If Commerce Were A League Of Heroes, Logistics Would Be Its Superman
E-Commerce is the first thing that comes to mind when thinking about logistics. You know who does it well? Amazon. But where do B2B Logistics Providers fit in all this? Can we imitate Amazon’s success for any B2B company?
Logistics, as an industry by itself, is the backbone of the economy. They motivate countries to trade and compete, and have helped generate sources of employment in numerous sectors (not just the commercial ones). It’s kind of mind-blowing if you think about it like that.
The Roles And Responsibilities Of Logistics
The reason why one of the biggest online retail giants has dominated this industry is because of the innovative and efficient way they used their logistics along every link of the supply chain. The role of logistics in the supply chain is to have the right amount of resources at the right time, transport them to the right location in their best condition, and then deliver them to the right customer. They are the links that keep the supply chain together.
Another reason why Amazon is so successful is that they have succeeded in two key factors:
- Making their customers happy
- Lessening the shipping time
The first is achieved by marketing and sales, and the second is by adopting new technologies to make this happen.
What They Do:
- The planning for the movement and storage of goods, and producing the appropriate information to streamline reporting and processing that follows.
- Utilize land, air, and ocean transportation for the movement of goods, and make arrangements for short or long-term storage.
- Control movement of goods through fleet management, shipment tracking, technology, and reporting of information with supply chain partners.
- Add value for supply chain partners.
Types of Logistics
There are various logistics models and it is important to identify which one makes the most sense for your business and the fulfillment process.
Third-party Logistics (3PL)
They are specialists with over decades of experience in the field of logistics. They have the leverage and the proficiency to make the process simpler and more cost-effective. Their services include freight in multiple shipment methods as well as specialized cold storage transportation.
Fourth-party Logistics (4PL)
Also known as the Lead Logistics Providers (LLP). They are responsible for managing the entire supply chain of assessing, building, running, and tracking solutions for the client. Their services include shipping, inventory management, warehousing, shipment security, and packaging.
Storage of goods only. Their responsibilities include managing the projected volume of inventory, keeping goods secure, providing clear instructions on packaging, performing warehouse audits as needed, and recording inbound and outbound shipments for documentation.
Enterprising organizations, wholesalers, and retailers keep their logistics operations in-house and may have their own methods in storage and distribution.
We call these the “Last Mile” deliveries. It usually happens when goods are transported from the closest delivery hub directly to the customers.
When a product is no longer helpful to the customer, it can be returned to the manufacturer. This is where reverse logistics come into play.
Logistics in B2B
Connectivity is a highly critical aspect of B2B, and in order to achieve this, there has to be better communication and collaboration between companies, their suppliers, and their customers. Electronic Marketplaces (EM) have become the system to make this happen. In the context of logistics, they are known as Electronic Logistics Marketplaces (ELM).
Logistics B2B Lead Generation
Logistics companies that create sales leads in-house miss out on chances that may drive their company ahead.
Perhaps they are just too busy for a phone call, or perhaps you are not targeting the right prospects. So, if you want to reduce the sales cycle, whatever the case may be, you must learn who your ideal prospects are in order to replenish your pipeline with fresh logistic connections for your transportation solution.
Types of Electronic Logistics Marketplaces
- Open Marketplace: A system that can be opened by any shipper or carrier. Open marketplaces are being used to offer the leasing of short-term vehicles and equipment, as well as backhauling services. Prices are often auctioned.
- Private Marketplace: Created by the shipper for communication with hauliers. The shipper maintains responsibility for operations and its key decisions.
- Shared Marketplace: Similar to a private marketplace but information can be shared between marketplaces. Shippers may not be able to see other shippers’ information but the hauliers may see their loads from different shippers in one location.
- Collaborative Marketplace: Businesses that are in collaboration to identify similarities in their individual distribution networks. This network is then controlled through a central hub to increase optimization.
The Future of Logistics: Technology and Automation
Logistics, as the backbone of global trade, has always had great future potential if the industry wasn’t so fragmented and slow to adopt new technologies. A table from PwC’s Future In Sight Series demonstrates how these new developments would have enhanced logistic capabilities as well as the uncertainties when faced with customer acceptance.
