercial, Administration and Finance. Everything must be meticulously connected and integrated. Companies that dedicate their IT resources to integrating various solutions (solution puzzle) or developing their own ERP will be behind schedule and will also have a cost double or triple that of a single vertical market solutionThis will cause them to lose competitiveness and excellence in their services.
  3. Training: The use of more advanced technology, more complex processes, and more demanding services requires high-level internal training, which allows controlling the training level of each employee, both of the technology tool used (ERP) and of the internal regulations and special processes of each of the services offered by the company. The staff of a logistics operator of excellence must have a high level of training. high level of specialization and continuous trainingand must actively participate in the continuous improvement of the processes in his or her area. A internal training and education tool will be of vital help in this process to transmit the company's culture and attract and retain new talent, valuing their training and proactivity in the improvement of processes.
  4. Recruitment: Another major problem for an Operator is the incorporation of qualified personnel who already have proven previous training (the sector suffers and will suffer from a significant lack of manpower) and who can be quickly incorporated into the company's processes without having a significant impact on the rest of the operators. This flow of personnel is constant and intensive (seasonal campaigns, new clients, personnel rotation, new delegations...) and the company must have a well-defined circuit for the recruitment of new employees and their rapid training in the company's business and operational culture.
  5. High availability: Playing in the first division of Logistics requires higher levels of service at the technological level, usually: 24×7 service, cybersecurity, contingency plans (from high availability to a Disaster & Recovery plan). And all this is no longer assumable from the IT staff and the facilities and equipment themselves. It is necessary to Cloud solution and a specialized Partner that allows the operator to have all these services and guarantee the SLA's defined by the operator, which can often be imposed by some of its own customers.

In June 2020, just three months after the start of the pandemic, Deloitte published:

As economies around the world move from the "response" to the "recovery" phase of the pandemic crisis, companies have entered a new period of innovation.

COVID-19 has exposed vulnerabilities in many organizations and accelerated trends that could lead to significant improvements in productivity, performance and resilience, enabling them to thrive in the "new normal." Never before have we seen such a massive operational transformation in such a short period of time as this.

Evidently COVID-19 has meant a before and after and has generated an important technological acceleration, to the point that some say that in one year we have made a technological leap equivalent to 25. The adoption of teleworking as a habitual way of working, flexible working hours, the explosion of videoconferencing tools as a means of communication, in many cases surpassing the traditional telephone, the essential leap to CLOUD to be able to offer teleworking, on-line training, changes in consumer habits and many other changes that are here to stay, are the consequence of this technological acceleration.

And as in all cycle changes, the logistics sector is one of the main thermometers, and one of the sectors that is most obliged to adapt to the new circumstances, a service sector that has to be continuously adapting to the changing needs of its customers.