Managing Logistics Information

Manufacturers and grocery retailers are increasingly forming alliances with providers of logistics services in an attempt both to improve delivery for their customers and to reduce their own logistics costs. ?ven so, information on the logistics services market is scarce. National statistics are dispersed between transportation and warehousing classifications, and numbers often shift between categories when alliances are consummated. Though precise information is not available, we estimate that in Western ?urope alone logistics alliances to the annual value of one to two billion dollars are now in place. They are also spreading to markets as far apart as the United States and Australia.

For the purposes of the paper, I defined alliances as agreements that met three conditions: they must involve at least one full year of cooperation; cover both transportation and warehousing services; and employ a single provider for the services. In other words, I was seeking partnerships — “win-win” situations from which both parties could benefit. Although the frequency with which such alliances are happening is a recent phenomenon, some companies have been aware of their benefits for much longer. One of the earliest and most definitive of these alliances is that between Rank Xerox and the Dutch transport company Frans Maas, which has evolved over a decade with periodic increases in scope and value-added. Logistics alliance development is still in its early stages.

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There are, as yet, no major service providers that dominate the ?uropean or Amerian scene. Almost half of the alliances in the research sample were less than two years old, and most had not changed their original scope. By far the most important factor driving companies toward such alliances is corporate restructuring. In ?urope, typical motives are the need to reconfigure production facilities to respond to globalization pressures, and the increasing harmonization and deregulation within the ?uropean Union. Corporate restructuring can lead to a logistics alliance in two ways.

If it involves more specialized production and fewer factories, it will be accompanied or quickly followed by a re-evaluation of the logistics configuration. In more than 500 cases to date, disappearing borders, greater distances to market, and improving transport networks have prompted the setting up of one or more ?uropean or regional distribution centers. Recent analyses by Dutch information and research institution, Nederland Distributieland, show that one in four of these distribution centers will be outsourced. ?xperience indicates that major US and Japanese companies are in the vanguard of this type of restructuring. With their more numerous production facilities and more established national organizations, ?uropean companies have been slower to act. (Sherry, 2003) A second group of companies approaches alliances for a different reason.

Having decided to focus on core competences such as product development, manufacturing, and marketing and selling, they have concluded that part or all of their logistics is best outsourced to a specialist provider. Logistics are widespread in the economy. Consumer packaged goods — where the outsourcing companies include food and beverage manufacturers and large grocery retailers — represent about a quarter of them. Major consumer-oriented and industrial product sectors are equally represented in logistics alliances, with about 40 percent of reported deals each. The balance of 20 percent consists of smaller sectors, both consumer and industrial. (Sherry, 2003) Consumer product sectors contain most of the pioneers of logistics alliances; about two-thirds are more than two years old.