Every logistics service provider (LSP) is competing to provide the most efficient and cost-effective storage, transportation and supply chain management for its customers. Visibility is a major part of getting that right— as operational insights and information sharing are critical to communications, resolving issues and boosting efficiency.
The thing is, by itself, visibility isn’t enough—your customers demand more. How do you turn visibility into better logistics execution and demonstrate value to your clients? Closing the gap between visibility and action takes work—but those actions can impress your customers and help you to run a tighter LSP operation.
Supply Chain Operational Costs: Visibility to Action
Understanding the operational costs in your supply chain will help you to identify waste. These costs come from multiple areas, including:
- The price of fuel for transportation
- Raw material price increases on the commodity markets
- Salaries and labor costs, both within your organization and third parties
- Fees charged by freight forwarders and other logistics providers
- Utility and other fees for storage leasing and operations
- Software and infrastructure costs
Acting on Operational Costs Visibility
Once you’ve analyzed your underlying costs, you can:
- Develop and test business models that give you a reasonable profit margin
- Look at each contributing factor to identify waste and savings opportunities
- Run tests based on different forecasts to understand the impact on your revenue and bottom line
- Streamline business processes that create delays and incur additional costs
- Create projects and programs to control and reduce costs
- Take actions that deliver savings that you can pass on to clients
These activities will help you create better pricing for your clients. You will be able to quote with confidence, knowing you’ve priced your logistics services keenly, without eating into your profit margins too much. Pricing is a major factor for clients, so understanding your costs will give your LSP a strong competitive advantage.
Supply Chain Transportation: Visibility to Action
Clients depend on an LSP’s ability to transport their goods between locations with minimal delays or quality issues. Data visibility will assist in areas including:
- GPS location tracking for trucks, chassis, containers and other assets
- Upcoming weather predictions and other environmental factors
- Delays in air freight, ocean transport, road or rail shipments by third parties
- Potential congestion in your transport networks
- Issues with a lack of capacity at ports, terminals and other key locations
Acting on Transportation Insight
You can turn transportation information into actions by:
- Optimizing GPS routing based on predicted congestion, time of day and other factors
- Building mitigation plans to deal with risks and issues caused by weather and environmental events
- Keeping clients informed if there are delays with third parties that are beyond your control
- Creating contingencies and alternative transportation methods for unacceptable delays
Clients want fast and efficient transportation without any issues. Introducing these changes will keep delays to a minimum and help you to meet your customer commitments. This will then help build trust around you delivering a reliable and consistent logistics service.
Supply Chain Trends and Demand Cycles: Visibility to Action
Every client goes through busy and quiet periods and this will be reflected in how they use your logistics services. Careful data analysis will reveal cycles and trends, such as:
- Seasonal demands for specific products, especially in the consumer-packaged goods and retail sectors
- Overall, end-to-end supply chain turnaround times, from original materials sourcing, through manufacturing to product distribution
- The capacity of your logistics business and other third-party suppliers to meet ebbs and flows in customer demand
- How demand from particular clients influences your overall logistics services
- Overall technology trends in the supply chain like AI, predictive analytics, machine learning and robotic process automation
Acting on Demand Cycles and Trends
Using this insight to develop proactive strategies with customers can keep your value front-of-mind. Some of these strategies include:
- Forecasting and predicting what logistics demand is going to be for both individual clients and your overall LSP business
- Getting the right assets in place with plenty of lead time, so you’re prepared for upswings in demand
- Hiring drivers and other staff so you have the personnel to deal with seasonal trends
- Developing service level agreements and relationships with third parties based on predicted trends
- Informing clients of your capacity and ability to provide the logistics services they need
- Taking advantage of the latest supply chain technologies to streamline business processes
These types of proactive strategies reassure clients that you understand what their future needs are going to be. This helps to build confidence that your services can meet their operational requirements.
Supply Chain Finances: Visibility to Action
LSPs often operate on fairly thin profit margins, and managing operational costs is only part of the solution. Ideally, you can use data to get insight into:
- Accuracy of invoicing
- The speed with which invoices are paid
- The revenue you’re generating from specific logistics services and clients
- Cost control and cost leakage in particular areas
Acting on Supply Chain Finances
Using information to get on top of your finances means you should:
- Audit your invoicing against services provided to ensure everything is being billed correctly
- Identify and fix business processes that cause issues with invoicing in a correct or timely way
- Talk with clients that take a long time to pay to see if you can make changes to improve payment terms
- Pay your upstream partners promptly for their services
Better financing and invoicing keep things fair for your logistics business and your clients. It can enhance relationships, with both your customers and third-party services.
LSPs operate in a challenging environment, but turning data visibility into actions can streamline your business, resulting in high-quality, cost-effective client services. These activities help you to demonstrate your value to your customers, ensuring they continue to take advantage of your services and don’t go to a competitor.
Through a global ecosystem of multi-modal carriers, trading partner orchestration and intelligent recommendations, we enable logistics service providers to manage and track real-time events and costs across every mode and every node. Blume Global for LSPs.