Logistics and Distribution has been saved
Logistics and Distribution
Increasing globalisation is driving change in the industry through greater competition, cost pressure and consolidation. Historically significant focus has been given to the cost of products with lesser consideration of the cost and agility of transportation. The fundamental challenge facing L&D organisations is how to provide an efficient and cost effective service within capacity constraints through increased use of innovative operational and technological solutions.
Two other major factors must be central to L&D providers’ strategy. As a major contributor to the global carbon footprint, L&D providers must deliver an economical but sustainable distribution solution managing fuel costs and minimising environmental impact – a key tenet of their strategy. Also a Providers’ ability to implement technology to both improve efficiency and quality of service (through integration) is mandatory if they are to grow with the cost constraints in the industry.
Furthermore, the competitive landscape continues to evolve and present a further strategic challenge. The UK market opening to greater competition has resulted in significant pressure on prices, emphasising the need for businesses to differentiate on service to improve long term viability. This coupled with their clients seeking more technology driven ways of minimising L&D costs has had a double impact. Internationally, as freedom of trade increases and trade flows shift to the developing world businesses are forced to redress their geographical footprint to position for growth.
Current drivers for change
There are similar trends in both logistics and postal markets with online shopping changing the scale and shape of parcels, heightened demand for real time information and increasing cost pressure. The following drivers are key to the changing the market:
Consolidation - demand for integrated service providers, increased competition and customers requiring a global reach are all driving L&D organisations to consolidation.
Use of technology - track and trace, 2D serialisation and use of mobile devices are enabling companies and their customers to interact with deliveries in real time.
Focus on sustainability - increasing fuel costs, customer attention on environmental impact and environmental regulation are bringing sustainability to the forefront of L&D strategy.
Deloitte is the leading firm of advisors to the Logistics & Distribution sector and has a dedicated Logistics & Distribution sector team.
We regularly advise Logistics & Distribution companies on the following:
- M&A - Responding to market forces and supporting successful integration to provide global coverage, consolidation of providers, expansion into emerging markets.
- Business Model Optimisation - By looking at tax efficient locations, employee tax and the underpinning people process and technology to deliver future proofed optimal business models.
- Automation and Serialisation - Using 2D serialisation to track and trace raw materials to finished goods, original sender to customer to enabling proactive real time management of the logistics fleet and customer interaction.
- New product changes - Developing an effective response to the changing nature of packages with different types of packages and smaller parcels being increasingly used.
- Real estate location and rent review - An industry characterised by multiple physical distribution centres needs to optimise its real estate portfolio as a key cost driver for a profitable business.
- Forensic analysis and audit - With organisations becoming global, there is a greater challenge and complexity around understanding territory pricing models. Incorrect charging is a fundamental issue to resolve.
- Technology integrity and on line security - Online security for all retailers and sales functions which include the transfer of currency is open to abuse and fraud. The investment in the correct technology and security is essential to business protection.
- Deloitte Digital - With a focus on Strategy, Mobile, Web, Social Media and Content Management where New Business & Innovation focuses on IP Monetisation, e-Learning, Value Chain Insertions and Digital New Business Models.
We would be delighted to discuss your opportunities and challenges and how we may be able to help.
“The logistics and distribution continues to go through significant change and through our deep knowledge of your customer’s needs and the challenges that the industry is facing we can help overcome these through applying our wide ranging set of industry focused capabilities.”