As the ever-changing logistics industry continues to transform through the introduction of advanced smart technology, such as artificial intelligence and the use of drones, many businesses are left wondering how they need to adapt to accommodate and prepare for these transformations within their own companies. Tony Hughes, CEO of Huthwaite International, considers how the sector has changed, and how the impact of e-commerce giants continuing to dominate, may provide compelling opportunities for smaller logistics companies.
Making the most of existing platforms
Tony comments: “Amazon, Alibaba and other e-commerce giants have extremely sophisticated and optimised logistics systems in place. Think one-hour delivery slots UK-wide and the ability to hold vast quantities of stock and you get some idea of the systems needed to support them. Increasingly, smaller logistic players are finding it easier to use these existing platforms for their own benefit, as opposed to building new, less efficient ones.
“Let’s look at this issue in more detail. Consumers can already buy things by talking to artificial intelligence (AI), such as Alexa, and soon they will use it to discuss deliveries. That means AI logistics is truly becoming an end-to-end presence. This end-to-end logistics needs a variety of different and expensive components to become truly successful: big server farms; complex algorithms and operational research software; strong warehousing and shipping presence – not to mention a strong global reach to make the whole thing viable. It’s no surprise that few, if any, smaller or even medium-sized logistics players can achieve this. As a natural consequence, we will see large companies, such as Amazon, selling their capabilities to the smaller players. It’s a good solution but it does demand that the latter be on their toes to negotiate the best agreements for their needs.
How smaller logistics companies can capitalise on their opportunities
“It’s not all one sided though. Smaller logistics businesses do have the option to compete in some parts of the chain. They can still buy sales presence, for example, and offer delivery using their own local distributors rather than always using larger companies. This requires a skill and agility which larger players may struggle with. This leaves real opportunities for smaller logistics companies if they realise those opportunities early on.”
Strongly believing that traditional skills remain essential, Tony said: “The larger companies with highly optimised logistics capabilities are not monopolies. They still need to sell their own offerings and services in competition with each other. Strong relationships and skilled account management with their clients will matter more than ever therefore.
“Also key will be their ability to identify and persuasively articulate their added value and this will often involve translating large, complex capabilities into persuasive messaging and benefits relative to the client’s challenges. High sales and negotiation skills are pivotal to all of this and will only grow in importance.
“Niche is pivotal – meanwhile, smaller logistics players buying services from their larger counterparts will not need industrial scale solutions. They will more likely demand niche elements adapted to their own special circumstances and thereby offer their own customers specific products with unique selling points. Negotiating the right solution at the right price will take skill and care. Strong sales and negotiation ability will matter for large and small players. A good partnership deal between them will advantage both, ensuring each walk away happy.”
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