How Logistics Service Providers Can Use Technology to Compete

The Blume Global Team | July 15, 2019

Logistics Service Providers (LSPs) are in constant competition to provide a complete, end-to-end service for transporting goods around the globe. If LSPs want to continue winning business, they need to become fully digitized and offer a seamless, online experience to customers who want a fast and easy way to move goods by land, sea or air.

 

Logistics Service Providers Have an Advantage for Moving to Digital Solutions

For example, because freight forwarders tend to act as brokers for logistics services, managing the relationships and contracts between providers, it’s easier for them to use digital technology to transform their businesses. LSPs are complex by nature, with hundreds of interlocking operations and services.

LSPs do have an advantage though—freight forwarders need to keep a healthy profit margin on everything they negotiate, so digital technology is an absolute necessity to drive value from their contracts. In contrast, LSPs can digitize parts of their business over time, and unlock significantly greater profit margins through automation, reporting, integration, communication and efficiencies.

 

Digitizing Logistics Services Should be a Business Priority

LSPs face several challenges:

  • Concerns about shippers bringing their logistics and supply chain services in house
  • The proliferation of online freight rate marketplaces, making competition more difficult
  • The growing number of well-funded freight forwarders
  • New, digitally-enabled LSPs in their industry

Digital logistics technology can help across the board. Here’s how.

Customers Get Greater Insight into Supply Chain Management

Bringing logistics together onto a centralized platform gives customers much greater insight into how supply chain management is working. They can track goods as they move around the world, understand when products are likely to arrive and collaborate with LSPs to drive up efficiency and reduce delays and bottlenecks. This creates better relationships between LSPs and clients, leading to greater trust, longer term business arrangements and truly customer-centric supply chains.

Customers Can Understand Logistics Costs

Digitizing services make it much easier to provide both detailed and end-to-end quotes for every type of logistics operations. Customers can understand where their money is being spent and ensure they’re getting competitive pricing. A fully-digitized LSP platform can provide rapid quotes for any type of shipping, compared to manual quoting processes which can take many days.

Logistics Service Providers Can Optimize Routes with Digital Technology

Automation, AI and machine learning makes it easier for LSPs to service their customers in a fast and cost-effective way. This includes:

  • Instantly sharing logistics data between all parties for complete visibility
  • Optimizing for the fastest, most cost-effective routes between destinations
  • Tracking and locating goods and vehicles through GPS location and Internet of Things devices, allowing rerouting in the event of delays

This combination of technologies allows LSPs to provide faster shipping, reducing end-to-end delays in the supply chain. Clients get their goods delivered more quickly, enhancing their own competitiveness.

Logistics Service Providers Can Automate Back Office Processes

A large, fixed cost base is a problem for many LSPs. Staff salaries, property costs, capital expenditures and more all contribute to high costs that need to be priced into shipping quotes. Moving to a centralized digital technology platform allows for much greater integration and connectivity with other systems. LSPs can automate many of their more common, low-value tasks, freeing up their staff to work on value and revenue generating activities. Areas like customer service, finance, quoting, order management, warehouse management, fleet management and more all benefit from digitization.

This combination of technologies allows LSPs to offer much more proactive, customer-focused technologies to their clients at a lower cost.

Logistics Service Providers Can Forecast and Meet Future Capacity and Demands

Predictive and prescriptive analytics, combined with demand and capacity forecasting means that LSPs can accurately understand what future demands are likely to be. This insight helps with fleet and carrier procurement and management to ensure there’s enough capacity to meet future client needs.

 

Transforming Into a Digital Logistics Service Provider

With so much potential for enhancing a logistics organization, LSP supply chain managers need a robust approach to digitizing their operations and services.

Create an LSP Digitization Strategy and Project

Moving to a centralized, digital logistics platform requires a structured, strategic approach to ensure you get the most value out of the software. You should start by establishing a business case for digitizing logistics services, then get your stakeholders on board to build a complete strategy for migration. Once you have a strategy signed off, you can create a digitization program and secure the resources and funding needed to go digital.

Choose the Right LSP Digital Technology Platform

You have several choices for an integrated, digital, centralized LSP platform. Although individual LSP needs will vary, platform features you’ll want to consider include:

  • A wide and deep range of integration with existing technologies
  • An established network of third parties, partners and providers
  • Transaction automation for complete tracking and auditing of all agreements
  • Deep logistics and business analysis and reporting
  • Built in optimization for routes, fleets and other logistics operations
  • Strong forecasting, capacity and demand planning capabilities
  • Track shipments in real time through GPS and IoT

Understand Where an LSP Will Get the Most Value from Digitizing

Many LSPs will want to digitize over time. Complete an audit of all logistics operations to understand where you’ll get the most immediate returns on moving to a digital platform. Talk to operational teams, clients and business stakeholders to understand what their priorities and pain points are. Create a digital technology migration plan based on the urgency, importance, benefits and savings you’ll realize from digitizing specific parts of your LSP business.

Use a Phased Approach to Digitize Specific Logistics Operations, Functions and Services

Once you have a strong digital migration plan, you can start moving parts of your operations to your new LSP platform and testing them once they’re up and running. As you migrate specific functions and services, you’ll need to train your employees, clients, and third parties on the new technology.

Monitor Performance of Your New Platform and Refine as Needed

Once you’ve migrated everything to your new LSP platform, you can drive even more value and efficiency by using dashboards and reporting to identify potential issues. Start a continual improvement plan with a focus on customer expectations and use that to drive up the benefits and features you offer to clients.

Moving to a centralized, digital logistics platform doesn’t have to be daunting. You’ll unlock greater value and efficiency and gain valuable insights that can help you win customers. Because you offer an integrated, end-to-end service, you’ll have a competitive advantage over the freight forwarders as you sustain and grow your logistics business.

 

Blume Digital Platform is the industry-leading, real-time network that connects and uplifts the entire supply chain ecosystem for logistics service providers. Beyond bringing efficiencies and automating repetitive tasks, Blume Digital Platform brings data from multiple sources to drive predictive capabilities in demand, real-time visibility into inventory, collaboration or co-innovation across trading partners, precision around availability or real-time status of orders, smart contracts and managing by exception—executed and enabled through our solutions to drive growth and value for customers.

Contact Us