2013-10-30

Supply Chain Execution Outlook 2014

Consafe Logistics CEO, Ulf Jansson delivers a two year-outlook on the supply chain arena.

After years of prosperous growth, the global logistics sector has been severely affected by the economic downswing. How has the arena in which Consafe Logistics operates changed?

"The unsettled global economy and the European crisis have obviously had a significant effect on growth, we know this, but at the same time the impact on the supply chain industry has been relatively minor. The WMS market is predicted to grow by 7 per cent in the next year and more and more companies are deciding to further develop their supply chain strategy to include new areas in their business flows. I believe that this is because companies are seeing the opportunity for greater competitiveness by improving the efficiency of their supply chain, while still being able to make savings. The potential improvement in efficiency also makes itself felt relatively quickly."

"The supply chain market is still an immature market. In contrast with ERP, which can be seen to be a more homogeneous and mature market. Today we have Mega-Vendors, which for their ERP solutions try to offer a comprehensive suite of solutions for Supply Chain Execution (SCE). We also have Best-of-Breed suppliers, who have a more limited but specialised offering linked to SCE, and whose solutions penetrate deeper into each area."

"And then we have Newcomers – small companies emerging with new innovative ideas about how they can develop the information flow in an efficient way. We can confirm that the market is still expanding, and that there is a lot of potential. We are considered to be number 3 in EMEA and number 6 worldwide in WMS with a market share of just over 5 per cent, so for us as a company there is still a lot more to do on this market."

Are there any technological areas where you predict major changes in future?

"Hardware has been subject to a major transformation, in so far as it has continued to become more of a commodity. Internet sales have increased and today companies can buy most of the available hardware components on the Internet in new channels, via volume distributors."

"Nevertheless, for Consafe Logistics the most important thing is the total service undertaking. The combination of software, hardware and service is an advantage for our customers. The strength and competence to integrate all types of hardware with our software solutions, to continuously provide feedback and give customers advice on how they can develop their hardware platform most effectively. It''s all about competence, integration skills and keeping up-to-date with the supply chain and knowing what suits the customer."

Supply chain integration is a hot subject. Are there advantages with integration for all types of companies, or is it mostly an advantage for global companies?

"A lot of the success involved in integration is based on process know-how. To understand the advantages of integration irrespective of the size of a company, you have to understand what the company needs and the processes involved. You get this in-depth knowledge from experience of implementations and far reaching logistical competence. Yard Management, Workforce Management and Transport Administration are examples of solutions that integrate, but also have a deep impact. Companies should remember that Mega-Vendors'' products are in many case extremely widespread, take a long time to introduce and involve heavy expenditures, which easily mount up. The products are broad-based, but not necessarily far reaching in their competence."

The future? How are supply chain intensive companies developing? What are the most important factors for success?

"From a solution perspective I think that companies are going to be finding new opportunities to invest in their supply chain, such as Cloud-based solutions or SaaS (software as a service), so that they can benefit from the advantages of the solutions as quickly as possible and at lower cost. These types of solutions have proved to be very successful in WMS, transport and visibility."

"Another factor for success is the ability of the company to derive benefit from its investment. We aim to be a partner for the customer and to continuously develop the solution in line with changes in customer requirements. Our customers are often successful companies experiencing rapid changes, so-called agile companies, which have the capacity to see new opportunities and want to develop at a fast pace. They are quick to benefit from the advantages of efficiency, for example with our release management. Our strength and their advantage is that we deliver a continuously developed product that meets their requirements, where they can continue to expand even in full production."

What do you consider to be the advantages of release management?

"The company regularly has its system updated and avoids the major upgrades, which can put all of their production at risk just because they are so substantial. The releases are the result of constant communication with our customers, to exchange ideas and thoughts around new, smart solutions. Solutions that will benefit all of us in the next release."

In which way is your offer influenced by Consafe Logistics customers?

"Dialogue with the customer is extremely important for us. Of our total turnover, 70-75 per cent is related to existing customers. This would imply that we are doing something right, and that customers are continuously asking for our competence. We try to have regular meetings with customers, where they have the opportunity to network, compare experience and discuss proposals for product development and other things. We have established a forum we have called CLIC – Consafe Logistics Innovation Center. We encourage customer feedback on existing solutions, future releases, proposals for the further development of products and modules. CLIC is an open forum for all our customers regardless of solutions, and a very good channel for our product development."

What are the prospects for the market in the time ahead?

"In the short term there is no reason to be anything other than positive in terms of development. There are strong signals that the economy in Western Europe is recovering, while it remains a little more uncertain in the US. The next 2-3 years are going to be very positive. Our customers have by no means exhausted the potential for rationalisation and profitability that exists in a well-structured supply chain. There is still a lot that needs doing, not least in terms of visibility. We also talk a lot about collaboration, which might be wishful thinking, but it builds up an image of an ideal supply chain flow, which is something worth striving for. Companies can earn a lot of money and above all become a lot more competitive if they think along those lines."

"Then there are some tendencies that all the hype about moving manufacturing and production to Asia is slowing down a bit, and in certain cases, for example in the US, companies are moving production back. It is highly likely that this will change the entire supply chain network for many companies. Consafe Logistics welcomes all forms of changes, because they imply new adaptations, new supplements and new thoughts, which improve our offering to the market."

Expansion plans?

"Consafe Logistics'' strategy for 2014-2016 has a lot to do with acting as a company on the market with a joint portfolio of products and services in Supply Chain Execution, which is facing a significant development in terms of functionality and services. The deliveries are supported by consistent processes and a shared service desk."

"From the perspective of the market, we will primarily be consolidating in the geographic markets where we already have a presence with our own subsidiaries. In the somewhat longer term we will be focusing on new markets in combination with an expansion via our partners."

Information about the company: Consafe Logistics AB

The news is presented in cooperation with MyNewsdesk