What challenge(s) do our clients face?
: As consumers increasingly demand customized and ethical services, logistics operators are under greater pressure than ever to transform their businesses in response.
In recent years we have seen that efficiency requirements and complex consumer demands have put growing pressure on supply chains across industries. Logistics operators therefore face challenges not only in their own businesses but in the critical role that they play for their partners as well.
These challenges can be categorized by their three macro drivers:
Growing Business Pressures
- The importance of being operationally resilient and efficient is an emerging trend. This requires boosting risk management capabilities in the design and management of operations so that business continuity risks can be mitigated without needing to rely on costly idleness.
- Sustainability, from both an environmental and social perspective, is an ever growing supply chain pressure, especially given the potential emissions impacts from transportation.
- Cutting edge technology is vital for providing visibility and automation of these new requirements throughout the supply chain. Such technologies include blockchain, IOT and AI for example. Disruptive technologies such as vehicle uberization, 3D printing and autonomous vehicles will bring additional pressures as well.
3PL Market Reality
- The market is highly commoditized which causes tight margins and intense price competition as clients seek to optimize their value chains.
- The market is highly fragmented which presents growth opportunities through M&A, especially considering the importance of economies of scale.
- The market exhibits inconsistency in service levels; it is not immediately clear whether a global or local operator will be optimal in any given context.
Shipper’s Unique Needs
- As they focus on the end user experience, customers demand ever more specific customizations such as ultra-express deliveries, channel integration, real-time order tracking etc.
- Because each sector needs specific customizations, their logistics providers are faced with a trade-off between being flexible for these needs whilst remaining cost efficient
How do we help?
Our global experience on both sides of the logistics partner relationship allows us to support you in navigating these challenges with a tailored approach informed by best-practices.
There are three fundamental pillars to the way we can help logistics operators to overcome these challenges:
- Understanding of the 3PL market: We have an extensive knowledge base (benchmarks and best practices) built from delivering projects of a strategic nature with many of the world’s logistics leaders.
- Knowledge of the other side of the table: Having delivered 600+ Supply Chain projects in various industries around the world, we understand the reality and needs of logistics operators’ clients and the foundations on which a productive relationship is built.
- Tailor made, results-driven solutions: Each logistics operator has a different context and needs. We therefore work together with you and your team to develop fully tailored solutions that fit your service offering, structure, target markets and client requirements. This proximity also enables your team to carry on the project’s legacy after Integration has left.
Commonly applied services
Clients
We have worked with clients in different categories, geographies and positions along the value chain:
In this video, a range of clients from the Transport & Logistics sector talk about their positive experience working with Integration.
SUCCESS STORIES
CHALLENGE
High tech. businesses (banks, data processors etc.) demand premium delivery services for high value-added parts that keep their operations running. Here, the challenge was to structure a logistics network capable of delivering spare parts within 2 hours in order to serve this profitable market. The project required a turn-key design and full implementation of this super-express logistics operation.
APPROACH
Integration supported from the initial strategic study through to the full implementation. We worked closely with the client to analyze the market potential and define their value proposition; this provided the basis for designing the logistics network and organizational structure necessary to achieve the super-express ambition.
To guarantee that the new model would run smoothly, we defined contracting models and bidding tools, alongside processes and KPIs for monitoring the effectiveness of the operation on an ongoing basis with continuous improvement. Finally, we managed the implementation of the new model, guaranteeing the transition to the new way of working on time with minimal disruption and preparing their team to continue the day-to-day execution after our exit.
RESULT
The project created a new business division with high profitability and one of the highest growths rates within the company.
CHALLENGE
Our client was a leading payments operator with a logistics network of ~150 Distribution Centers. These were run by two major 3PLs (split regionally) and delivered 300k+ orders to 1.8m+ clients each month with ~40% of orders needing 4 hour express delivery.
To protect margins in an increasingly price-competitive market, the organization needed this high service level as a differentiator without increasing costs. Integration was asked to review their 3PL remuneration model with the objective of improving productivity.
APPROACH
In the assessment phase it became clear that to increase service level without increasing costs it would be necessary to re-design the 3PL remuneration and relationship model. This is because there were conflicts of interest that did not incentivize the 3PL to share the our clients end-consumer focus.
As remuneration is such a delicate point of negotiation, the findings of the assessment were presented to the 3PLs’ executives to protect the relationship. They agreed with the findings and in this sense “joined” the project, validating decisions in the re-design and buying-in to the disruptive new remuneration model because they understood how it delivered on the operational needs.
The project included the client and both 3PLs implementing the new remuneration model through a tender process. Integration supported this commercial negotiation by providing technical support and adjustments to the new model as required.
RESULT
Qualitative
- The full model was implemented with success and became a benchmark in the market
- Full alignment and buy-in was achieved between the client and their logistics partners, driving a project legacy beyond the implementation phase
Quantitative
- 20%+ SLA increase whilst also improving geographical coverage
- 40%+ order back-log decrease
- 20+ pp increase in spare parts inventory accuracy
TALK TO US
Alejandro Martinez
Alejandro is a Managing Partner in our Mexico operation. Alejandro has spent over 20 years within consulting, as well as within Industry, having been factory manager and chief of production for Kimberly-Clark. He has worked extensively across Mexico, Latin America and the United States developing deep experience in Consumer goods, Retail, Manufacturing, M&A and particularly [...]
Ezequiel Paez
Ezequiel is a Manager within Integration’s Chilean office, with more than 10 years of consulting experience. He has worked on projects in Latin America, North America, Europe and Australia supporting our clients across the value chain with everything from cost reduction to strategy implementation. His experience includes sectors such as Consumer Goods, Retail Transport, Manufacturing [...]
Gilberto Sarian
Gilberto is a founding Partner at Integration. Over the course of more than 25 years he has led the development of Integration`s award-winning Supply Chain practice, advising international clients across Latin America, Europe and USA. With a background in Engineering, he frequently participates in events and lectures across the world, to discuss latest trends and [...]
João Vilela
Since 2009 João Paulo has been working in our Supply Chain practice. During this extensive period, João Paulo has led projects across numerous continents and in several sectors and areas of Supply Chain. He has worked on challenges such as Logistics Network Design, Transport Efficiency, S&OP, Order-to-cash, Stock Management and Supply Modelling.
Luis C Vidal
Luis is a Managing Partner at Integration where, since 1999, he has been working in the Supply Chain practice. During this period, he has led projects in the most diverse sectors and in themes such as Logistic Optimizations, Process Efficiency, Planning (S&OP), Industrial Strategy, Go-to-Market Strategy and Distribution Structure. His international experience encompasses the opening [...]
Rafael Pinto
Rafael is a Specialist in Integration and brings a wealth of knowledge in the areas of Retail and Supply Chain. Over many years working in the field, he has led and advised on projects across all our Supply Chain areas, with emphasis on Operational Efficiency, Demand Planning, S&OP, 3PL and Transport Strategy and Distribution Center [...]