|The Technology||The Impact||The Uncertainties|
|Physical Internet (based on the IoT)||– Improved supply chain transparency, safety, and efficiency|
– Improved environmental sustainability (more efficient resource planning)
|– Social expectations around data privacy and security may change|
– Regulation around data security and privacy may increase or be enforced more stringently
– The sector’s willingness and ability to invest in collaboration
|IT Standards||– Enabling collaboration horizontally|
– More efficiency and transparency
|– Companies’ willingness to adopt is uncertain due to data security concerns|
|Data analytics||– Improvements in customer experience and operational efficiency in operations|
– Greater inventory visibility and management
– Improved ‘predictive maintenance
|– Rate of development of data processing capacity is unclear|
– Question marks around data security
– Social expectations around data privacy and security may change
– Regulation of data security and privacy may increase or be enforced more stringently
|Cloud||– Enabling new platform-based business models and increasing efficiency||– Development of costs unclear (once a certain scale is reached physical data centers still tend to be cheaper)|
|Blockchain||– Enhanced supply chain security (reduction of fraud)|
– Reduction in bottlenecks (certification by 3rd parties)
– Reduction of errors (no more paper-based documentation)
– Increased efficiency
|– Rate of adoption uncertain|
– Unclear whether one or two dominant solutions will emerge or multiple competing solutions
|Robotics & automation||– Reduction in human workforce and increased efficiency in delivery and warehousing (including sorting and distribution centers)|
– Lower costs
|– Speed of technology development unclear|
|Autonomous vehicles||– Reduction in human workforce|
– Increased efficiency in delivery processes
|– Regulatory environments not currently in place in most countries|
– Liability issues are not yet clear
– Ethical questions remain especially in relation to emergency situations
|UAVs / Drones||– Increased cost efficiency (use cases: inventory, surveillance, delivery)|
– Workforce reduction
|– Regulation in most countries is not sufficient for commercial use in public areas like delivery|
– Safety and privacy concerns may hamper market acceptance
|3-d printing||– Lower transportation demand|
– Transported goods would mostly be raw materials
|– Speed, scale, and scope of uptake by customer industries are still unclear|
Achieving Higher Logistic Profits With Effective Management, Marketing, and Sales
7 Best Customer-Centric Practices
Developing goodwill strategies may depend on the organizations that are designed for them. But I have found that companies that are in the business of supply chain (and logistics) have these customer-centric characteristics in common:
- Understanding the buyer’s purpose. A lot of companies aren’t very clear on what their customers want and fail to realize that there are different responses in the supply chain for each buyer’s purpose. Understanding the buyer’s purpose ensures that production losses can be avoided and that the goods can be stored and transported safely.
- Ease of doing business. The company that is the easiest to do business with gets higher customer preference. Logistics management will want to make sure that there are no problems with the system. This means checking on operations on each link of the supply chain, to streamline the purchase process, punctual delivery of purchased goods, and establishing communication channels to make sure everyone is on the same page.
- Take ownership of problems and improve outcomes. Customer expectations are increasing in terms of getting the goods faster, easier, and at a lower cost. While there may not be a perfect solution for every disruption, it is important to have transparency and prompt delivery of customer promises.
- Use Cost-To-Serve (CTS) data to create customer value. Identify the specific actions to increase the bottom line without sacrificing customer satisfaction. But the real value of CTS becomes apparent when there is a loss-making customer and it helps you transform them from unprofitable to profitable. It’s a lot less expensive to sell to an existing customer than to acquire a new one.
- Listen to customer feedback. There are a lot of touchpoints in the logistics sector and feedback becomes a powerful source of information to compete in the market. The feedback should help you gain customer loyalty, understand their buyer’s journey, and will allow your representatives an opportunity to advise them on better purchases. Most importantly, they could help you figure out how to be more cost-effective!
- Have an efficient cross-functional collaboration. This will streamline the following flows and processes:
- Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses, and customers.
- Distribution Strategy: Centralized versus decentralized, direct shipment, cross-docking, pull or push strategies, third-party logistics.
- Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, and transportation.
- Supply Chain Management
- Map and measure performance. Determine if the goals are met by mapping and measuring the performance. This will help logistics management quickly diagnose any potential issues and make course corrections. One way to do this is to create a Value Chain Analysis. Another way is to track your Key Performance Indicators (KPIs) which I will explain later.
There is no doubt that logistic enterprises have accelerated economic growth and productivity globally. Not only are the world’s countries have become economically competitive, but the transportation and logistics industry as well.
Market segmentation is a way to help them optimize their marketing programs and create a personalized customer experience. This method goes well with the Ideal Customer Profile (ICP) which helps narrow down your marketing-qualified leads (MQLs) and sales-qualified leads (SQLs). As an added bonus, segmenting your market will help your supply chain partners allocate their resources more efficiently.
The Global Logistics Market is segmented by:
- First Party
- Second Party
- Third Party
- Fourth Party
- Industrial and Manufacturing
- Oil and Gas
- North America
- Asia Pacific
- ROW (Rest of the World)
The Logistics KPI Checklist
As I mentioned previously, Key Performance Indicators (KPIs) are another way to map and measure performance in order to reach that goal. Where Value Chain Analysis is used to quickly identify where something needs to be improved, the KPIs help you measure your progress in completing business objectives.
- Shipping Time: Is the amount of time between customer purchase and order shipment taking too long?
