Press release from Business Wire India
Source: Frost & Sullivan
Thursday, February 18, 2010 02:49 PM IST (09:19 AM GMT)
Editors: General: Consumer interest; Business: Accounting & management consultancy services, Advertising, PR & marketing, Automotives, Business services, Media & entertainment; Technology; Automotive
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Indian Logistics Service Providers Lag Significantly Below end-user Expectations on Key Performance Criteria, Finds Frost & Sullivan
Mumbai, Maharashtra, India, Thursday, February 18, 2010 -- (Business Wire India) -- Indian logistics service providers (LSPs) lag significantly below end-user expectations on key performance criteria such as attitude of staff, process improvement capabilities and material safety.
The fifth annual 'Voice of the Customer' study from Frost & Sullivan (http://www.automotive.frost.com), Indian Logistics Industry Benchmarking Study and Analysis of Outsourcing Trends, finds that LSPs in India performed well above end-user expectations in some key performance criteria but lagged significantly on other important criteria.
The study also established that transportation was the most outsourced function to logistics service providers, followed by freight forwarding. Almost all companies from across all industries largely outsourced transportation functions, while about 60 percent of companies from across all industries outsourced freight forwarding functions to LSPs. Interestingly, warehousing was outsourced by only about half of the companies.
If you are interested in more information on this study, please send an e-mail to Ravinder Kaur/ Nimisha Iyer, Corporate Communications, at ravinder.kaur@frost.com/ niyer@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country.
"About 90 percent of users across industries mentioned cost saving followed by preference to focus on core competency as the primary reasons for engagement of logistics service providers," says Frost & Sullivan Industry Analyst Srinath Manda.
The findings from the performance benchmarking of Indian LSPs, which is based on the ratings provided by leading end-users from 8 key industry sectors in the country revealed that LSPs performed well above user expectations on few key parameters such as fleet size, vehicle quality, number of warehouses, and warehouse size. With regard to aspects such as value addition, consignment tracking facility, and cost saving initiatives, LSP performance came close to end-user expectations. However, the Indian LSPs have lagged significantly behind end-user expectations on key performance criteria such as process improvement capabilities, material safety, and attitude of staff.
Another interesting fact found by the study is the lower preference of end-users for long-term contracts with LSPs. Observations reveal that long-term contracts between LSPs and end-user companies were found to be low across all industries in the country. A majority of the companies either had no contracts with LSPs or had just one year contracts, indicating a tendency toward frequent change of LSPs.
"Foremost among the challenges in logistics for a majority of companies across industry verticals are safety of goods during transit and warehousing, inefficiency of LSPs in adhering to timelines and the low skill levels of logistics personnel," says Srinath. "Inability of LSPs to keep pace with evolving volumes of end users and the lack of multimodal transpiration capabilities are other impediments. Further, the risk of information leak is a cause for angst among end-users."
Moreover, a significant share of companies across industries could not gain notable (5 percent or more) improvement in their logistics efficiency despite using 3PL providers. About two-thirds of automotive industry was in this category, while about 55 percent of companies from auto components and pharma industries also reported to be in this category.
End-user opinions revealed that major opportunities for third party logistics (3PL) service providers in India exist in developing technology solutions and infrastructure (logistic parks), as well as providing multimodal transportation.
"LSPs should strive to improve their performance on criteria where they currently lag below end-user expectations, apart from adopting advance methods and technologies in supply chain and use them to offer better services to end-users, which is likely to reduce the challenges and concerns of end-users," observes Srinath
Indian Logistics Industry Benchmarking Study and Analysis of Outsourcing Trends is part of the Automotive & Transportation Growth Partnership Service program, which also includes research in the following markets: Strategic Analysis of Cement Transportation Market in India, Strategic Assessment of Containerization Trends in India, and Strategic Analysis of Liquid and Gaseous Cargo Transportation Market in India. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
About Frost & Sullivan
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Indian Logistics Industry Benchmarking Study and Analysis of Outsourcing Trends
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CONTACT DETAILS
Ravinder Kaur, Corporate Communications - South Asia, Frost & Sullivan, +91 (44) 42044760, ravinder.kaur@frost.com
Tanu Chopra, Corporate Communications - Middle East, Frost & Sullivan, +91 (22) 40013437, tanu.chopra@frost.com
Nimisha Iyer, Corporate Communications - South Asia & Middle East, Frost & Sullivan, +91 9820050519, niyer@frost.com
KEYWORDS
CONSUMER, CONSULTANCY SERVICES, MARKETING, AUTOMOTIVE, BUSINESS SERVICES, MEDIA, TECHNOLOGY, AUTOMOTIVE
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