22nd Annual Study of Logistics and Transportation Trends: Masters co-create value
September 01, 2013
Some have said transportation is a street leading to unlimited destinations. On this street, some are headed to a place where transportation is viewed as a commodity. Others have made a dramatic U-turn and are headed towards an end point of long-term commitment where transportation providers are viewed as critical partners to the success of the firm. Meanwhile, the majority remain in the middle, parked in the off-ramps, wondering why everyone is in a hurry. For those headed to commitment or commodity, the reasons for urgency are apparent and inescapable.
This allegory reflects a trend continued by a group of carriers and shippers towards the co-creation of value, and this group has moved further along the road to positioning transportation as a strategic value-add function. In fact, the results of the 22nd Annual Trends and Issues in Transportation and Logistics (Masters of Logistics) findings indicate that this “value-added” view of transportation directly relates to better company performance in areas such as profitability, return on assets, competitive position/market share, and customer service.
This year’s findings reveal that the value-added approach to transportation goes beyond the core carrier program: It’s an active two-way street where both parties are committed to the long-term success of the other; a strategic relationship where both parties keep their focus on forging a new way of managing transportation.
In addition to the annual global survey which is the primary source of data presented in this article, the authors, along with survey sponsor Con-way Inc., conducted in-depth interviews with vice presidents and directors of transportation, logistics, and supply chain at Fortune 100 companies as well as discussions with CEOs of the top ranking truckload (TL) and less-than-truckload (LTL) carriers. The interviews provided a wealth of perspective concerning the commoditization of transportation.
The findings from the survey in tandem with the interviews point to a pivotal change in the way transportation is being viewed and managed by companies. A critical mass is emerging at both ends of the “commodity/value add spectrum,” with both sides cite compelling, data-driven reasons for their positioning of transportation. Four of the most frequently mentioned factors that emerged from the study regarding forces that are changing the way transportation and logistics is managed are: business climate; cost to serve; customer service; and functional alignment.
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