It’s a word I’m hearing a lot these days, especially from supply chain and logistics executives. The dictionary defines flexibility as “susceptible of modification or adaptation” — but supply chain executives define it as “what we need in our systems and processes to keep pace with the rapid changes in our business.”
Flexibility is also part of the value proposition supply chain software vendors and third-party logistics providers (3PLs) are offering to customers. But as Eric Meister, Chief Operating Officer at LeanLogistics, discussed last week on Talking Logistics, enabling flexibility goes beyond offering a software application:
Executives are looking for a flexible solution that gives them organizational capacity in the face of rapid change — [that is], having the ability to flex up or down, pull in the appropriate resources and business processes as needed in order to support the changes, which in a lot of cases can’t be anticipated…or the future challenges may be unknown.
When a customer comes to us, typically their first question [is not] about technology; what they [ask] about is the solution set — how [can] you solve my supply chain problems? The expectation is that technology will be an important component of that solution, and that it’s best-in-class and simplifies business processes, but [technology] is foundational to the broader overall solution. And, fundamentally, to provide that [solution], you have to have a good understanding of customer supply chain issues and challenges and how your specific solution set plugs into that in the appropriate way.
One area where flexibility is becoming increasingly important is transportation management. So what defines a flexible transportation solution? Here’s Eric’s perspective:
If you look at the components of a flexible transportation solution, there’s the delivery model, functionality, and services.
From the delivery model perspective, software-as-a-service (SaaS) really fosters the rapid development of networks outside the four walls of the organization. It also has the added financial benefit of matching savings and costs.
The second component is functionality, and having embedded best business practices in a comprehensive suite of lifecycle transportation management tools that can be implemented incrementally or in modules is key to providing that flexibility.
And finally, being able to layer services on top of a strong technology platform, whether it’s analytics and benchmarking, transportation procurement and market intelligence, transportation execution, supply chain engineering, program management, as needed, provides that additional bandwidth in challenging times. The final leg of that services stool is continued strategic engagement as a service over time to ensure that the return on investment is delivered.
My conversation with Eric underscored a couple of points I’ve been making for years. First, customers don’t really want to buy software; they want to buy outcomes — cost reductions, productivity improvements, revenue growth, increased market share, improved working capital, and so on. As Harvard marketing professor Theodore Levitt famously said, “People don’t want to buy a quarter-inch drill; they want a quarter-inch hole!”
Many manufacturers and retailers, however, are looking at their fragmented supply chains and becoming overwhelmed by the ever-growing complexity and rapid changes. Buying and implementing supply chain software is now the “easy” part; the real challenge is finding experienced supply chain experts who can connect all the pieces together (software, process changes, metrics, best practices, continuous improvement, and so on) to deliver business value.
Which brings me to my second point: The business models of software vendors, consultants, and 3PLs continue to converge as customers, in their quest for flexibility and control, look for solutions that combine the best of what each of them offers. And that mix of technology, consulting, and services will change over time, which means solution providers also have to be flexible in their delivery and pricing models.
I encourage you to watch the rest of my conversation with Eric for additional insights on this topic. Then post a comment and share your perspective.
Note: LeanLogistics is a Talking Logistics sponsor.