KEYS TO TRANSFORMATION

KEYS TO TRANSFORMATION

Opportunities await LSPs that use IT as a strategic differentiator, adopt modern leadership principles to achieve fl exibility to suit the marketʼs altering needs, broaden their services, and enter new geographies. By SUNDAR SWAMINATHAN.

The 2010 Annual Third Party Logistics (3PL) Study, conducted by Capgemini Consulting, the Georgia Institute of Technology and Panalpina, showed that LSPs (logistics service providers) still face an IT capability gap — only 54 percent of the shippers surveyed were satisfi ed with the IT capabilities their LSPs off ered. LSPs have been bridging the IT capability gap over the last three years, but there is still a long way to go.

LSPs have to simplify and modernize their information technology environments, standardize and automate business processes, and transition to logistics platforms that allow them to provide multiple services to multiple clients on a single confi gurable platform.

THE SIX KEYS In working with shippers, LSPs and carriers over the last two decades, Oracle team has identifi ed six key principles that characterize class information technology platform:

• Automate to scale the business and improve profi tability: Standalone systems, disconnected and labor intensive processes, and the lack of decision support for complex tasks such as quoting, routing, and shipment consolidation have resulted in LSPs adding manpower to support growth, high cost of service, and low margins. Logistics leaders will automate routine and complex tasks and orchestrate enterprise workfl ows, allowing the workforce to focus on the customer and on exceptions that require human expertise.

• Leverage technology to speed time-to-market: Multiple systems for logistics planning and execution and fi nancials, and the lack of standard processes, have increased the time LSPs need to introduce new services and made it diffi cult to deliver them consistently. Logistics leaders will adopt global quote-to-cash platforms that allow new services to be introduced quickly and delivered reliably by ensuring adherence to contracts, automated workfl ows, and pro-active monitoring.

• Confi gure solutions without customizing processes and IT: Infl exible legacy platforms for transportation and warehouse management have forced LSPs to add a new instance of the system for each client, resulting in hundreds of TMS and WMS instances that needed to be setup, confi gured, and maintained. LSPs have also had to rely on workforce training to ensure adherence to customerspecifi c requirements. Logistics leaders will adopt TMS and WMS platforms that can support multiple services for multiple clients, reducing the time and costs to onboard each client. Logistics leaders will also automate client business rules, ensuring service reliability and customer satisfaction.

• Collaborate with customers, partners, employees: Collaboration with customers using spreadsheets, complex EDI integrations, high error rates, and long lead times for setting up electronic communications with shippers and carriers have limited the real-time collaboration abilities of LSPs. Leaders in logistics will use new collaboration platforms that support data exchange in a variety of formats, integration using web services, and automated workfl ows. This will reduce the time and costs for integration, increase reliability, and promote proactive workfl ow monitoring.

• Measure to drive improvement: KPI data collection and computation tends to be manual and delayed at most LSPs, making proactive process improvement diffi cult. Leaders in logistics will improve decision-making through performance dashboards that allow visibility to KPIs and provide the insights needed to identify root causes and improve processes. Leaders in logistics will invest in robust data collection systems for KPIs, automate KPI computations and make continuous process improvement a priority.

• Deliver one version of the truth: Most LSPs have a real challenge closing their books quickly because customer data, shipment data, revenue and expense data are split across multiple systems, making it diffi cult for LSPs to get a consolidated view of customers and operations. Leaders in logistics will centralize these to lower IT costs, accelerate decision making, and enable fi nancial consolidation and more accurate and effi cient reporting. This will also enable LSPs to target the right customers, qualify leads, and up-sell new services through a global customer repository, and provide consistent customer service at all touch points.

Promising opportunities await LSPs that realize that IT is a strategic diff erentiator, and for those that adopt modern leadership principles to achieve fl exibility to suit the market’s altering needs, broaden their services, and enter new geographies.