21st Annual Study of Logistics and Transportation:Partnerships add value to the Masters of Logistics
September 01, 2012
They’re at it again. Over the past two decades of conducting this study, we have often found that it’s the Masters of Logistics—those with sales greater than $3 billion—who are the first to implement new transportation management methods and approaches, put new technology to use, or move more quickly than smaller organizations to integrate internal systems.
However, in the past few years, the competitive gap that was created by the Masters through these actions essentially closed—in other words, there wasn’t a statistically significant difference between small-, medium-, or large-sized companies. During that time, being the “biggest” simply didn’t translate into being the “best” in terms of logistics and transportation practice.
The results of this year’s study suggest that the Masters are again taking the lead when it comes to creating value through the delivery of differentiated service; in fact, we found that the Masters think differently when it comes to actualizing this concept as they view their people and processes as key elements in differentiating their organization in the marketplace.
That is to say, the Masters perceive that they are better than their competition in terms of delivering service that distinguishes between customer groups at a lower total cost.
This year’s results indicate that the Masters clearly believe that rewarding performance of logistics and supply chain personnel results in exceptional customer service that sets them apart from competitors. Further, the Masters strongly agree that innovation in logistics and transportation services improves their competitive position.
But this is a just one element of what we learned while dissecting the results of this year’s study. Some 1,370 domestic and global logistics, transportation, and supply chain management professionals participated in the study (a near record turnout), offering insights on trends and issues relevant to today’s busy managers.
In addition to the University of Tennessee, the research was conducted in partnership with Con-way Inc., Ernst & Young, and Logistics Management. Participants accounted for an estimated $30.1 billion in domestic transportation expenditures and over $20.5 billion in international transportation. The Masters of Logistics represented 27.8 percent of the study participants. Medium-sized firms, with between $500 million and $3 billion in annual revenue, were 20.6 percent of respondents. The majority of respondents (51.6 percent) were smaller firms with reported annual revenue less than $500 million.
Respondent companies represent a broad and diverse set of fifteen industry sectors ranging from pharmaceuticals to food. Since the beginning of the study, the core group of participants has been in the manufacturing sector—this year they made up 42.6 percent of the total. Consumer products companies represent the largest sub-sector of that group at 15
The results identify the emergence of an idea advocated for over a decade, and one which is being put into place by the Masters of Logistics: Use logistics and transportation services to differentiate yourself in the marketplace. As one would suspect, being able to deliver differentiated service is not possible without a value-creating partnership between the shipper and its strategic carriers; in turn, this has created a unique balance of power between the two parties.
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