Current issues in logistics and transport

Back in 2004 a large survey of supply chain managers by Accenture identified ‘collaborating with multiple partners’ as their greatest challenge.  It remains a major challenge.  Over the intervening period, numerous examples have emerged of big companies sharing logistics assets and thereby saving money, reducing emissions and often improving service quality.   The most celebrated of these collaborations have been in the ‘fast-moving consumer goods’ sector between companies such as Unilever and Kimberly-Clark, Nestle and Pepsico and P&G and Tupperware. Given the rich potential benefits of such collaborations, their rate of formation has been disappointingly slow.  There is evidence, however, that momentum is building.

Among the companies attending the ECR / IGD conference on ‘Reducing Wasted Miles’ on April 21 in Nottingham there was certainly strong commitment to explore new opportunities for collaboration[1].  This latest ECR / IGD campaign joins many earlier initiatives by ECR, ELUPEG, Lean and Green and the EU-funded project CO3 to get companies to work together.   I see these programmes as moving us from the first ‘opportunistic’ phase of supply chain collaboration, which relied on chance encounters between like-minded logistics managers, to a ‘systematic’ phase when companies routinely seek out possible logistics matches  more strategically.  This requires a change in the corporate mindset and a recognition that merging logistics operations offers greater efficiency gains than anything that a single company can do on its own.

In a presentation to the ECR / IGD conference I argued that mindset was one of six conditions beginning with the letter M which must be met to foster logistical collaboration.   Others include motives, which are still primarily commercial but acquiring a green hue, metrics, which must be defined in a way that accurately and fairly tracks the performance of a collaboration and the models the now exist to help optimise  costs and benefits among partners.  Ministries also have a role to play in ensuring that competition law doesn’t obstruct logistical collaborations which are patently in the public interest.  Finally, collaborative initiatives must be well aligned with market trends and properly engage logistics service providers, allaying any fears that they might have that collaboration simply involves shippers ganging up to squeeze their margins.

If there were a seventh M, it would be momentum, because too often in the past efforts to promote collaboration have petered out leaving managers sceptical about its longer term prospects.  This time should be different. We are now entering the Sharing Economy, when the sharing of assets is becoming a guiding economic principle at all levels from the individual citizen to the global corporation. We now have the analytical tools to model, plan and manage collaborations along and between supply chains.   And above all we have the favourable experiences of growing numbers of companies that have ‘taken the plunge’ and become keen advocates of the new collaborative paradigm.

[1] http://igd.com/reducingwastedmiles