Brexit – 4 Challenges & Solutions for Logistics Businesses
Come March 29, 2019, Logistics companies will experience an important shift in the way they operate and conduct business. With UK exiting the EU, exporters and importers will be required to adhere to new rules and customs regulations and be required to adopt and adapt rapidly to this new business situation.
Since the last downturn few years ago, Logistics services have gained significant momentum with rapidly increasing cross border trade. The proliferation of ecommerce globally has further catapulted the importance of Logistics, and now it is well poised for exponential growth in the immediate few years. However, the impact of Brexit will be deeply felt by Freight Forwarders. In the new schema, they will have to handle increased volumes of additional paper work to meet UK customs and trade regulations. Besides, keeping pace with the demands of end-customers to deliver high quality service at competitive prices is paramount to business sustenance and growth. It certainly seems like a tall situation to handle.
Whilst the big players believe in investing on IT automation to handle huge volumes of paper work, majority of the small and medium (SME) Freight Forwarders are not in a position to open their wallets to a technology play. With stiff competition prevailing in this industry, SMEs will be sandwiched between demand and the reluctance or inability to invest on new technologies to handle paper work. A fuzzy picture looms in front of them, but that does not flag an end of the road.
As far as business process management is concerned, this is a “moment of truth” for SME Logistics service providers. It will be necessary to augment execution and delivery models and capabilities that will help them manage cost better. However, to keep the momentum, “out-of-the-box” efficiency improvement solutions are required to achieve desired business outcomes.
An analysis of the SMEs in the Freight forwarding industry in the Benelux reveals four areas of challenges. Smart solutions do exist, just that business owners should start seeing and utilize such solutions.
4 Challenges and Solutions:
Skilled Resource Availability:
A growing demand for skilled manpower has placed a lot of strain on Logistics companies. With lesser hands on the job, a major challenge has emerged. Further, skills scarcity coupled with skyrocketing compensation packages could be a big challenge with Brexit bringing in huge additional paper work to the table. This situation requires a medium to long term business and people strategy.
To circumvent the skills and people dilemma, Freight forwarding companies can embrace an outsourced model to manage their day-to-day business process operations. In fact, several upwardly thinking freight forwarders are ahead of the curve and are gaining immense business benefits from outsourcing.
Keeping decent margins & profitability is essential for survival. Currently, most freight forwarders settle for wafer-thin margins and this has placed them in a tight spot. To manage this crisis, freight forwarders can transition to an outsourcing model to capitalize on the benefits of labour arbitrage which contributes significantly to better margins.
The Logistics industry, more so Freight Forwarders have so long been “far behind the curve” in technology adoption. While large players are showing signs of embracing technology for the next phase of growth, it is a catch-22 situation for small and medium Freight forwarders and Logistics service providers. Most of the Logistics business process work is still executed with legacy systems and highly manual / people dependent. It is clear that small and medium players are facing a technology embracement crisis.
Nevertheless, despite the “slow to change” environment prevailing in this segment, Freight forwarders and logistic service providers can address the crisis by using a hybrid model. Routine business process tasks such as data entry and documentation pertaining to Bill of Lading, Invoice management, Pre-Alerts, Shipment Tracking and Freight Audit which require human intervention can be outsourced to 3rd party Managed Services providers, while customer facing processes can be handled in-house with little technology dependency. Thus the benefits of the hybrid model can be harnessed in multiple ways which include access to new technology tools and platforms offered by Managed Services providers to augment the quality of service execution and delivery.
Data Quality Challenge:
“The proof of the pudding is in the eating”. That said the proof of high quality service is measured by the quality of data that is entered into the business process system available to clients and other stakeholders. It is well-known that data available to users in most Logistics organizations lack in accuracy and quality. One can expect more data in-accuracy with Brexit increasing the load of data entry and documentation work.
In spite of large Logistics players upping their technology play, data quality and management still remains a big problem and challenge. This challenge can be attributed to fewer skilled resources than required are deployed for data entry and to manage large volumes of data pertaining to shipments. Besides, smooth Logistics management requires a well-oiled Business Process function and team that is capable of handling the diverse requirements of Industry.
It is quite evident that crisis situations like the above can be surmounted by outsourcing routine business processes to experienced 3rd parties to meet desired business outcomes.
Cenza – a Managed Services company which offers outsourced solutions, is one example of a 3rd party that helps Logistic services providers in the Benelux benefit from outsourcing. Benefits can include significant cost savings from efficiency, skilled resources availability, improvement in business process turn-around time, data quality & accuracy and IT infrastructure.
Cenza’s benefits don’t stop here. Cenza has a strong presence in the Benelux by way of a strategic partnership with KuneVerda BV , Netherlands. Cenza’s business process outsourced service offering coupled with KuneVerda’s strong Logistics business process consulting expertise can be a “one stop shop” to deliver efficient and seamless solutions to Freight Forwarders and other Logistics companies.
The bottom line is that Logistics companies in the Benelux which include Business Process Outsourcing in their Corporate Strategy are better poised to weather the challenges that Brexit poses to the Logistics industry.
About the Authors:
Ed van Dort, brings over 25 years of experience in the Transport and Logistics industry in the EU and is specialized in the optimization of cargo flows through worldwide main ports. Besides his specialization in seaborne traffic, Ed has implemented several optimization projects for hinterland connections. Ed has a strong international network of transport and logistics experts and has been head of business development and software-engineering at a key information provider in the Port of Rotterdam, Royal Dirkzwager.
Hari Santhanam brings over 25 years of experience in IT, AI/ NLP, Education, Retail, Strategy Consulting and BPO. His pet functional areas are Global Business Strategy, Tech Solutioning, Go-to-Markets, Marketing, and Scaling.