Capturing the logistics outsourcing opportunity
So how exactly are the challenges of LSPs different and distinct? In addition to mastering complex day-to-day operations challenges, LSPs also must contend with more long-term, strategic issues. To achieve growth, they need to position themselves to capitalize on the enormous, and growing, market for logistics outsourcing — estimated to increase to $1.642 trillion by 2032.
That might mean expanding their physical footprints or service capabilities. It might mean strategic mergers and acquisitions. But one thing is certain: It means establishing clear-cut digital leadership. The only way LSPs can increase their scale and scope, without negatively impacting service levels or margins, is by leveraging advanced transportation management system (TMS), warehouse management system (WMS), labor management, warehouse execution system (WES), yard management system (YMS), returns management system (RMS), digital supply chain network and commerce solutions.
These solutions not only automate daily tasks, from warehouse picking to load building, for increased speed, accuracy, efficiency and resource utilization. But, enabled by artificial intelligence (AI), they also automate the hundreds of decisions LSPs need to make every day. AI-enabled decision engines ingest huge volumes of real-time data, apply business rules, weigh trade-offs and make optimal choices in microseconds. Often, advanced digital solutions can also pull execution levers with no human intervention. That means LSPs can serve more customers, offer more capabilities and deliver optimal service levels — at the lowest possible cost.
“The reason companies outsource their logistics is because they know LSPs can move and store products more effectively, more efficiently,” says Pat Jones.
“That’s their core business. But, as logistics outsourcing grows, for LSPs that’s created a challenge of building scale, quickly, without driving costs so high that it’s no longer a profitable business model".
“At Blue Yonder, we get that scalability challenge. We’ve seen it before, and we know how to enable rapid, profitable growth,” Pat adds. “We help LSPs leverage the most advanced technologies, the most innovative processes and the best practices we’ve learned from hundreds of customer engagements. We help them do their work better, faster and more profitably — even as they’re adding capabilities, adding customers, adding new revenue streams.”
