‘There’s a lot of talk about collaboration but not as much walk,’ says Adrian Gonzalez in ‘Talking Logistics’.
I couldn’t agree more. Very few companies have actually implemented collaborative logistics. Even fewer have fully exploited its potential as a game changer.
According to a paper in Transport Review (Collaborative logistics from the perspective of road transportation companies, October 2013), collaboration is now a necessity rather than an option: ‘To survive under the ever increasing competitive and global pressures to operate more efficiently and improve profit levels, transportation companies are obliged to adopt a collaborative focus.’
Large logistics service providers (LSPs) have the critical mass needed to benefit from internal collaboration. Many are already achieving huge gains from optimizing their operations.
But what about midsize operators? How can they avoid being squeezed out of the market by larger, more efficient players?
If you’re a midsize operator, the choice really is yours. Like large LSPs, you too can achieve the critical mass required to improve capacity utilization, develop value-added services, minimize costs, and dramatically reduce your carbon footprint.
Through collaboration with your peers.
Of course there’s the issue of how much information to share and with whom. Whatever you do, don’t be too cautious. Evaluate the possibilities. Studies on the profit to be gained from collaborative logistics show a significant positive relationship between the amount of information exchanged and the benefits achieved.
Similarly, don’t be put off by the challenge of determining how revenue and efficiency gains should be distributed among your partners. The payoff will be worth it.
And finally – and most importantly – don’t be deterred by the complexity involved. As we all know, there have been many attempts at designing networks in collaboration with other LSPs. Building a hub and spoke model isn’t easy. Building a hub and spoke model in which all parties benefit is even more difficult. When should you go for a hub? When should you use direct links? How should you consolidate orders? Which services should be combined?
Today, there are smart systems that answer questions like these – optimally. The technology exists to optimize multiple trips across multiple depots, right across the supply chain.
Collaborative logistics will mean the difference between playing second fiddle to the planning departments of larger organizations, and taking the lead – with your peers – to grow your share of the market. Being midsize can be a competitive advantage if you’re willing to collaborate.