Leveraging LSPs in Distribution Can Reduce Costs

  

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How are companies handling the increasing cost pressures and unexpected volatilities in world markets today? This question was posted recently to our website and it is a true reflection of the business challenges faced today in a global marketplace. 

With increasing and unpredictable fuel costs, how can companies manage logistics in a more predictable manner?  Add to this the unpredictable turmoil around the globe, such as the recent tsunami in Japan, and there is no shortage of logistical challenges to manage. 

Just this week I met with a client who manages a Honda Car dealership. He told me that his inventory is down by almost 80% due to the supply chain interruptions caused by the tsunami. Even though the cars are assembled here in the US, suppliers around the globe have been unable to meet demand.

As more mid-sized companies evolve and make their supply chain more complex, there are additional options to consider when managing distribution. How are some of the market-leading companies managing this process today? Aberdeen Group conducted a survey of 123 supply chain professionals in the fall of 2011 that gleaned some insight into the ways market leaders are managing these processes. 

The use of Logistics Service Providers (LSPs) in business processes such as logistics and warehousing has helped organizations realize a competitive edge. Some of the key processes these leaders have leveraged LSPs for include:

• Warehousing
• Logistics
• Customs brokerage for trade compliance
• International freight forwarding
• Cross-docking services

The research showed that market leaders who effectively use LSPs in some component of their logistics were able to decrease their freight spend by 2.7% and improve their outbound on-time order rate to 96.6%. 

The Aberdeen study identified three actions required to achieve Best-in-Class performance:

• Develop a future outsourcing strategy road map and vision

• Leverage core competencies of LSPs

• Integrate collaboratively

In summary, the Aberdeen Group's study identified some key trends in leveraging outsourced logistics service providers. If your supply chain is evolving with complexity, the details of this study may be of interest to you. 

If you are interested in downloading a copy of this study, you may visit Aberdeen Group's website (Aberdeen Group). A copy of this white paper is available for a limited time at no cost.

Our team is very interested in learning about your distribution challenges. If you have one you would like to hear our feedback on, please submit a topic (submit blog topic). You could win a $50 gift card.

Dan Holzgen