Logistics research challenges: The study highlighted the following issues in obtaining sufficiently detailed data on which to undertake effective planning and decision-making at a national level:

- Lack of continuity in surveys limits the monitoring of trends.

- Current surveys are too complex and focus on specific issues.

- Data collection efforts are fragmented.

- No qualitative benchmarking information exists.

- Surveys are in many instances not conducted by unbiased institutions.

- Companies are unwilling to contribute information since it is regarded as a threat to their competitiveness.

- Relevant government departments do not commission joint research to address national logistics imperatives in favour of internally led initiatives based on speculation or deals.

Logistics maturity: The report further highlighted that most companies' supply chain management competencies were not very mature. Many were at a basic stage with the main focus being to only control costs in each functional area, with limited functional integration and strategies such as flexible manufacturing to meet the needs of the marketplace. Some outsourcing of logistics was in place to help reduce costs.

Few companies had undertaken strategic assessments of their entire supply chain and its different role players. Little understanding of fourth-party logistics (4PL) was evident or the potential value that it can create.

Most CEOs knew that there was scope for improving their supply chains but the creative input to rethink and re-engineer their supply chains was lacking or sabotaged by entrenched or threatened managers.

The companies that are innovating are the ones that are forced by their competitors or by changes in the business environment, such as deregulation or free trade agreements. Although the impact of a full supply chain review could contribute a typical 20% decrease in the base cost of local distribution or delivery time reductions of 60%, these benefits could only be achieved with significant effort and a long term audit and redesign process over 12 months.

The 3PL/4PL debate: The value creation of 3PLs and 4PLs is an ongoing and controversial topic. The report highlighted that many companies claimed that using third-party logistics providers did not actually reduce overall costs since their margins were on a par with the savings.

The use of 3PLs has been dangerous in certain instances since companies have become lazy and have passed off problems to 3PLs (cost-cutting that leads to undesirable side effects - poor truck maintenance, limited training, overloaded vehicles, dangerously long driver hours, and so on). There were instances where collaboration between 3PL companies and manufacturers did not exist as a result of adversarial relationships and confidentiality boundaries. Many providers who claimed to be 4PLs actually were linked to transport providers or used their own large transport asset base therefore losing their impartiality.

There were very few "pure play" 4PLs that do not have asset bases, who could strive to provide optimal solutions where the best combination of service providers were being utilised. Some 4PL operators got around this problem by buying assets from their customers with the objective of more efficiently maintaining the customers' supply chain.

The study raised the discussion on the merits and rationale behind outsourcing. The report proposed that outsourcing all logistics was not sustainable since there needed to be a certain level of in-house expertise and asset base, many outsourcing projects had been undertaken merely to reduce labour issues.

A number of cases were discussed where huge value had been provided through some industry-specific outsourcing by service providers with in-depth understanding of their respective industries. In some situations, the global freight forwarders were playing the most effective role as 4PLs being able to integrate logistics activities for their large multinational customers.

Industry-specific supply chain reviews: The report contained selected industry reports highlighting trends and key initiatives being undertaken. This allowed improved understanding of market challenges that each industry sector was facing and identified areas on which both the industry groups, and service providers should focus to shape supply chain responses that enable competitiveness.

There is an excellent opportunity for Thailand to undertake similar industry by industry supply-chain review, institute common measurements within a strategic data collection framework. Next week we will discuss some possible approaches to this opportunity.

Weekly Link is co-ordinated by Barry Elliott and Chris Catto-Smith, as an interactive forum for industry professionals. Comments and feedback are welcome at:

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