Why are a handful of MNCs dominating the Logistics Industry?

For decades, the competitive landscape of the logistics industry has not changed much. A majority of the market share belongs to a minority of MNCs in the logistics industry. Time and again new challengers have entered the game, briefly showing promise and spark but failing to grow to be leaders. An unanswered question is why only a handful of MNCs are dominating the logistics industry globally?

The biggest challenge:

The biggest challenge for any logistics company aspiring to be a leader is to manage growth. They can acquire growth through optimized operations, exceptional customer service and relentless sales and marketing efforts. It has been witnessed again and again that many have failed to manage their growth which has limited their success. Sudden rapid expansion of business can severely stress the operational processes affecting the customer service and quality. Failure to provide the expected service due to unmanaged operational growth can be very dangerous for any growing company. So what is the solution to this problem? ...

What differentiates a small logistics player from a global leader? MNCs invest heavily in technology to benefit from the latest advancements of the same. Global leaders have been using the latest technologies to stay ahead of the competition. Wisely investing in the right technology at the right time is the key to handle rapid expansion. For example, leading logistics companies are using Logistics ERP solutions to manage their growth by closely integrating various interdependent processes to achieve operational excellence. There are many such benefits of using technology ?

a) Integration & Flexibility -

A major success factor for leading logistics companies is integration of global branch offices, customers, carriers, service providers & vendors of their logistics business into one single platform. The successful integration of various stakeholders within an organization is a powerful enabler for -

  1. Increased productivity
  2. Improved customer service
  3. Reduced costs

 

Logistics companies must be capable of being adaptable to meet changing demands quickly. Using modular a modular logistics software offering the ability to add and update modules as required provides greater flexibility to respond to changing markets and competition. Enhanced level of flexibility enables organizations to modify and enhance their logistics processes as their business needs change.

b) Faster information Access and Response -

Real-time access to data in logistics software helps MNCs to take informed decisions very quickly. With access to real time freight data and the ability to run reports, MNCs are more equipped at making better business decisions based on their trends and history. For example, Carrier 1, being the least cost service, can be a top choice 70% of the time. But reports may also show that Carrier 1 is delayed in service, 30% of the time which affects customer experience. In the long run, such situations can lead to losing customers. Easy access to important information empowers logistics companies to see the total cost of their decisions and mitigate expensive bad decisions.

c) Reduce Costly Errors -

Manual data entry errors lead to delayed delivery or higher costs. For example, having to pay for shipping twice or paying a higher freight rate due to entering an incorrect commodity freight classification, increases cost significantly. MNCs use Logistics ERP solutions to integrate all crucial business entities and automate processes to reduce the time & cost effects of wrong information.

d) Better Control through Centralized System -

Leading logistics MNCs have put in an effective control mechanism through the integration of business processes with help of Logistics ERP solutions. MNCs are using these centralized systems to enforce standard business processes. Standardization for all users, both internal and external, to follow the policies ensures efficient and cost effective operations. Effective usage of a logistics software has also helped in accelerating business processes. It also provides improved visibility that is essential in improving business execution, which in turn supports the organizational goals of revenue and profit growth.

e) Improved Customer Service -

Worst challenge for growing logistics companies is losing a customer due to service quality. Visionary MNCs deploy logistics software to achieve integrated and fully automated processes along with auto email alerts, exception reporting & scheduled reports. Not only does it help in increasing your team?s productivity but also improves customer service efficiency. With customized Billing and accounting processes, both logistics companies and their customers are empowered with real time visibility from PO to POD. A real time freight tracking system available online helps customers track their consignments which are in process, transit or delivered. It helps to know exactly how much the freight will cost and when the freight will arrive at its destination through automatic notifications. Managing the growing operations to provide excellent service quality with end-to-end solutions is the key to success. Choosing the right technology to manage your business growth at the right time is very important. Major distinction between a small freight forwarding company and a global logistics leader is the most effective usage of technology to expand business and manage growth. Global logistics leaders wisely choose a right tool for the job which allows them to expand their operations rapidly without any compromises.

Multinational logistics companies have a huge advantage in terms of investment on technology. Small & medium scale freight forwarding companies were not having a similar advantage earlier. However, with the advent of cloud based solutions, the same technology which is available to the bigger companies is available to them as well at a fraction of the cost it was available earlier. Small freight forwarders should deploy ERP solutions to not only allow their business to grow but also manage their growth.

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