What Can Telecom, IT, and Real Estate Teach Logistics Companies?

Today, most shippers don’t consciously collaborate with other shippers to share and drive down distribution costs.  Today, it’s about “my” distribution network, not “our” distribution network. 

Over time, we think collaborative logistics will take hold. Just look at the examples of shared infrastructures from outside the logistics industry

• Wireless service providers no longer build towers; they share cell towers to avoid redundant sites and reduce capital expenses and assets. Towers are most often owned by neutral companies that do not provide wireless services.
• Most companies don’t use their own servers and IT staff to host their websites. For a fraction of the cost, they pay a third party web hosting company that manages a bank of servers to host hundreds or thousands of websites.
• Instead of installing software in their own IT environments, companies reduce cost and complexity by buying software as a service. They can have secure access to the software via a web browser, but share the costs of the underlying infrastructure of networks, servers and storage.
• In The Bronx, NY, 50 different businesses share the costs to run the famous Hunts Point Market – a 1 million-square-foot facility that provides a central source for New York’s hotels, restaurants and delis to buy fresh fruit and vegetables. If there was no Hunts Point Market, each of those 50 businesses would need to design its own solution for distributing to this key market – and their customers would not have the convenience of sourcing these products from ONE place.

All these examples seem so logical.  So why can’t we apply that same thinking to consumer product distribution? 

In part, it’s because shippers hold on to the idea that their company’s strategy to get products to market is a competitive lever.

News flash: consumer products don’t compete in the warehouse or sitting side by side in a delivery truck.

They compete on price, on product quality, on value.  They compete on the shelf.

All these consumer products are going to the exact same retail distribution centers and grocery chains.  Just like all the data from the various wireless companies is hitting off the same towers.

Shippers should band together to minimize the time and cost to get products to market. The best way to do that is by SHARING – ideas, infrastructure and, ultimately, costs.

Read more on collaborative logistics in our paper “The Power of We.”