More Seeking Outside Provider Assistance and CollaborationJanuary 10, 2019
Today’s opportunities require cooperation across the ecosystem at large. As indicated by Forbes Insights research, transportation-focused executives will not only be looking to hire outside providers for a wider array of services, but they will also be seeking closer collaboration with suppliers, customers and even competitors. In short, for logistics, supply chain and transportation, this is the era of external outreach.
Hard To Keep Up With Changes
Amid so many challenges and opportunities, keeping up with it all is becoming increasingly difficult. In fact, 64% of executives surveyed by Forbes Insights say it is becoming increasingly difficult to keep up with changes in technology, demographics and the competitive environment. Similarly, over half, 53%, say they are concerned their competitors may be moving significantly faster, contributing to disruption in terms of capabilities, costs/margins, service provision and similar attributes.
One proven means to rapidly reap the benefits of any fast-evolving set of technologies or business practices is to engage experienced third parties. Today, only about one-third of companies (33%) say they outsource the majority or a significant portion of their logistics, supply chain and transport operations/needs. But going forward, 61% say they will be relying significantly more on external sources—outsources, service, truck leasing and technology providers—to meet their fast-evolving supply chain, transportation and logistics needs.
Technology: Looking For Outside Help
Amid so many advancements on so many fronts—from telematics/IoT to artificial intelligence and safety/self-driving innovations—technology deserves special attention. Some of the most visible needs include access to leading-edge technology, logistics processes (optimization of routes/loads), or even fleet leasing or maintenance.
A particularly intriguing aspect of the research findings is that in terms of both current and future reliance on outsourcing, the figures are remarkably consistent for all firms large and small. What this means, says Mary Long, managing director of the Supply Chain Management Institute at the University of San Diego School of Business, “is that even those companies with greater resources, the largest in their industries, recognize that with such complex and fast-moving technologies, it makes sense to look more to outside providers.”
Technology is, in fact, transforming logistics, supply chain and transportation processes on so many fronts that the choices, development and on-boarding paths can seem bewildering. So it is no wonder 58% of executives are saying that when it comes to pursuing related technology, they plan to rely on or at least heavily lean on external partners. Only one-third (32%) plan to go it alone; a mere 11% say they will not be pursuing new technologies.
Greater Collaboration Across The Ecosystem
Transportation-focused executives in general will be pursuing greater outreach and collaboration across the whole of the value chain—all participants will be working more intimately with intermediate customers, shippers and 3PLs (third-party logistics companies), end customers, technology providers and so on. Certainly, if the goals are greater efficiency, speed and accuracy, it pays to forge closer ties with others with shared interests and needs.
Such expanded collaboration can take many forms. For example, 60% will pursue expanded partnerships with vehicle manufacturers themselves. By speaking with vehicle makers, users of such products are able to more clearly communicate their evolving needs as well as understand upcoming options and improvements. Similarly, OEMs will more actively reach out to end-users and prospects of their products.
Almost three in five, 59%, say they will more aggressively pursue the outsourcing of transportation processes. This includes activities such as fleet leasing and maintenance. Similarly, 57% of executives say they will aggressively pursue greater outsourcing of logistics processes, including warehousing-as-a-service, scheduling, carrier management, etc.
As to the former transportation processes, the thinking here, says Long, “is that as the technology in the vehicles becomes even more sophisticated, it becomes not only harder to keep up with changes but also to service existing fleets.” Firms will also turn to leasing and related services “as a means of gaining greater flexibility as well as access to the latest technologies and lower capital costs,” she continues. As to the latter, logistics processes, companies can gain earlier and deeper access to advances in artificial intelligence, machine learning and related technologies as a means of optimizing routes, loads, costs and other variables.
Finally, in a series of interrelated findings, 60% say they will aggressively pursue closer collaboration with their own suppliers; 57% will collaborate more closely with partners/distributors; 55% will pursue closer collaboration with customers. Focuses will be on issues such as the sharing of more data, with an eye toward greater end-to-end visibility and process improvement.
Expect A Surge In M&A
Also likely, the industry should be poised for a significant uptick in Mergers and Acquisitions. Consolidation builds breadth and scale, which, when coupled with optimizing technologies like AI, can also lead to greater efficiency, flexibility and margins. Firms may also acquire technology providers in a bid to build greater sophistication. Overall, the Forbes Insights report reveals, nearly three out of five executives, 57%, plan to pursue this ultimate form of external outreach.
Change is all around. Structurally, the industry is looking at new global trade patterns as well as shifting customer expectations. In terms of frontline technologies, executives are seeing all manner of new safety equipment—and soon will need to contend with driverless vehicles and drones. Behind the scenes? Logistics, supply chain and transportation teams are moving as fast as they can to understand and obtain the benefits of technologies such as telematics/IoT, AI and machine learning. It is a remarkably demanding set of challenges. No wonder industry professionals are seeking outside assistance—it is a necessity.
Forbes Insights Team and Penske. (2018). “It Takes An Ecosystem: Transportation-Focused Executives Turn To Outsiders, Customer, Supplier and Cometitors”. Retrieved from https://www.forbes.com/sites/insights-penske/2018/09/25/it-takes-an-ecosystem-transportation-focused-executives-turn-to-outside-providers-customers-suppliers-and-competitors/?ss=logistics-transport#68d1a50d1de6.