The past year brought significant change to countless industries around the world in multiple ways. On the consumer side, the global shift to e-commerce spending — up 4% year-over-year and growing almost twice as fast — has put immense pressure on manufacturers, distributors, and carriers to meet that demand in a timely fashion, with particular strain felt in last-mile delivery.
In 2017, there was a notable transportation capacity crisis stemming from multiple challenges facing both the transportation industry itself and the nation as a whole. For the transportation industry, there was a marked shortage of trucks to carry an abundance of loads. The cause? Fleet deterioration due to transportation companies cutting costs, a shortage in drivers with CDLs due to retirement and compensation challenges (and Millennials lacking interest in the industry), massive storms and fires causing economic problems, and increased regulations like the electronic logging device (ELD) topping a list of more than 20 laws making it difficult for companies to stay in business.
Every department within an organization has value and makes an impact on others. However, no other department makes a whole-organization impact like logistics does. This is because logistics is influenced by other departments and influences their ability to do what they do. And it’s because of this interconnectedness and immediate ability to impact the bottom line that CEOs care about logistics more than ever before.
All too often, it can be easy for departments within your clients’ organizations to become too isolationist or focused on their own goals and problems. Why bother with cross-departmental collaboration when they already have enough on their plates to deal with, right? We’re sure your clients have experienced this challenge in the past — if it isn’t still a problem today. But when it comes to logistics and operations, this mindset simply won’t work.
All too often, people confuse logistics with the transportation of goods from A to B via ground, rail, air, or sea. It’s important to understand that logistics as a function of an organization also includes (or should include) warehousing and distribution functions.
Research is predicting that B2B organizations that do not embrace the latest digital technology and the eCommerce megatrend could lose nearly half of all future revenue over the next five years.
The impact that COVID-19 has had on the logistics industry has been staggering. Whereas some industries like consumer goods, health, and life sciences have seen staggering growth as a result, retailers and various industrial companies have struggled to maintain operations despite significant losses. Depending on what industry your clients are in, they’ve likely experienced numerous challenges with their manufacturing logistics strategy.
The leadership teams for small and mid-size manufacturers and distributors have a great deal on their plates already, particularly with the unknowable challenges that lie ahead due to COVID-19, ongoing tariff negotiations, and other industry trends. While these times are filled with a great amount of uncertainty, it’s nevertheless important that your clients’ leaders are asking themselves the right Logistics questions to understand how logistics fits in with their overall strategy.
Whether you are a trusted advisor to manufacturers and distributors, an investor in those spaces, or a manufacturer or distributor, understand that logistics is the way that businesses move forward — literally and in terms of their strategic goals. The logistics function governs how supplies, products, and other goods get to where they need to be. And just as with any other aspect of business, it’s important to benchmark logistics so you can understand what’s working well and what needs improvement.
Recent events, market conditions, and the mantra to further strengthen and sustain long-term relationships with clients have compelled trusted advisors to get creative and even more proactive with their manufacturing and distributor clients. The very best trusted advisors are adept at bringing ideas and suggestions to their clients in the spirit of helping improve margins, competitive positioning, business valuation, and customer service. In many cases, that means aligning with subject matter experts outside of their wheelhouse.