- Order Accuracy: How many orders are processed, shipped, and delivered without issues?
- Picking Accuracy: How many orders are picked up from the warehouse or hub without errors?
- Delivery Time: What is the average delivery time between the hub and the customer after the order was placed to be shipped?
- Pick & Pack Cycle Time: How long does it take for the employee to locate the product and start the packing process?
- Pick & Pack Costs: What are the costs for workforce, packaging materials, and/or equipment?
- Equipment Utilization Rate: Is your equipment enough for your workforce?
- Transportation Costs: What is the total of transportation and transportation-related costs per delivery?
- Warehousing Costs: What is your warehouse cost distribution?
- Use of Packing Material: What kind of packing material are you using and how many have been used?
- Number of Shipments: How many orders were shipped out?
- Inventory Accuracy: How accurate is your inventory database?
- Inventory Turnover: How many times was your entire inventory sold in a specific period of time?
- Inventory to Sales Ratio: How much inventory was stored compared to how many times it was sold? Did you overstock?
How To Market Logistics
By now you may have realized that anyone in this business knows that to be successful in your industry you must increase productivity, leverage your assets, and be highly efficient in all aspects of your logistics operations. And you must do this while making sure to lower transportation, equipment, and warehousing costs as much as you possibly can. You’ll notice that the primary focus in this sector has always been on material costs and gains.
However, technological breakthroughs have created opportunities to enhance business models while keeping expenses down. When the material costs have gone down thanks to these technologies, the ROI for successful marketing and sales tactics has increased. It is now easier to get qualifying leads with the right channels!
There are so many revenue-generating methods that would help logistic marketing today and in the years moving forward! But digital still remains a challenge for most companies and are reluctant to explore beyond traditional approaches such as transactional marketing.
So open your mind to these highly recommended marketing strategies!
- Inbound marketing has proven to be the most effective way to funnel opportunities to your logistic sales.
- Methods such as creating and publishing content, search engine optimization (SEO), and social listening are the trifecta of inbound marketing.
- Content can increase web traffic and bring value to your target audience.
- Social media channels such as LinkedIn will help increase your business and audience reach. However, be mindful of the post and connection limits since you don’t want to be banned for spamming!
- It’s not just for Sales. Making use of sales automation such as Customer Relationship Management (CRM) can enhance your leads database and track information faster.
Effective Outbound Marketing Strategies
Traditional relation-based outbound marketing is not completely ineffective. Cold calling is not dead. Email marketing is certainly not dead either! Webinars and virtual event marketing and Live Streaming events came through for us when Trade Shows, Seminars, and Exhibitions were suspended. “Face-to-face” simply changed to “behind the screen.”
Did people find it impersonal? At first, maybe. But this is why a lot of highly successful marketers and sales development representatives have found effective ways to project their personalities and professionalism over the internet. In fact, yours truly has found a lot of success in ABM solutions, a Multi-Touch Multi-Channel Marketing which includes inbound AND outbound approaches.
I’ll be honest with you. Logistics is a cost-cutting business and outbound marketing is… kinda not. You’ll need a dedicated marketing team, and an efficient plan to allocate your budget and resources to get your intended ROI. But this is also why outbound is considered a high-risk and high-reward strategy. Everyone keeps doing it because the ROI you get from a successful outbound campaign is absolutely worth it.
Tips To Increase Logistics Sales
Human-to-human interaction has always been the key to closing a deal. It hasn’t changed then, and it hasn’t changed now. However, our sales toolkits have. The world of logistics is full of spreadsheets and forms, and they used to be done manually. Now, we have smart applications that have made it easier to optimize the sales process, manage data, and save time.
Embrace the data revolution! Here are some amazing tips to enhance your logistic sales!
CRM tools such as HubSpot or Salesforce should help you assess your deal stages, and determine the revenue you generate from your prospects and customers. These tools should also allow you to store their contact information and profiles, and make it easier to segment them. Different CRMs have their own flows of automation but they generally look like this:
If I didn’t emphasize this enough before… Automation is the key! According to Aberdeen, automation boosts sales performance across a variety of metrics:
- 107% better lead conversion rate
- 40% greater average deal size
- 20% team higher attainment of quotas
- 17% better forecast accuracy
The online traffic is mostly on desktop. But as younger generations start entering the workforce, the mobile footprints start increasing. Google has also started tracking mobile performance with its Mobile-First Indexing (MFI). It’s essential to have a website that reads well on mobile.
The Bottom Line
Many logistics businesses may be slow to adapt but the world of B2B is a fast-paced and agile industry. Since the Covid-19 pandemic, companies have digitized 20 to 25 times faster. If logistic providers want to keep up, they would have to use data to digitize what was once a tedious manual process and utilize automation for their workforces.