Manufacturers across all industries are attempting to reconfigure their supply chains into demand-driven value networks. With logistics outsourcing continuously on the rise, it only makes sense that the logistics service provider (LSP) industry becomes skilled at the execution of these demand-driven capabilities to help their customers make the transition faster, with less cost, and with a better chance of success.
Demand-driven supply chains require more dynamic execution of the basic logistical functions, such as transportation; pick, pack, and ship; and freight forwarding. We found that while most of the leading LSPs are more than capable of executing these necessary tactical activities, very few LSPs are involved in the demand-driven decision processes. Other than in a handful of situations, LSPs are in standby mode, waiting for instructions from their customers' supply chain departments. The customers' supply chain organizations, in concert with their suppliers and customers, hold the reins, assessing, re-planning, and making the necessary adjustments. These changes get handed down to the LSP that is ready and willing to perform.
The characteristics of these new demand-driven supply chains are more dynamic, requiring more real-time integration and faster execution. While the LSPs perform these more dynamic tasks well and with efficiency, they are still not being asked to orchestrate outside of these extended execution activities.
Some of the key findings of our research include:
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