3PLs and Logistics Investors – Wake Up to the New Blue Ocean Strategy
The 3PL industry has growth. Behind that positive are many providers of different sizes. It is an industry that is defined as a commodity service. There is little differentiation. Value propositions are limited and are more about functions that...
Strategy is more as a market or competitive reaction. Margins are not growing with the market. Customer retention is an issue; turnover of contracts and customers resembles divorce rates. Too many 3PLs operate and are designed for their benefit and not for the benefit of customers--including potential ones--and their supply chains. And they wonder why they are a commodity service.
3PL leaders should recognize that it is time to stop doing what everyone else is doing. There is a new e-commerce that meets the immediacy needs of customers. The new e-commerce is driven by the new supply chain.
A handful of companies are now implementing the new e-commerce. These firms understand that customers want delivery of their orders within 48 hours, or less, of order placement. This is both good business and a blue ocean opportunity for them. It is unique and creates competitive differentiation.
They are meeting supply chain issues, such as delivery, using their own solutions, instead of using the usual options and providers. This contrasts with companies that view e-commerce as a website and shipping orders. The quick action of the new e-commerce also reduces the amount of returned orders caused by buyers’ remorse.
The new supply chain is very different from the traditional, monolithic supply chain used by many manufacturers, retailers, and wholesalers
New Supply Chain Management for Blue Ocean New E-Commerce / Multichannel
- Are segmented by channel
- Are defined by integrated process
- Are measured by performance and service
- Focus on customers
- Focus on delivery
- Focus on product positioning and availability
- Deliver orders complete, accurate, and on-time
- Utilize integrated supply chain execution technology across the supply chain
3PLs and Logistics Service Providers need to wake up to the new supply chain. Or they will be left behind as shippers move on without them and as new providers step up to the challenge and opportunity.
What is happening is a strategic, competitive disrupter to traditional logistics services. The new supply chain creates a blue ocean opportunity for 3PLs and logistics service providers. These select 3PLs and LSPs may be in business now and redefine themselves with a new strategy. New 3PLs and logistics providers will arise. Logistics outsourcing will change.
The blue ocean is not for those 3PLs who do not want to change and like to compete in a commodity service with little or no competitive differentiation. It is for the bold.
The new e-commerce opens up additional opportunities. It will move across the multichannel. It will expand. Customers across the world and across markets and industries will want the immediacy with their orders. That creates more opportunities for the new breed of 3PLs.
That new supply chain that drives blue ocean opportunities for the new e-commerce, global e-commerce, and multichannel requires outsourcing logistics providers to be selected and to operate based on service and performance. They must fit into the integrated supply chain, both as to process and technology. It is no longer about a logistics activity. It is about compatibility with where customers are going and how to get there.
The blue ocean opens up questions for investors. Are you considering investing in logistics and/or supply chain management? Are you investing for the right reasons? Are you investing in the right places? Are you investing in what was? Are you investing in what will be?
3PLs and investors both need to shake off complacency. Present practices are passing away.
Where will you be on the blue ocean logistics service adoption—innovator, early majority, or laggard?