Think Big, Act Small
Business disruption is creating disproportionate opportunity for mid-size forwarders, logistics solutions providers, and 3PLs. The maxim “He who is closer to the customer wins” is in play here.
Says who? A recent survey by Barclays/BOD on the state of logistics confidence levels finds that “larger companies have generally found things more difficult than smaller ones, despite being more likely to benefit from a more diverse customer base, as they may have found it harder to adapt quickly to the changing market.”
Reasons are threefold: 1) COVID-19 relationship disruption, 2) the explosive growth of e-commerce, and 3) the reconfiguring of global supply lines. Those trends bring customer service front and center.
You might think that, given their size, scope, and available resources, large multi-national forwarders and providers hold the advantage over mid-size solutions providers. Not in this business climate, say some observers.
Inertia of the huge is a disadvantage. Large players are not as agile, and therefore much slower to react to the moving target of this minute’s customer requirements, is the thinking. Smaller providers position themselves as high-touch, with more personal service. Keeping in constant contact with customers, when many work in a distributed personal environment, leverages the human side of business relationships.
Rapidly evolving technology and visibility offerings undercut legacy IT investments and prices have come down for many solutions. That leaves an opening for mid-tier forwarders and providers to adopt newer and cheaper logistics technology solutions.
Is smaller better? You might get a different perspective from sector gargantuans, but consider that monster XPO recently announced its intention to split the company into two smaller entities—one dedicated to outsourced warehousing, essentially contract logistics solutions, and the other to truck brokerage and LTL shipments.
Was XPO’s move in recognition of the need to be more agile and responsive to ever-evolving customer service demands? No, it is to recognize stock market demands, says CEO Brad Jacobs, who reasons that the stock market value of pure-play companies is greater than “a complex company.” Is the stock market recognizing the reported trend toward smaller, and valuing companies accordingly?
One thing is certain. This past year painfully taught many enterprises they need to diversify suppliers, supply chain solutions providers included. Laying off your supply chain needs on several smaller providers inoculates you against further business disruption.
What’s your take? Do smaller logistics solutions providers have the upper hand in this COVID-created business environment? Or are huge multi-nationals doing just fine, or at least as good as everyone else? Let us know: [email protected]