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Four new market realities

After the Crisis: New Demands on Logistics

The logistics industry faces four new realities that will have a long-term impact on supply chain management, said Dr. Detlef Trefzger, Member of the Management Board of Schenker AG, Essen, responsible for Contract Logistics and Supply Chain Management.

Speaking to an audience of over 500 attendees at one of the world’s key congresses for logistics service providers, Trefzger addressed the new demands being placed on logistics at the start of the economic upswing. He said:

The crisis has changed our reality. New, fundamental developments are emerging on the macro, meso and micro level that were not expected to appear so soon. In logistics, we see four new realities that will have a long-term impact on the situation we are familiar with in supply chain management. But there are also excellent opportunities for the globally active logistics industry to benefit from these developments.

Firstly: There is tremendous growth in new markets and threshold countries, particularly in China and India, but also in Vietnam, Brazil and the Middle East. This is not simply due to the fact that these regions were not severely affected by the economic crisis, but because economic recovery is taking place far more quickly. In future, these countries will have and will demand a more significant role in the global economy, which will result in new business opportunities for our industry. A case in point is the automotive sector, with many manufacturers now moving parts of their production to these countries.

Secondly: There are strong fluctuations in world trade, on the commodities markets, in production costs and on the stock exchanges. These complex and often simultaneous changes result in corresponding fluctuations in global freight flows and in the demand for transportation and warehousing services. This results in increasingly less time to plan logistics processes - with corresponding consequences for the logistics industry. "Nothing is as permanent as change" is now becoming the order of the day in planning. Those who miss the boat now and do not diversify broadly enough and adopt a global stance will find it difficult to absorb these fluctuations in future.

Thirdly: The outsourcing trend is not only here to stay, it is also becoming more pronounced. The logistics industry is continually taking on more of the customers’ workload and the associated responsibility. Increasing expertise is needed to handle these tasks and achieve the quality and productivity levels expected. Success very much depends on having qualified employees. Good talent management is once again in demand; ultimately because outsourcing also includes transferring part of the business risk.

Fourthly: There is a strong demand for standardized logistics solutions on a global scale. Well-known burger chains are showing us how it’s done – a customer can now get a meal of the same quality all over the world. We have also noticed that this is not only what the major customers of logistics service providers expect. Delivering consistently high standards of service quality will be one of the fundamental requirements in contract logistics. This will not only apply to all standard solutions, but increasingly to customer-specific solutions.

Yesterday’s decisions have become today’s reality, but by tomorrow they will already be out of date. Actively driving change, exploiting talent and innovation, and at the same time ensuring continuity in the provision of services and quality for the customer - these are the new post-crisis requirements for logistics service providers.

Last modified: 22.06.2010


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