The managing director of one of our biggest logistics companies admitted to me that there were nights when he would wake up in a cold sweat: “I worry that if our customers work out how we achieve the service levels and make a profit, they will take the business back in-house.”
That was twenty years ago and, with one or two famous exceptions, it hasn’t happened. The third party logistics market has flourished. Of course, cost is only one part of the equation – there are plenty of other reasons to outsource.
And the evidence is that the demand for logistics services is on the increase. Analyst Datamonitor is predicting that the global logistics and express market will grow by 14 per cent over the next three years to some £2.6 trillion.
And it reckons that logistics and express spend as a proportion of global GDP will regain its 2008 peak of 9.3 per cent in 2013.
However, the news is better for some than for others. Europe is expected to lose a 1.5 per cent share of the global market by 2013 as demand shifts to the emerging markets of Latin America, BRIC and the Middle East.
But, how do you make the most of the opportunity? Well, you could do worse than start by looking at what potential customers are thinking. And another piece of research, this time by Capgemini, offers some pointers.
It found that more than 58 per cent of supply chain managers believe their main business driver for 2010 is meeting customer requirements. Centralisation of supply chain functions was another theme, with 37 per cent of the participating companies planning to centralise supply chain organisational functions. Both reports say sustainability is an important business driver for 2010.
There’s no doubt that cash was king last year. But is the old king now dead? And are we ready for the coronation of a new king: the customer?