The Role of CRM in Logistics Companies' IT Strategies, Part 1
Dec 5, 2011 5:00 AM PT
The logistics industry faces several challenges with the tremendous growth observed in the last two decades. Global manufacturers in industries such as automotive, IT and consumer goods have outsourced supply chain activities such as distribution and warehousing to third parties. The industry has begun to offer additional value-added services around processing of products. In addition to transportation and storage of goods, logistics service providers (LSPs) may also assemble goods or package accessories. They are also doing consulting work to address complex global supply chain problems.
The traditional challenges of LSPs include on-time delivery and ensuring safety of shipments. The processing and assembly of products by LSPs also means that they can be held accountable for faulty products and product recalls.
The threat of terrorism has forced the logistics industry to lay increased emphasis on security at all points in the supply chain. For instance, the hijacking of oil tankers and vehicles with hazardous waste are possible terrorist threats. Stricter environmental compliance norms, different regulations for categorizing dangerous goods, and temperature controlled environments for perishable goods are several challenges being faced by the logistics industry.
Cross-globe operations have brought the new challenge of complying with regulatory systems in all the different countries through which goods transit. Despite these challenges, the key objectives of logistics service providers are to ensure that customer requirements are always met and to keep satisfaction levels high in terms of on-time service, predictability of delivery, competitive pricing and short order-processing times.
IT cannot address many of the challenges faced by the logistics industry, but a sound enterprise CRM strategy can address many of the operational challenges faced by LSPs through new approaches to customer service, account and prospect management, opportunity management, campaign management and order management.
Key Drivers for Operational Efficiencies
The most important objective of operational excellence is gaining repeat business from existing customers. Following are a few key services that LSPs provide to their customers:
- Cargo handling services
- Storage and warehousing services
- Transport agency services
- Other auxiliary services (transport document preparation, etc.)
- Maritime transport and internal waterways transport services
- Wholesale retail and trading services
- Air, rail and road transports/courier services
To provide optimal service to customers, LSPs need to interact with them through different communication channels and build up long-term and trusting relationships. LSPs needs to get a 360-degree view of their customers, comprised of order records, complaints, opportunities, competitors, campaigns and offers. In addition, tracking of customer orders and estimated arrival at their destinations are very important.
Enabling a sales and service agent with the above information can be achieved if service, order and opportunity management are closely integrated within the IT solution stack. This will greatly enhance the integrity of customer information, improve agent efficiency, and enhance the overall customer experience.
Why LSPs Need a CRM Strategy
The leading LSPs have been operating for the last several decades. Information pertaining to customers concerning new opportunities, complaints and order information were stored in legacy applications, and this information was retrieved on a need basis.
With the introduction of CRM in and around 1990, small-scale CRM software was available but didn't provide much insight into how the business was performing. Individual business units within an organization bought software to meet their specific needs with little IT involvement.
Large organizations managing customer relationships have several CRM systems -- such as standalone sales, marketing and services systems. Some of them are integrated with back-end systems like order fulfillment, whereas others work in standalone mode.
CRM is gradually helping organizations capture a better understanding of customer needs and behavior. Software companies have now introduced advanced solutions to integrate sales, services, marketing, order management, pricing, etc., which has helped improve customer satisfaction and enabled them to deliver goods on time.
There is a clear need to have a cohesive CRM strategy and to opt for a maintainable and scalable solution stack to realize the real benefits of IT and leverage it as a business growth driver. Large LSPs are realizing that in this global and competitive environment, it is imperative that large workforces in different geographies are connected in the real-time environment and have access to information about third-party vendors, logistics partner information, details about transit locations, and the ability to track a consignment at any given time.
Today, business growth and the sustenance of LSPs is directly linked to the capability and functionality of the CRM application and how smartly it has been integrated to the rest of the IT landscape.
Omesh Garg, a lead consultant with Infosys Consulting and Systems Integration Group, has several years of experience in implementing large-scale Enterprise CRM solutions spanning the logistics, communications and high-technology industries. He can be contacted at