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How Top Companies Use Technology and
Logistics Partners to Improve Performance
Business Value Research Series
Table of Contents
Executive Summary 2
Key Findings and Recommendations
Business success is increasingly linked to effectively enabling a new level of transaction automation and
managing international logistics. Growing low-cost country partner synchronization previously not practical or
sourcing and rising sales to international customers are possible. On-demand global trade management platforms
triggering companies to seek new ways to manage the and data gateways are driving more electronic
costs, complexities, and uncertainties of moving goods collaboration for significantly reduced IT costs.
across borders. • Create visibility to create control. International logistics is
In November and December 2005, Aberdeen researched all about managing a network of third-party providers. The
companies that are transforming their international logistics foundation for controlling this process is visibility. For a
operations to find out how they are achieving improvements. number of best practice winners, visibility does not stop at
Eight companies were selected as best practice winners, two identifying a shipment delay or inventory issue. Rather, an
in each logistics management category: global inventory alert is the first step in a structured notification, resolution,
control, transportation spend management, import/export and root cause analysis process. In particular, those
process management, and international logistics outsourcing. companies with strong Six Sigma heritage are using that
These companies are able to invest less capital in interna- discipline to create improved international logistics
tional logistics yet provide better service to customers. reliability.
Key Findings and Recommendations • Use inventory more effectively. A number of international
Analysis of the best practice winners found that greater logistics leaders are focusing on extracting more value
process automation, improved technologies, and increased from their inventory. In some cases, this means creating
reliance on logistics partners were instrumental in driving better in-transit visibility so they can redirect inventory
their successes. Although winners focused on different areas around port congestion or other bottlenecks or to higher
of international logistics improvement, they shared common points of demand. In other instances, the focus is on
views on how to achieve success. Companies seeking to optimizing where and how much inventory to hold in the
improve their international logistics performance should first place. Better leveraging the networks of logistics
consider these best practice tenets as they construct their partners and using multi-echelon inventory optimization
transformation roadmap. tools are some of the success tactics being applied.
• Envision the future, act on the foundation. Best practice • Implement transportation spend management. Although
winners set the strategy for international logistics in the companies have focused on spend management discipline
context of how their companies compete as businesses. in areas like office suppliers, travel expenses, and telecom
However, they realize logistics excellence is a journey. As a costs, they have mostly ignored ocean and air freight
result, they focus their actions on transforming specific, costs. Two of the best practice winners focused specifically
foundational components on which they can drive future on aspects of transportation spend management to
improvements. Visibility, trade compliance, and transpor- jump-start their improvement initiatives.
tation contract management are some of the most • Streamline customs processes and maximize trade
common cornerstones. agreements. Without a solid foundation of trade compli-
• Partner for success. Unlike in domestic logistics, it’s ance and documentation, purchasing will make the wrong
impossible to “go it alone” in the international arena. To sourcing decisions, goods will be delayed clearing
drive their success, best practice winners are creating customs, and the business will be put at risk of regulatory
better ways to leverage the skills (and technology) of infractions. Trade agreement management and integration
partners. They are figuring out new ways to synchronize with broker partners to avoid data keying errors and costs
activities and increase process visibility and control with are among the key trade compliance initiatives for best
customs brokers, freight forwarders, ocean carriers, practice winners.
logistics service providers, and others. Best practice • Obsess about organizational buy-in. Best practice winners
winners stress that it is vital to choose partners that are intensely focused on gaining and maintaining organi-
provide the best value, not the lowest contract cost. zational buy-in for their logistics transformation initiatives.
• Automate with Internet-based technology. Without This includes gaining the CFO and finance organization’s
exception, best practice winners’ logistics strategies support by focusing not just on logistics-related savings
revolve around decreasing manual processes and but also translating the initiatives to tangible, direct
increasing automation. Internet-based technology is benefits for them.
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