Value of innovation management in logistics service provision not yet recognized

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Due to the recent multi-crises, the importance of the logistics sector has become more apparent to the public, and with it its responsibility for the supply.

Innovations are needed to ensure this in all areas in the future. Based on a short study, the BVL together with transport logistic, which will take place in Munich from 9 to 12 May 2023, have found out the state of innovation management in Germany—both among logistics service providers and their customers from industry and trade.

The study sheds light on how companies in the logistics sector are fundamentally positioned regarding the development of innovations—on the one hand from the perspective of service providers, but also from the perspective of their customers from industry and trade. The study comes to the following five key results.

Shippers expect innovative services at the same price

Logistic Service Providers still allocate a rather low amount of financial and human resources to the development of new service concepts and the development is not associated with a methodical and structured process. On the other hand, about one third of the shippers find it positive to have an innovative service provider but are not willing to pay more for it.

Innovation increases efficiency and saves cost

After all, 41 per cent of shippers assume that working with an innovative partner will increase their efficiency and save costs. This is also the main motivation for logistics service providers to develop new services. The true value of innovation in tapping into new markets and actively differentiating from competition has not yet been widely recognized.

Innovative strength of logistics service providers is improvable

Asked about their opinion on the general innovative strength of logistics service providers, 42 per cent of the participants from industry and trade say that they consider them to be little or not at all innovative. About a quarter consider them innovative or very innovative. About a third see themselves on a par with their service providers.

Logistics Service Providers could be more self-confident

When analysing by sector, it is noticeable that logistics service providers in the retail sector see themselves as significantly more innovative than they are in the eyes of their customers; the situation is similar in the automotive sector. The opposite is true in the electronics, mechanical engineering and chemical sectors. The logistics service providers could therefore be more self-confident there.

Potential through cooperation and partnership

Developing new logistics services—most shippers consider this task to be exclusively on the side of the logistics service providers. This could explain why only one tenth of the companies in industry and trade are involved in the innovation processes of their service providers, which means that relevant practical know-how in the innovation process is missing. The shippers are thus missing the opportunity to jointly develop innovations that would also enhance their own competitive position.

The short study is part of the dissertation by BVL employee Frederik Pfretzschner. The research objective was to determine how logistical service innovations can be classified according to their degree of newness. Within the scope of the survey, 117 logistics and supply chain management experts and decision-makers from industry and trade as well as 213 experts from logistics service providers were surveyed. All details and the complete results are available for download https://www.bvl.de/schriften/schriften

Innovation at transport logistic 2023

BVL will explicitly address the topic of innovations in logistics in two sessions at transport logistic. In addition to the session about the digital bill of lading on May 10 at 11:30 a.m., which will discuss how “Cloud4Log” can be rolled out to other sectors besides the consumer goods industry. The session on May 11 at 11:30 a.m. will focus on the results of the short study.

Decision makers from logistics service providers, industry and trade will discuss what conclusions can be drawn from the results and how partnerships and cooperation between logistics service providers and shippers can work in the future.

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