Sally Bean, Director—Accenture   Supply Chain integration has been a catch phrase for both
logistics service providers ("LSPs") and users, or buyers, of logistics
services for some considerable time. In the ideal world of the end-to-end
integrated supply chain, the entire supply chain is transparent to the customer
enabling opportunities for collaboration between buyers, sellers and carriers
in strategic planning, forecasting and replenishment, and physical execution.
In this ideal world, collaboration with the logistics service providers—known
as Collaborative Logistics Management (CLM)—is critical in ensuring effective
supply chain integration.
"Reducing inventory levels has been and remains a key focus
of our clients. Clearly the reduction in the ratio of industrial and commercial
inventories to GDP, from 17,7 percent in 1990 to 13,8 percent in 2000,
represents a significant success in this regard" says Sally Bean, Director at
Accenture. "However, the focus traditionally has been the area of buyers and
sellers of products, rather than consideration of the role played by the
logistics service providers. We believe that increased collaboration with the
logistics service providers can further enhance the efficiency and
effectiveness of the supply-chain, and specifically reduce costs of the
transportation process."
In order to establish the extent to which LSPs are getting
integration right, Accenture commissioned 29 in-depth interviews with Chief
Executive Officers and senior executives within some of South Africa's leading
LSPs in late 2001. The interviewees were closely involved in the strategic
decision-making regarding their clients and the provision of appropriate
logistics services and included large, medium, and small-sized LSPs across
South Africa. Companies were considered having "significant operations"
depending on their turnover. Also taken into consideration was the breadth of
their service offerings and their prominence within the market. In order to
benchmark the information gathered, the results were compared against results
from a parallel study conducted by Accenture during Europe in 2001
(eFulfilment: The Future Awaits Pan-European Logistics Service Provider Survey
2001).
The significant conclusion to emerge from the study is that
there appears to be some disconnect between the price-focused commodity
offering currently being demanded and supplied by LSP's, and the fast evolving
needs of customers in the future. Furthermore, although the local market tracks
European trends in their technology enablers there were some notable anomalies.
Status of technology uptake among LSPs Respondents were asked their views about technology trends,
and the systems and tools that would be used to support the various logistics
services that they offered. For each category of service—warehousing,
order-taking and processing, planning and optimization and so forth—respondents
were asked about the technology that is currently and planned to be used within
their businesses to support these services.
Overall, the balance of these results are encouraging, with
several consistent messages emerging. For one, the market currently relies on
telephony-based and custom written applications for supporting their service
offerings. While telephony-based systems definitely appear to be on the way
out, custom written applications appear to be with the market for a while
longer, showing an upturn in anticipated use. This last trend stands in marked
contrast to those foreseen in the European market, where custom written
applications on the whole look to be used less.
One reason for this may well be the performance of the Rand,
which has created a cost-barrier for LSPs wanting to purchase some of the
functionally rich and robust off-the-shelf solutions, typically developed by US
and European software houses. Whether as a cause of this, or not, most South
African-based LSPs have their own in-house IT shops, to develop and support
these applications.
Another surprising forecast is that of the ongoing increase
in the use of EDI. Generally, respondents anticipated using EDI more in the
future, in support of their offerings. In Europe, the forecast is the opposite.
CEO attitude towards EDI represents disconnect and concern.
Although EDI may support the transfer of transaction of data, it does not
create the platform for collaboration and this may not support the future
demands of their customers.
Notwithstanding, CEOs of local LSPs largely concur that
web-based technology will grow in supporting CLM business processes to
overshadow other technologies. There is no question that web-based technology
is the best option for collaboration, facilitating the interaction points
between customers. Specifically buyers and sellers of products should be
looking to extend their thinking around collaborative planning, forecasting and
replenishment (CPFRs) to include their relationships with the LSPs involved in
their supply chains. The primary points of interaction, as we see them, are
logistics planning and optimization, order taking and processing, and tracking
and tracing of orders.
Integration: Beyond Technology In themselves, these 2 anomalies do not flag difficulties
ahead for the local logistics market and it is heartening to see the upturn in
usage of Web-based technologies. "Collaborative Management is not a purely
technology-driven solution, but also a process for, and mindset towards,
leveraging technology across trading partners to better plan and schedule
shipments." The fact that CEOs understand the criticality of integration does
not necessarily mean that all or, for that matter any, of them will manage to
get CLM right. Currently local LSPs see the trend towards CLM as being the
third most dominant challenge facing the market. 59 percent of Respondents
agreed strongly that there is a demand at present for integrated, customised
solutions, which are both flexible and information rich. This issue is
anticipated to move to the top of CEOs' agendas, in the future," cautions Bean.
"Collaborative Logistics Managements does not simply replicate what takes place
currently, but rather reengineers the whole process so that the LSP is part of
the larger more focused buyer/seller team. It provides opportunities for
collaboration between buyers, sellers and carriers in strategic planning,
forecasting and replenishment, and physical execution. We are seeing some
significant benefits arising from work being done jointly in this area by
Wal-Mart, Proctor Gamble and J.B. Hunt, that are able to be replicated here in
South Africa" she says.
Conclusion Integration is key to effective supply-chains and while
supplier/buyer integration has historically been the focus, the spotlight is
now moving to the role of the LSPs in the supply-chain. It is not something
that will be turned around overnight. And it is not something that has
finiteness. It is ongoing. Accenture believes that LSPs are right in thinking
this is going to be the big "thrust" of the future. And the challenge does not
begin, or end, with the technology.
 To Top
|