E2E supply chain orchestration: From control tower to command center

Despite the turbulence in supply chains, the adoption of end-to-end supply chain visibility lags behind expectations. To find out more, consulting firm BCI Global and Supply Chain Media surveyed 123 supply chain executives about their motivations and challenges. What emerged? The vast majority really do need end-to-end visibility, and would ideally like to take things even further.

Logistics outsourcing

Besides end-to-end supply chain visibility and orchestration, another theme in the survey by BCI Global and Supply Chain Media was logistics outsourcing. One of the most striking conclusions is that, in the run-up to 2027, companies would like to see a change in the relationship with their logistics service providers. They want the relationship to be more focused on value creation rather than the lowest rates. “We foresee a shift from a transactional to a strategic relationship with logistics service providers. In conjunction with this, we see a desire to reduce the number of logistics service providers. Companies prefer to have fewer partners, so they can enter into a strategic partnership with them,” says Carlo Peters, Principal Consultant at BCI Global.

That desire may stem from today’s experiences. Companies are satisfied with the operational performance of their logistics service providers, but find they lack a proactive attitude and the ability to continuously improve. “Service providers do what the shipper wants, but that’s as far as it goes. In a strategic relationship, companies expect a proactive attitude and continuous improvement. They are also dissatisfied with logistics service providers” lack of progress in digitalization and network optimization. Logistics service providers will have to invest in their competences in this area to move beyond purely executing basic services,” Peters states.

Management model

The service providers are not the only ones who have work to do. Companies themselves struggle with the standardization of processes, largely lack standard IT interfaces and have not set up an effective model to manage their service providers. Moreover, logistics outsourcing should be proactively managed at various levels in the organization – both at top level for strategic issues, and at tactical and operational level. “We regularly see too much focus on the operational and tactical aspects,” Peters comments. “If companies want to build strategic relationships with their logistics service providers, they will have to focus on long-term rather than short-term objectives. They will have to make decisions driven by value creation rather than costs, and be prepared to enter into contracts of seven or ten years rather than two or three. In addition, a strategic relationship requires harmonization of processes and a better, more mature management model,” he adds. “This also changes the selection process. We often see that Procurement’s interests differ from Supply Chain’s. So does it really make sense for Procurement to lead the selection process and focus too much on operational costs?”

Bosch acknowledges that many companies lack a proactive attitude and the will to continuously improve. “That is exactly why we chose to set up our own 4PL. If we had chosen outsourcing and the external party did not perform as expected, it would have led to heated discussions with the various divisions – possibly resulting in them nevertheless engaging another 4PL,” explains Bosch’s Arne Flemming.

Right structure

Björn Kirchner of Henkel Adhesive Technologies recognizes the desire to replace the transactional relationship with logistics service providers with a strategic one. “The question is whether that will really happen. The need for a more strategic, long-term relationship has existed for years. If you don’t set up the right structure and don’t offer the right incentives to logistics service providers, you are better off running the operation yourself. You have to allow your logistics service providers to run a healthy business while keeping them ambitious at the same time. That’s the challenge.”

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