Yesterday, we reviewed the seven trends for 2012 that World Trade identified for the logistics sector in a recent article and asked if they had weight. Today, we answer that question by presenting the reality (that SI perceives) with respect to these trends.
- Buyers are expecting 3PLs to be the new Jack-of-all-Trades.
While some of the larger organizations are adapting to their clients’ requests, this won’t hold true in all cases. Only where the requests are for services similar to what the 3PL is already offering and where the 3PL has the necessary expertise will the 3PL be able to successfully offer the service for the long term. As a result, some 3PLs will falter (and maybe even fail) and, ultimately, retrench on their strengths and smarter buyers will seek solutions from the right partners. (Going to the supplier to handle packaging, a best-of-breed software provider for a visibility solution, etc.) The 3PL as the Jack-of-all-Trades trend will be short-lived.
- Mobility is King, the Cloud is irrelevant.
Call it ASP, SaaS, Cloud, or Web 3.0 — smart buyers don’t care. They just want a solution that works on the go. They’ll settle for what works, and won’t be satisfied with who has the most buzzwords in their product description. That being said, buyers still on the learning curve may fall for “cloud” in the short term, but if they don’t get results, the services provider will wish they were up in the clouds far from the angry buyers’ reach!
- Transportation is going back to intermodal.
The trucking phenomenon is over. The value proposition of intermodal rail can no longer be ignored.
- Capacity is climbing up the issues list — fast!
Regulations and lack-of-drivers are severely limiting available capacity, air capacity is also limited, and low-cost ocean routes are not going to last forever. As a result, smart buyers always have an eye on capacity.
- The rate of system/data integration is going to increase.
As visibility is a necessity in today’s supply chain. Execution integration will also improve as lean and JIT continues to be applied to the logistics chain. But business integration will take time. Trust, and undisputable business cases, will have to lead the way.
- Near-Sourcing will happen.
The value proposition is back, and, like the value proposition of intermodal transportation, it can’t be ignored. It will take time, as you can’t switch suppliers, or end multi-year contracts, over night, but it will happen.
- Sustainability will continue to lag.
The reality is that at least 8, if not 9, out of 10 companies only tackle sustainability when forced to do so by regulation or pressured by customers. Very few tackle it for the long-term benefits it can provide an organization because, with the relentless Wall-Street focus on profit quarter-after-quarter, an average organization does not want to bear the up-front cost, no matter how great the potential year-over-year reward in the long-term.
And, most importantly, you’re going to see the following trend start to take shape later this year:
- A renewed investment in logistics/inventory management/optimization software
Leading, and better-than-average, organizations are not going to be content to let their 3PLs manage logistics after the fact, when most of the cost has already been locked in, but use advanced software to make sourcing decisions that, when sensible, optimize logistics and inventory costs up-front. Like all sourcing technology trends, it may take a year to pick up steam, but it’s going to happen. Too much money is on the line.
That’s what the doctor thinks. Any divergent opinions?