Forces like digital start-ups and entry of giant non-logistics players are triggering disruptions within the logistics industry. They are threatening existing business models, but at the same time opening new opportunities for revenue generation. To protect market share from these disruptors, there is a need to shape new business models and develop innovative offerings. While it is difficult to predict the right model and offerings, there are a set of questions, which when answered would lead in the right direction.
How to shape business models & offerings
To stay relevant and ahead in the game, it is imperative to be ready for disruptions by developing new models and offerings for the market. These factors should be considered to design, develop and deploy new business models and offerings:
New opportunities in logistics space
Above factors have shaped new business models and offerings. While some models are driven digitally with the help of physical operations, others may have a dominant physical aspect augmented by digital transformation. Matrix given in Figure 1 shows a few of those opportunities along with physical and digital involvement.
Figure 1: Opportunities in logistics
A commerce platform, which is well integrated with supply chain execution system to handle order and logistics management, can be provided by logistics players for SMB to go online. Third Party Logistics (3PL) players can provide this as a platform to SMBs using their network for supply chain execution and collaborate with their parcel/transportation team for line haul and last mile delivery.
Virtual address is a concept where logistics players across different geographies can collaborate using a common digital platform to enable online ordering from any location and smooth flow of goods by providing import/export clearance services and handling core logistics operations. Postal/parcel players can collaborate with postal/parcel providers in different geographies and global e-retailers to provide platform to citizens to increase their reach across globe to shop online.
Logistics players providing aftermarket or spare parts logistics services can leverage their facility network’s front-staging locations, and parcel/postal companies can leverage their retail outlets to provide finished/semi-finished goods through 3D printing by means of contract manufacturing.
Majority of households are/will be using smart speakers for transactions. SMBs want to provide conversational commerce to its customers without investing too much in technology to develop and maintain new services. 3PL players can integrate inventory management and provide this as-a-service to SMBs, so that they can provide voice as one more channel to its customers for booking an order.
Traditional freight forwarding players are losing the advantage to their competitors due to transparency, flexibility, speed and competitive prices bought in by the startups through the emergence of marketplace models for online booking of international shipments. Incumbents can develop online platform with capabilities of fast quotes, competitive pricing mechanism, guided selling etc. for selling and booking.
Key considerations for successful implementation of business models & offerings
While we work on the details of the process, operational and digital technology aspects of the above opportunities, it is also critical to consider some key factors:
Specialization – As global organizations are widespread, it is imperative to assess elements of specialized or industry or local logistics needs of customers as they may vary significantly. For instance, the hi-tech industry’s logistics need varies from that of the healthcare industry.
Simplification – New models and offerings need to simplify processes, reduce operational complexities and increase customer satisfaction. Logistics players providing intermodal capabilities or cross docking, need visibility across value chain, hence simplified integrated model will benefit every stakeholder in the value chain.
Collaboration – Business models can’t work in silos; hence it is imperative for logistics players to have right collaboration strategy for vendors and customers. Depending on the business model, adapt an asset heavy/light model to collaborate with vendors. Customers no longer look at transport solutions as a commodity but more as a collaborative relationship with logistics players. This opportunity can be used by logistics players to be a partner of choice for customers.
The future of logistics
Our research shows that the right business model positively impacts top-line and at the same time, helps in digitizing customer experience and operations. Looking ahead, there are two ways to create and tap into the potential of new business model. First, the logistics players need to understand the journey of their customers and then move up in the value chain of their business. Second, they need to leverage next gen technologies like artificial intelligence, machine learning, robotics, 3D printing etc. to provide customer experience and operational excellence. Design thinking and digital ways of working are the key essentials for shaping new business models and gaining competitive edge.
1 – https://www.digitalcommerce360.com/2017/10/30/how-smbs-are-finally-winning-at-e-commerce/
Ashok is a Consulting Partner & Global Transportation Consulting Practice Head at Wipro. He is responsible for shaping transportation solution strategy, process consulting, package consulting and providing thought leadership in 3rd Party Logistics, Parcel Logistics and Freight Forwarding areas. Ashok has 16+ years of experience and has managed consulting engagements, transformation programs and global implementations for leading logistics and retail players across geographies.
Sarthak is a Senior Consumer Domain consultant & working as a Business Analyst at Wipro. As a supply chain SME, he is responsible for industry research, consulting, and shaping solutions and requirements. Sarthak has 6+ years of experience and has been part of digital transformation programs for leading postal, logistics and transportation players across geographies.
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