Keywords: Warehousing Services, Contract Logistics, Value-Added Services, Logistics Service Provider (LSPs), 3rd Party Logistics Provider (3PLs), Global Market Research Report, Market Shares, Market Growth, Market Trends
Warehousing and distribution may not be the core competency of shippers. However, there are many strategic issues related to outsourcing warehousing services to an LSP. In addition, the market is highly fragmented and there are thousands of worldwide suppliers of these services. ARC has not attempted to estimate the total market size and thus the study covers the “Top 25” warehousing services suppliers.
In this market study, ARC focused on the market dynamics from an LSP perspective. According to Senior Analyst Neelam Singh, the principal author of ARC’s Warehousing Services Global Market Research Study, “LSPs translate warehousing services into a valuable business proposition by better asset utilization, offering flexibility, and continuous improvements for their customers. LSPs report that continuous improvement programs are often mentioned as something potential customers are looking for and almost always include the request for proposal.”
It is difficult for the shippers to select an LSP. They often view LSPs as any other service provider, and choose the most cost-effective one. This selection criteria has encouraged providers to suggest cost-effective options, such as multi-client facilities. Below are some strategies of LSPs that provide the differentiators to keep them ahead of the competition.
Continuous Improvement Strategies Drive Growth
According to one top LSP executive, continuous improvement strategies “are table stakes - you have to be able to show you possess a continuous improvement program to be in the game.”
LSPs seek to prove to potential customers that continuous improvement is more than a toolset that they pull out of their bag of tricks to help win a deal, but rather that they have a continuous improvement culture in place.
Value Added Services Serve as Icing on the Cake
Many operations need to have some local customization to suit customer needs. The more value-added services (VAS) the customer assigns to the LSPs the more specialized the service becomes. Right from simple projects such as relabeling and kitting, all the way up to product preparation (trimming, packing, staging) and point of sale sequencing can be performed by the LSP. As the complexity of the VAS increases, a LSP’s ability to improve margins also increases.
Technology Updated LSPs Have an Edge
LSPs pursue different strategies when it comes to warehouse management systems (WMS). In some cases they have standardized on a best-of-breed solution; others have standardized on different best-of-breed solutions based on industry; others have their own proprietary WMS, and in many cases, an LSP is willing to implement a best of breed WMS specified by the customer. But customers look for more than WMS capabilities; the ability to provide visibility to inventory and shipments, advanced BI, and highly intuitive dashboards are commonly asked for in RFPs.
More Information on Study and Supplemental Reports
For more information on this study, go to www.arcweb.com/market-studies/warehousing-services.
ARC has two related client reports that are also available for purchase:
• “Configurable Supplier Selection Guide on Warehousing Services”
• ARC Strategy Report on the ROI data will be based on a survey completed by 100 user respondents
If interested in these reports please contact Greg Starr for additional details.