Traditionally, most third party logistics companies have focused on creating value for customers by taking over their transportation and warehousing operations, and through economies of scale, systems and best practices, removing excessive costs from these functions.
While this ability to help customers reduce these supply chain costs remains important, the outsourcing cycle for warehousing and transportation management has matured for many companies. Efficiencies have been gained. Easily identifiable costs have been wrung out.
Where will logistics providers find the next level of value for their customers? I see it in three areas, all of which drive toward one goal: delivering competitive advantage.
First is innovation. This applies both to systems and in work practices. We must provide supply chain analysis, process engineering and systems capabilities which support our customers’ needs for superior functionality and improvement. This is an exciting area where evolving technologies hold much promise. 3PLs will need to make critical decisions and investments in this area to bring customers that next level of value.
Second is operational excellence. We have to continuously examine, question and improve every process, every work task we touch. The basic question we should always ask: why do we do what we do the way we do? Lean methodologies offer the ideal foundation for this challenge. Lean tools like value stream mapping provide the framework that allows us to remove waste, to design and engineer the best process for a given task, from the warehouse floor on up.
Third is collaboration and connected services. Logistics providers are strategic partners, in effect connecting a business to its suppliers, manufacturers and customers. Clients rely on our ability to flex with their business, to collaborate with their suppliers, plants and customers, as seamlessly as possible, across regions, countries and processes. It’s both science and art. We have to demonstrate an understanding of cultural and business sensitivity in every location we serve the customer. At the same time, regardless of the region, we have to provide the same level of process consistency and operational excellence, at every point we touch the supply chain.
Delivering effective, reliable solutions in these three areas is the key to getting to that next level of value, and the next great growth opportunity for global logistics and supply chain management.
Robert L. Bianco, Jr. is executive vice president of Con-way Inc. and president of San Mateo, Calif.-based Menlo Worldwide Logistics, the $1.4 billion global provider of logistics, transportation management and supply chain services. An executive with nearly 25 years of experience in the logistics industry, Mr. Bianco began his career as a logistics officer in the US Army. He joined the Con-way organization in 1989 as a management trainee and was named to his current role in 2005.