Market analyst Aberdeen, which specifically looked at how midsize companies can best manage warehousing and transportation, argues that best-in-class midsize firms are those with the ability to flex their distribution models while still maintaining high productivity and cost efficiency. This is something that larger firms are unable to do.
According to Aberdeen's new benchmark study results, companies that adopt this best-in-class approach invariably have superior performance across all customer service, cost, and productivity metrics. Successful midsize companies then are those that focus on making feasible, profitable customer service promises at time of order to achieving integrated processes from the warehouse into dock management, asset management, and transportation.
All this is of great relevance to the situation most food companies now find themselves in. Tightening freight capacity, rising fuel prices and price pressure from retailers have forced food companies to rethink how they deliver value to the enterprise right along the supply chain.
For example, a squeezed supply of refrigerated shipping containers in the US caused shipping rates to rise 10 per cent to 25 per cent since last spring, pushing up prices that retailers were not prepared to pass onto consumers. But for smaller companies though, the relative cost of supply chain inefficiencies or disruption is less the issue; for these companies, improving supplier performance is all about staying competitive with the larger players.
Along with flexibility, integration is a crucial factor if midsize companies are to prosper. In an earlier report, Aberdeen found that firms that separate IT investment from investments in production capabilities do so to their detriment.
The study found that by managing IT infrastructure as a cost centre, many organisations are not operating as efficiently and as streamlined as they could be.
With regard to integrating warehousing and transportation, the same pattern is to be found. Aberdeen found that nearly 60 per cent of midsize respondents said they did not fully understand best practice for extended warehouse processes.
This point was raised in a recent Deloitte Touche Tohmatsu study. "The negative impact of failing to take a holistic, global view of the business can be devastating," said Gary Coleman, DTT global manufacturing industry leader.
According to the Aberdeen study therefore, competitive midsize companies are those that have put in place a strong foundation for fulfillment productivity and flexibility. While larger competitors are focused on corporate-wide fulfillment standardisation and simplification, midsize companies can use their agility to attract individual customers.