In 2012, after parts of the United States were pummeled by a series of superstorms, a manufacturer of home building products received a huge uptick in orders as companies and homeowners set out to repair the damage. The soaring demand had the company scrambling to reroute elements of its supply chain. But by then it was too late – it had lost out to competitors with more flexible and agile logistics capabilities. That was when the insight hit the company’s management: If they could lose based on their logistics shortcomings, they ought to be able to win by making their logistics best in class.

Logistics is one way for companies across all industries to differentiate themselves beyond low cost. In fact, leading-edge logistics capabilities offer compelling responses to the impact online retailers are having – an escalation in customer expectations brought about by the online retailer’s many customer-pleasing delivery innovations, including end-to-end order transparency, frequent notification updates, and anticipatory delivery plans. These innovations on the consumer-delivery side have influenced business customers to begin clamoring for ever-higher levels of service.

Many companies are responding with logistics innovations of their own, using the wide range of tools and approaches at their disposal. One area where they are making enormous strides is in bringing the “voice of the customer” into the decision-making process. Rather than basing their distribution strategy on business operations, they are talking directly with customers and finding that their needs vary drastically based on geography. Accommodating these diverse requirements ultimately improves the bottom line through better customer retention and business growth.

Some companies are turning to dynamic optimization technology to determine transportation monthly routes for each customer, including lowest-cost location to ship from and best mode of transportation (for example, truck or rail). The technology and capability are powerful enough to make real-time adjustments as new orders are fed into the system or a disruption occurs. As a result, logistics may now actually influence what gets produced at a specific plant.

Strategic alliances are another important lever for improving a company’s global logistics capabilities. Viewing relationships with supply chain partners such as 3PLs and freight forwarders as merely transactional is short-sighted. These providers often interface directly with a company’s end customers. By deepening and reinforcing relationships with its partners, a company can drive towards delivering the level and quality of service that is consistent with its logistics strategy.

The Outlook

Once the laggard in the supply chain tool kit, logistics is quickly becoming front-and-center. A robust global logistics capability can help a company meet its customers’ escalating expectations, providing it with a competitive differentiator. Have you looked at how logistics can help you truly deliver value to customers?

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