Logistics in the grips of cost and market pressure

Logistics is widely spread and established particularly in highly developed economic societies. Industrial companies, for instance, rely on the transport of mass-produced goods, and the makers of consumer products need their goods to be smoothly distributed from production sites to businesses and retail outlets. Services provided by courier, express and parcel companies are used in particular by mail-order and wholesale companies as well as the pharmaceutical, textile and fashion sectors. All companies face intense cost and market pressure.

Cost pressure that affects logistics

The cost pressure being applied to companies, which is the result of globalization Globalization of businesses and dynamic technological developments, continues to intensify. For this reason, a company must be able to create favorable cost structures through the use of efficient processes. Otherwise, it will be difficult to succeed in the marketplace. Therefore, the resource and production orientation related to the cost pressure is a critical matter for logistics.
The latest trend study by the German Association of Logistics serves as a guide to the share of logistics costs among total costs by using the example of an industrial company in Germany [1].

A sector comparison of logistics costs and logistics investments

In recent years, the trend of falling logistics costs has indeed continued. But it has slowed considerably. Furthermore, a reversal of the trend appears to be taking shape. Several studies, for instance, have clearly shown that a majority of companies expects logistics costs to rise. One cited reason is the increasing complexity of the supply chain Supply chain into which more and more value-creation activities are being shifted. Other reasons include external factors like rising fuel costs, tolls Toll and new security regulations in the international supply chain [2].

Demanding customers increase market pressure

Increased market pressure is being created by expanding globalization Globalization and technological advances. Customers are becoming more and more demanding and quickly learn to transfer positive experiences in one submarket to others. For this reason, companies must be organized in a way that enables them to exactly address the needs of their customers. By providing differentiated problem solutions that are tailored to specific market segments, companies can gain an edge on their competitors. To do this, increasing numbers of process innovations in logistics are necessary along with product innovation [3].

Industry and trade rely on delivery service

For industrial and trade companies, delivery service Delivery service is extremely important. Besides product quality, this is frequently the most important criterion for a purchasing decision. Many companies are working to shift storage responsibilities to deliverers. The result is smaller order sizes, shorter order intervals and demands for special delivery conditions.
The increased importance of delivery services Delivery service is also the result of the interchangeable nature of material services in many markets. Competitive edges can be created only by enhancing the offer with special logistics services. A growing number of companies are taking this approach in order to distinguish themselves from competitors. At the same time, more customers are requesting these services. In such markets, it is necessary to have products available at all times [3].

Logistics companies as sales assistants

Many industrial and trade companies are incapable of performing needed logistics services or can perform them only with great difficulty. Usually, they lack qualified logistics specialists. They also have difficulties introducing the organizational changes related to the logistics concept. In particular, small and mid-sized companies are inexperienced in handling logistic instruments, including IT support. For this reason, numerous industrial and trade companies are reliant on logistics companies, which become sales assistants in the process [3].

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References

[1] Trends und Strategien in der Logistik | Straube / Pfohl / Günthner / Dangelmaier 2005
[2] Embracing Security as a Core Business Function. 17th Annual State of Logistics Report | Wilson 2006
[3] Logistiksysteme | Pfohl 2004