Just a decade ago, it would have been unthinkable to be able to generate revenue without any assets. Yet, some of the world’s largest companies today do just that; Uber does not own taxis, Airbnb does not own real estate and Facebook does not create content.
Why are these companies successful?
The concept behind these digitized companies is nothing new. Uber and Airbnb essentially take on the role of a middle man while providing exemplary customer experience. They anticipate their customer’s needs before their customer realizes they have that need. However, it may not be easy to think out of the box with chains of tradition weighing the company down. Instead, a new perspective from a trusted partner may be key to surviving in today’s digital world amidst growing business challenges.
The recent alliance of Japan’s top three shipping companies, Nippon Yusen K.K, Mitsui O.S.K Lines Ltd. and Kawasaki Kisen Kaisha Ltd. is just another step towards to the complete consolidation of this industry. LSPs, like smaller lines, are facing tremendous pressure just to stay afloat. And yet, dwindling bargaining power is just one of the numerous challenges LSPs face alongside sluggish global trade, disruptive technologies and volatile freight rates.
What should logistics service providers focus on?
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” – Bill Gates
Although the quest to perfection (the most efficient operation) never ends, it is necessary for businesses to start contemplating how automation and digitalization can make a difference in their company.
Automation is the tried and tested solution to logistics inefficiency for years. The best example of automation is warehouse automation. From assisted picking to barcode scanning, these methods have made warehouse operations less tedious and more intuitive. Other logistics solutions such as transport management systems and freight management systems serve to reduce manual entry and duplicate work. What these solutions have in common is that they improve existing methods by a certain percentage; making processes faster and cheaper.
Digitalization, on the other hand, refers to a quick and seamless user experience. Although it sounds rather simple, digitalization requires a brand new perspective and revolution of traditional business methods. It is a complete overhaul as compared to automation which focuses on improving existing operations.
Contrary to popular belief, it is never one or the other. These two techniques work hand in hand to create value for the business. Once the thought process behind digitalization is determined, automation kicks in to increase the effectiveness of streamlined processes.
If only there were recognized standards or benchmarks that establish how digitalized a company is. However, the only real yardstick is the one you create. Moreover, the supply chain is no longer a conveyer belt with goods and information flowing one way but an ecosystem with multiple entries and exits.
To even begin contemplating digitalization, it is paramount to have an accurate picture of the business as a whole. Too many LSPs comprise of multiple silos with disparate systems. Instead, systems need to be integrated with each other where everyone is on the same network sharing vital information. To provide exemplary customer experience, creating one single transparent platform is but the first step.
“That’s one small step for [a] man, one giant leap for mankind.” – Neil Armstrong