(chinadaily.com.cn)
Updated: 2008-05-20 13:50

A focus on innovation is what the logistics industry needs to substantially improve performance, according to Arthur D. Little's latest report, which analyzes the results of a recent study by the management consultancy and the European Logistics Association (ELA). The report highlights logistics service suppliers such as Kuehne + Nagel and shipping companies like European retail giant Metro have set customer-centric standards across their markets, resulting in boosted EBIT margins and amplified business performance.

Arthur D. Little's newest report, "Value Creation through Innovation Excellence in Logistics", details the study of more than 100 logistics service providers and their customers, the shippers, in various industries across Europe. The goal of the exercise was to indentify top innovators in logistics and the added value they generate through high levels of excellence in innovation. From its analysis ADL and the ELA were able to derive the key success factors for achieving innovation excellence.

The study found that while innovation has always been judged as the growth engine of society, in the field of logistics its importance is still undervalued. But with globalization and structural industry changes leading to more complex and increasingly interlinked supply chains, executives worldwide are realizing that logistics has to centre around the customer.

Author Markus Achtert, a Senior Manager in Arthur D. Little's Munich, Germany office, said: "Specialists in the field of logistics have been rather conservative innovators compared to those in other industries. We've found that in this field the key to success is to focus on the customer and define innovation from their viewpoint: What will the new function do for the customer? Innovation is useless unless it delivers added value to the customer."

According to the study, the reduction of costs and modularization of services with the intent of using them for multiple customers are the most important objectives for logistics innovation today. In the future, as the cost-oriented innovations are replaced by customer-centric ones, these objectives will be replaced with the need to create new services to cover existing customer requirements and stimulate new business. Top innovators measure the added value of their logistics, while average innovators focus on costs.

The Innovation Excellence in Logistics report analyzes this study, then describes four distinct approaches logistics companies and shippers can harness to reach their markets. It also links the results to real-world examples and outlines how executives can create value through innovation.