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Service expansion will decide the winners in logistics

October 18, 2021

3-MINUTE READ

In brief

Logistics customers want end-to-end services

91%

of logistics companies acknowledge that customers are now asking for end-to-end logistics services handled by a single provider.

Traditional logistics companies have no choice but to change. They must become more responsive, more agile and resilient. Their customers count on it. And their relevance—and very existence—depends on it.

43%

of logistics companies strongly fear becoming a takeover target if they don’t proactively invest in expanding their offerings portfolio.

Two paths to service expansion

Vertical integration

This strategy involves transitioning into a one-stop logistics provider or, at a minimum, a provider that offers an expanded array of services to meet more of their customers’ needs across the value chain. Traditional logistics companies adopting this strategy have the opportunity to integrate upstream, as well as downstream services.

Horizontal integration

In contrast, this strategy focuses on expanding current offerings in the same domain. Companies expanding in this way double down on the service areas that offer them the greatest competitive advantage. In doing so, they not only grow market share and shareholder value, but also buying power—which leads to cost efficiencies and leaner operations.

Four steps to success

1. Understand the drivers of change

Companies need to understand what customers want, what their competitors are doing and assess the main drivers for change in demand.

2. Assess change-readiness

Logistics companies must assess their existing capabilities and identify the service gaps they must fill to add the most value to their customers.

3. Formulate an integration strategy

Logistics providers need to determine whether their goals will be best addressed through vertical integration, horizontal expansion, or both.

4. Execute the new strategy

Logistics companies must take several critical actions to launch and sustain their expanded business model.

Future-oriented logistics companies are already making their moves to protect and grow their business by expanding their service offerings. Others are at risk of falling behind if they don’t follow their lead.

About the Authors

Sarah Banks

Managing Director – Global Lead, Freight and Logistics


MICHAEL EICHSTEDT

Senior Manager – Freight and Logistics


Contributors

Matthias Wahrendorff

Senior Thought Leadership Principal – Accenture Research, Global IIoT and Industrial Research Lead


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