Black Friday and Christmas both epitomize the importance of logistics and the supply chain to companies wanting to keep ever more demanding customers content. To keep shelves stacked and meet same or next-day delivery obligations, businesses are having to work with an ever-increasing range of specialists who have managed to identify and fill a niche.
This ability to see the opportunities in gaps left by the huge players puts SMEs in an advantageous position according to Richard Wilding, professor of supply chain strategy at the Cranfield School of Management, and chairman of the Chartered Institute of Logistics and Transport.
“SMEs are obviously more agile than some of the giants in logistics and so they can move faster to enter niches that the big guys aren’t filling – and to find ways of working that offer quicker lead times that customers are now demanding,” he says.
“There’s a company near Milton Keynes, which specializes in just delivering around the local area. Most towns and cities will also have specialists who can deliver, say, car parts within a couple of hours. That’s why garages can change a tyre in a couple of hours. They can’t carry every model – they just call their local specialist, which is likely to be an SME that’s seen the opportunity in that area.”
Small and personal
SMEs are also thriving in logistics, Mr Wilding explains, because they can provide the personal touch that is essential to the industry. His guiding principle in discussing logistics is to convey to businesses that they are not just managing pallets and lorries, but rather personal relationships between partners in a client’s supply chain.
“I always say that logistics and supply chain management is mostly about managing relationships,” he says.
“Large companies can manage accounts very well, of course, but it’s the personal touch that can give SMEs a huge advantage. They can be far more personable and get to know clients and partners at a deeper level. Some companies may think their job is done when the item goes out of their warehouse, but the clever ones realize that the most important part is yet to come.
SMEs can adjust and innovate at a pace far quicker than a huge global organization
“The most important person is the one who hands over the package because they’re the only face the customer will associate with the brand. Large or small companies can excel at this, but SMEs are usually best placed to offer the personal touch.”
That is certainly the experience of Ian Baxter. He started up a logistics company that was sold to one of the giants of the industry, before setting up Baxter Freight just over a year ago. He did so because he believes the market has never been easier to enter and, at the same time, has never needed the personal touch of an SME more.
“It’s the SMEs that are small enough to adapt and be flexible – we can adjust and innovate at a pace far quicker than a huge global organization,” he says.
“That’s why you’ve got thousands upon thousands of SMEs and even one-man bands in the industry. The technology is so good now that someone can just download an app, and using GPS on their phone, can then be a part of a larger supply chain. The barriers to entry have truly come down with the industry and it’s meant small companies can pick an area or a type of product they want to specialise in and they’re away.”
Route to innovation
Technology is one thing, Mr Baxter believes, but adapting it to be able to offer a compelling service is another – and it takes considerable research and investment to get the right tools in the hands of trained staff.
“Our technology has allowed us to innovate to introduce new services, such as allowing customers to pick up orders on the same day, if they’ve been placed by 2pm,” he says.
It’s because we’re able to take those generic pieces of technology and get our IT guys to build on them so we are in better control of our shipment and, crucially, able to keep our customers in the loop with detailed tracking of their shipments.”
As the logistics and supply chain industry continues to offer new opportunities to companies that can adapt quickly to changing market conditions and customers’ rising expectations, SME are very well placed. They are agile enough to move at a fast pace and to invent new services – and will usually have the personal touch required to succeed in an industry driven by managing relationships to deliver a client’s promise.