While the term “speed-to-market” mostly applies to how fast a company can create and launch a new product or service, it is also fair to say that logistics plays an all-too important and oft-forgotten role in winning the speed-to-market race.

Speed-to-market is an industry term the manufacturing community has become more familiar with over the past few years. While it mostly applies to how fast a company can create and launch a new product or service — all in the name of competitive advantage — it’s probably fair to say that logistics plays an all-too important and oft-forgotten role in winning the speed-to-market race.

Take this Financial Express article that believes “supply chain management is the plan, freight forwarders are the executors.” In many instances, professionals working for the logistics companies are the ones handling the actual supply chain management for a company to include consolidators, freight forwarders, cargo agents or mainline shipping and airlines companies all working together at different points of the delivery chain. Certainly, there are numerous touch points or “transactions” where things can and often do go wrong, which is still a major concern for many. According to the Financial Express piece:

These transactions need to be honest and beyond reproach. The main concern for any economy is to increase “core investment” which includes investment in manufacturing and industrialization in all sectors including information technology and all export-oriented sectors. Such investment would be more forthcoming if investing companies see auxiliary sectors like logistics maintaining the highest and most technologically advanced standards and service.

The article also notes that the world’s logistics infrastructure remains congested and slow, which obviously is detrimental to growth in business and trade. “In that scenario, we need more investment in logistics where any company, local or foreign, can be encouraged to enter the local market, provided that they show that their standard of automation and technological preparedness is world class,” the article contends.

The importance of logistics investment is not lost on Aberdeen. The research firm is now touting that on-demand supply management solutions increase the amount spent under management, according to a recent report. Among the report’s key findings are that enterprises are not focusing only on cost (38 percent of the respondents) but also on faster implementation and ROI (65 percent of the respondents) as well as the ability to deploy a solution enterprise-wide and utilizing fewer IT resources (47 percent and 45 percent of the respondents, respectively).

“By enabling faster, enterprise-wide rollouts of a supply-management solution, enterprises utilizing an On Demand Model deploy the value proposition of supply management at a much faster rate than traditional “license-and-install” solutions,” says Sudy Bharadwaj, Vice President of Global Supply Management at Aberdeen. An on-demand solution is a three-year decision, and may be re-evaluated compared to the 10-15-year ERP decision. Twice as many respondents in the Aberdeen report said they preferred a flat fee on a monthly subscription basis — inclusive of software, support and hosting costs.

The on-demand, or “software as a service” (SAS), model could bode particularly well in today’s never-ending quest to reduce the cost of logistics, which looks to outpace the economy eventually, according to this Northwest Indiana Times article, which cites a recent report from the Council of Supply Chain Management.

The costs of carrying, transportation and shipping, and distribution administration rose more than $156 billion nationwide in 2005. Logistics costs ran $1.184 trillion last year, or about 9.5 percent of the gross domestic product, compared with 8.8 percent in 2004. Costs could hit 10 percent next year. Transport costs rose because of higher fuel prices and trucking and air costs. Climbing interest rates also bumped up carrying costs, according to the Council.

Sensing the rift in rising logistics costs, some manufacturers such as beverage giant Cott Corporation are embarking on new ways to create a more efficient supply chain. The company recently announced it is knee-deep in the implementation of an advanced, Web-enabled demand and supply planning system to help maximize the company’s North American supply chain performance.

“The progress being made in our North American supply chain is a critical component of our plan to aggressively reduce costs and improve service to our customers,” says Brent Willis, Cott President and CEO, in a news release.

How are you reducing costs and improving service to your customers?

Earlier: Leveraging Technology to Strengthen the Supply Chain