The growing tends to increase logistic costs.
At the same time, retail and production companies have to keep an eye on these cost, which often account for 10% or more of their overall costs. This seems to be a classical trade-off,but as the survey shows, there is no contradiction in managing higher complexity while at the same time reducing logistic cost. On the contrary, especially those companies that are faced with the highest possible complexity and dynamics in their respective industries prove to be the most efficient logistics managers. Car and computer manufacturers as well as large retail chains have succeeded in this task, developing state of the art logistics management concepts that rely heavily on IT
The basis for an efficient logistics management is an automated order administration system that allows the seamless and paper-free flow of order information system. A majority of the more efficient companies in the survey already uses system for automated order administration in contrast to the less efficient participants, as exhibit 1 show. Companies already relying on automation and integrated order administration outperform their competitors in several dimensions, most of all when it comes to the order throughput time. On average these companies can reduce their order throughput time by 20% compared to companies without the system.
But the support of internal processes with IT alone is no longer sufficient to enable above average performance. The internal systems have to be compatible with the systems of other partners in the supply chain to allow for a seamless information flow along the whole value process. Companies will have to embrace the possibilities of new communication standard like XML to build highly standardized and integrated supply chain information systems.
As important the connectivity and integration of the order administration system along the supply chain is the selection of the right planning systems. Most of all Enterprise Resource planning (ERP) and production planning and management (PPM) systems are essential for companies who aim to increase their logistics efficiency, again with a focus on connectivity to other information systems, internal as external
Faced with the growing complexity of logistics management, with respect to performance as well as costs, production companies and to same degree even retailers are more willing to outsource logistics activities. This offers great opportunities to logistics service providers(LSPs) - under the condition that they can provide the performance and costs their customers seek. The subsequent paragraph will therefore examine how LSPs can provide efficient services by using the right IT.