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Where is the Logistics Service Provider Industry Going?

Where is the Logistics Service Provider Industry Going?. Thomas J. Goldsby, Ph.D. Associate Professor of Supply Chain Management University of Kentucky. April 20, 2006. 15. 18. 5. 9. 10. 17. 11. 5. 3. 8. Participants by industry and job title [in %]. Industries. Positions.

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Where is the Logistics Service Provider Industry Going?

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  1. Where is the Logistics Service Provider Industry Going? Thomas J. Goldsby, Ph.D. Associate Professor of Supply Chain Management University of Kentucky April 20, 2006

  2. 15 18 5 9 10 17 11 5 3 8 Participants by industry and job title [in %] Industries Positions President, CEO, COO; 1 Others; 1 Food and beverage Logistics employee Others Vice presidentlogistics 2 Healthcare 20 Automotive Consumergoods Retailing 76 Chemicals and plastics Industrial equipment Logistics manager Computer hardware and peripheral equipment Electronics and related instruments Logistics Quarterly Executive Exchange (April 20, 2006)

  3. 10,000 and more less than 100 13 16 5,000-9,999 10 9 100-249 10 2,500-4,999 14 250-499 18 11 1,000-2,499 500-999 Participants by revenue and employees [in %] Revenue (in Million $) No. of employees < 100 mil. $ 100-249mil. $ ≥ 5,000 mil. $ 7 11 31 250-499 mil. $ 12 10 29 500-999 mil. $ 1,000-4,999 mil. $ Logistics Quarterly Executive Exchange (April 20, 2006)

  4. Outsourced Services Transportation operations 4.4 Warehousing 4.1 Transportation planning 3.8 Logistics information systems 3.6 Customs clearance 3.6 Pick/pack operations 3.5 3.5 International freight forwarding Cross-docking 3.4 Product returns 3.2 Inventory control/management 3.2 Lead logistics management 2.9 Consulting services 2.8 Assembly 2.4 2 3 4 5 6 7 1 1 = not at all, 7 = completely Logistics Quarterly Executive Exchange (April 20, 2006)

  5. Reduce logistics costs 5.8 Reduce capital employed 4.9 Improve ability to deliver 4.8 Improve process flexibility and response times 4.7 Increase speed of logistics 4.4 Turn fixed costs into variable costs 4.1 Level peaks when order volumes vary 3.9 Leverage LSP’s logistics skills 3.9 Limited management capacities 3.3 Decrease damage- or error ratio 2.8 Logistics is a rather unimportant process 1.5 1 2 3 4 5 6 7 Reasons for Logistics Outsourcing Logistics Quarterly Executive Exchange (April 20, 2006)

  6. Goal Achievement Mean = 5.03 1 2 3 4 5 6 7 fully disagree fully agree The pre-set goals are achieved by 74% of respondents Logistics Quarterly Executive Exchange (April 20, 2006)

  7. Goal Exceedance Mean = 4.22 1 2 3 4 5 6 7 fully disagree fully agree Goals are exceeded in only 39% of surveyed firms Logistics Quarterly Executive Exchange (April 20, 2006)

  8. Key Factors of Outsourcing Success Relationship Factors Outsourcing Success Cooperation Trust Proactive Improvement Goal Achievement Commitment Shared Values Goal Exceedance Communication Opportunism Openness Logistics Quarterly Executive Exchange (April 20, 2006)

  9. A Focus on Action Variables Relationship Factors Outsourcing Success Cooperation Trust Proactive Improvement Goal Achievement Commitment Shared Values Goal Exceedance Communication Opportunism Openness Logistics Quarterly Executive Exchange (April 20, 2006)

  10. The Paths to Goal Achievement vs. Exceedance R² = 71.3 % Cooperation R² = 52.5 % +++ Goal Achievement +++ +++ Communication +++ + 0 Goal Exceedance +++ ProactiveImprovement Strong Influence +++ R² = 34.2 % ++ Medium Influence + Weak Influence R² = 38.2 % No Influence 0 Logistics Quarterly Executive Exchange (April 20, 2006)

  11. So what!?! • Good communication is the driver of cooperation – and good cooperation leads to proactive improvement. Customers of outsourced logistics services distinguish goal exceedance from goal achievement. Proactive improvement is what sets apart “excellent” outsourced logistics performance from “acceptable” or “good” performance. Logistics Quarterly Executive Exchange (April 20, 2006)

  12. For more information… • Thomas J. (Tom) Goldsby • Ph. (859) 257-2979 • e-mail: goldsby.1@uky.edu Logistics Quarterly Executive Exchange (April 20, 2006)

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