Mumbai, Maharashtra, India:End users in India tend to base their logistics outsourcing decision on the service providers’ industry-specific logistics expertise and ability to deliver goods on time. Industries also seek out logistics service providers (LSPs) to achieve cost savings and focus on core competencies.
New analysis from Frost & Sullivan (http://www.automotive.frost.com), 7th Annual Voice of Customer Study on Indian Logistics Industry Benchmarking and Analysis of End-user Preferences, finds that about 80 percent of companies in key end-user industries have just one-year contracts with their LSPs, possibly due to the low levels of improvements in efficiency.
“Around 70 percent of logistics users reported better logistics performance after partnering with third-party logistics (3PL) service providers,” said Srinath Manda, Program Manager, Transportation & Logistics Practice. “However, about half of such companies claimed that the efficiency improvement was less than 5 percent, and another 40 percent said it was between 6 and 10 percent.”
End users also found LSPs’ performance sub-par in the areas of security and damage control of goods during transport and warehousing, and quality of vehicles. Around 67 percent of end-user companies in India stated that their main concern was the safety of goods during transit and warehousing by LSPs. Nearly around 63 percent of respondents expressed that their second biggest apprehension was logistics handlers’ (both within their own organization and among LSPs) lack of skills and expertise.
To address these issues and reduce the scope of goods damage, LSPs should acquire modern transportation assets (vehicles and equipment) and advanced warehousing assets (warehouses and material handling equipment). They should also invest in modern supply chain technologies to offer full goods movement visibility to customers. Furthermore, LSPs can fine-tune their recruitment strategies by hiring personnel already qualified and trained in logistics or and undertake training programs for their staff to enhance their logistics skills.
“Outsourcing basic logistics functions and technology solutions are perceived as the most promising growth opportunities for 3PL service providers,” noted Manda. “LSPs will do well to focus on building assets and capabilities to provide complete solutions in transportation and warehousing, supported by technology and equipment.”
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7th Annual Voice of Customer Study on Indian Logistics Industry Benchmarking and Analysis of End-user Preferences is part of the Automotive & Transportation Growth Partnership Services program, which also includes research in the following markets: Logistics Scenario Tracker on Indian Auto Components Industry, Logistics Scenario Tracker on Indian Pharmaceutical Industry, Logistics Technology Usage Trends in India, and Logistics Scenario Tracker on Indian Automobile Industry. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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7th Annual Voice of Customer Study on Indian Logistics Industry Benchmarking and Analysis of End-user Preferences
Ravinder Kaur, Corporate Communications – South Asia, Frost & Sullivan, +91 9940141714