IT gap in logistics

Are logistics service providers really moving with the times when it comes to IT? I sometimes wonder. But the gaping void between what logistics service providers offer in terms of IT expertise and what clients demand from them has become smaller and is stabilising, according to the 20th edition of the annual ‘ThirdParty Logistics Study’ conducted by Capgemini and America’s Penn State University, among others.

By Martijn Lofvers

In 2002, only 27 percent of shippers (clients who outsource their logistics activities) were satisfied with their logistics suppliers’ IT expertise, even though IT was an essential element of 89 percent of those logistics activities. By 2015, satisfaction had increased to 59 percent and appears to be stabilising at that level, although the required percentage has since risen to 93 percent. In other words, there is still an ‘IT gap’ of 34 percentage points.

In the same report, the researchers state that the least-outsourced logistics activities tend to be strategic, customer-facing and IT-intensive ones, with examples including spare parts logistics, customer service and supply chain management.

From talking to supply chain directors of multinationals, I know that they have implemented IT applications that check whether their logistics service providers invoice them correctly. Various outsourcing companies use software to generate socalled ‘pre-invoices’ which they send to their logistics service providers so that it is clear in advance which costs have been approved for invoicing. I also know of a well-known fashion retailer that has implemented a supply chain portal to plan and coordinate deliveries from brand manufacturers – if that’s not an example of logistics service, I don’t know what is!

In view of the substantial growth of e-commerce and the associated complexity of logistics challenges in fulfilment, shippers have a strong need for IT support. Their calls for the necessary supply chain visibility are getting louder all the time. Logistics service providers should ask their clients’ supply chain directors about their concrete needs much more often.

In addition, they should distil new, meaningful insights from the huge volumes of data contained in their transport and warehouse management systems in order to proactively offer their customers refreshing advice and recommendations. Nowadays, apps can be developed for a fraction of the price of the standard logistics applications. So, my dear logistics service providers, why not surprise your customers with new insights via a handy app?!

Martijn Lofvers, publishing director & chief editor
martijn.lofvers@supplychainmedia.nl