Comment: Why the logistics sector needs to innovate to accommodate
Published: 28 November 2017 - Jack Cheeseman
As the ever-changing logistics industry continues to transform, one of the major changes emerging is the scope for intermediate players. Increasingly large companies’ ‘one size fits all’ approach struggles with local presence. Tony Hughes, CEO of Huthwaite International, considers how the impact of a rise of local logistics will benefit the sector, enabling local and niche markets to be reached.
“Big logistics companies often have issues with local presence, their one-size-fits-all approach sometimes can’t make use of local optimisations or contacts that would be known to local players. Consequently, they often use resellers to reach local or niche markets. During sales and negotiation discussions with each other, large companies can sell their access to global services and well-established household brands, while smaller companies can leverage their local presence. When executed well, it’s a two-sided, mutually beneficial discussion.
“Due to the rise of micro-enterprises we may see the emergence of intermediate logistics companies, these intermediates can deal equally well with individuals who supply products or local distribution, as they can with the larger companies who want access to the micro-enterprises themselves. By leveraging intermediates of this type, large logistics companies can offer a true end-to-end service. There’s much to gain commercially, and competitively if the deal is right.
“When it comes to selling and negotiating, a prominent concern for intermediate logistics businesses will be in preventing companies from bypassing them by dealing direct with the micro-enterprises in question. Although their role will be valuable, care will be needed to create deals that work for all parties without greed or force. Each party will be aware of their own value, unique offerings, strengths and weaknesses, but only those with sharp sales and negotiation skills will leverage them fully. Large companies will also want the ability offered by intermediates to enter local markets, and can offer access to global services in reciprocation. But underpinning all of this is a mismatch of cultures - geographic, industrial and corporate. The business potential is huge but this will be no landscape for average performers. Those trained in multicultural selling and negotiating will win out over those who aren’t.
“New deals, new terms - many large companies have terms and conditions that aren’t applicable to a smaller client or supplier. The smaller players skilled in selling and negotiating will have the confidence to leave familiar ground by refusing standard terms and negotiating deals instead based on scope of project.”
The full white paper on the future of logistics from Huthwaite International can be found here: https://huthwaiteinternational.com/logistics/