Whichever industry you work in, whatever product you make or source, moving those products and supplies efficiently throughout the supply chain to the end customer is crucial to commercial success. This is why the logistics sector is so important to a whole range of industries, irrespective of whether you operate your own account or use a third-party logistics (3pl) provider.
Logistics is at work 24 hours a day, seven days a week, supporting all sectors across the economy to meet ever increasing demands, such as smaller deliveries and greater efficiency. The industry also faces the continued challenge of reducing carbon emissions to help create a greener economy. Meeting these challenges successfully in the future will require the implementation of new technology, as well as changes in behaviour and practice. However, despite some fantastic technological advances, many companies are yet to apply these profitably to their operations.
So, why have some industries been slow to innovate in an area that is ripe for improvement? Unsurprisingly, the recession must bear some of the blame. During times of economic hardship, companies tend to be overly cautious, lacking commercial and financial confidence. Margins are squeezed and companies cut investment in new technology in order to survive today, let alone think about tomorrow. In such times, companies are understandably reluctant to embrace a new way of doing things – even when evidence suggests that this may be the logical step forward in the longer term.
However, as we emerge into a new year and a more positive environment, many organisations are experiencing a healthy demand for change and innovation: companies and their customers are increasingly looking for the solutions and new technology that can give them a significant competitive advantage.
As a fourth-party logistics (4pl) company, we have always championed the importance of innovation as a means of operating more effectively and giving customers what they want. While we advocate a process of continuous improvement with our clients, there is also a place for radical innovation. Ultimately, in our experience, the process of innovation is what distinguishes market leaders from their less successful rivals.
Innovation can help you discover what opportunities exist now, or are likely to emerge in the future. Successful businesses not only respond to their current customer or their own organisational needs, but anticipate future trends and develop an idea, product or service that allows them to meet this future demand rapidly and effectively. Innovation will help you stay ahead of your competition as markets, technologies or trends shift.
With the recovery underway, our own particular industry of logistics is beginning to embrace the role that new technologies have to play in managing operations, people and costs more efficiently. However, in my experience it is the companies that have looked forwards; changing, innovating and investing in technology throughout the past five years that have emerged unscathed – or even bigger and better – from the recession.
These companies have recognised that they need to look more carefully at how they do business and what they are able to offer their customer. Each sector will have its own specific challenges and priorities, but ultimately these companies stand out because they offer something different. Furthermore, as their customers recover with them, they are looking for new solutions, products and services to spend their money on.
For example, at 3t we have continuously looked to innovate our product and system (known as SOLO) to help drive step changes in transport cost reduction. In fact, the application of this technology has enabled one client to jointly reduce their transport cost per unit by over 50% since 2005.
In 2013, we also introduced new technology that has helped reduce transport cost by a further 10%. Developed in conjunction with the University of Nottingham in the UK, we invested significant amounts into this technology throughout the recession to develop unique technology that optimises the cost for a multi carrier multi modal 4pl type operation.
Attaining Microsoft Silver Partnership status in 2012 was also a significant achievement, requiring evidence of competency in developing software applications using a Microsoft developer framework. Being a Microsoft partner also enables us to control our software licensing costs as well as providing access to the latest editions of the company’s software.
Getting your culture right
But innovation doesn’t just apply to products, it is equally important to look at your business culture: the systems that you use, the service that you provide and the assets and talent that you have. Look at examples of successful companies from a range of industries – not just your own. What are they doing? What can you learn from them? What are they offering their clients that is different or exciting? Innovation is not just about designing a new product or service, but should also extend to business processes to improve efficiency and find new customers.
Innovation can transform how a business performs, saving valuable time and money. So, if you haven’t already done so, look at your own operation and ask yourself some searching questions:
- When did you last review your business processes?
- How efficient are your current operations?
- Where do bottlenecks occur and why?
- How effectively do you communicate ideas and practices within your organisation?
- Could you create more sustainable business practices?
- What is the culture of your business?
- Where could automation enable you to carry out tasks more efficiently?
- Are there any areas that have not been innovated recently?
Within our own area of logistics, the time is definitely ripe for change. Advances in technology that enable the automation and optimisation of processes will play an important part of any company’s future successes or failures. As we emerge into a new economic era, it is the perfect time to embrace change and the advantages that innovation can bring.
Tim Fawkes is managing director of British company 3t Logistics
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