Transportation Management Report 2011 - Capgemini

How to Manage Your LSP
Hugo Haarman
The Netherlands
17
Outsourcing of logistics services
Outsourcing logistics services
has become common practice.
Outsourcing of transport execution is
one of the most outsourced business
processes. In Europe, domestic
and international transportation
is outsourced by respectively
92% and 89% of the shippers.
Associated business processes such
as transportation management are
outsourced by almost 40%.
When companies outsource their
logistics it is tempting for them to
think that their ‘logistics problems’
are outsourced as well. Although
some problems may become the
Logistics Service Provider’s (LSP)
responsibility, shippers will still be
responsible for managing their LSP.
How to effectively manage your LSP
is the subject of this article. Using
real life examples, we will explain
why managing your LSP is such a
challenging task and provide you
with tips and tricks to do this more
Figure 7: Problems with LSPs
TOP Seven Continuing Problems
Lack of continuous, ongoing improvements and
achievements in offerings
Service level commitments not realized
Information technology capabilities not sufficient
Cost reductions not realized
Lack of project management skills
Unsatisfactory transition during implementation stage
Lack of global capabilities
Source: 2009 14th Annual Third-Party Logistics Study
effectively. Selecting an LSP with the
right IT capabilities is key and a first
step to developing a more beneficial
LSP relationship.
What goes wrong in your LSP
relationship?
The purpose of outsourcing
your logistics is to reduce costs
while improving service levels
and flexibility. Is this really what
has happened or could your LSP
relationship be more beneficial?
We think it can. Every year
Capgemini researches the experience
of LSP users across the globe. The
2009 edition of the Third-Party
Logistics Study shows that shippers
are not completely satisfied with
LSP performance and report areas
where LSPs can improve. The most
frequently reported problems are
not realizing service levels, lack of
continuous ongoing improvements
and not realizing cost reductions
(Figure 7).
Percentages Reported By:
Shippers 3PLs
46%
46%
43%
36%
35%
31%
30%
19%
31%
31%
34%
17%
25%
21%