MANAGEMENT OF A COMPANY’S SUPPLY CHAIN IS CRITICAL

Logistics firms broaden scope of operation

MANY COMPANIES are now beginning to understand that the logistics business is no longer only about transportation and storage of goods and materials. This knowledge is pulling suppliers of logistics and forwarding services more into the role of consultants – advising about how logistics processes can influence decisions about what, where and how a company produces its goods. While most large international companies are already aware that well-organised logistics bring innumerable benefits, small and medium-sized companies are just beginning to realise the potential of better logistics management.

Logistics firms have ample capacity in western Slovakia. Logistics firms have ample capacity in western Slovakia. (Source: TASR)

MANY COMPANIES are now beginning to understand that the logistics business is no longer only about transportation and storage of goods and materials. This knowledge is pulling suppliers of logistics and forwarding services more into the role of consultants – advising about how logistics processes can influence decisions about what, where and how a company produces its goods. While most large international companies are already aware that well-organised logistics bring innumerable benefits, small and medium-sized companies are just beginning to realise the potential of better logistics management.

The Slovak Spectator spoke with Rastislav Brenčič, the head of DHL Freight Slovakia, and Markus Jelleschitz, the director of Gebrüder Weiss for Slovakia, about Slovakia’s position on Europe’s transport and logistics map and their expectations for the further development of the logistics sector here.


The Slovak Spectator (TSS): How would you evaluate Slovakia’s position in logistics and transport of goods? What advantages or disadvantages does Slovakia offer compared to neighbouring countries?
Rastislav Brenčič (RB):
In my opinion Slovakia’s advantages outweigh its disadvantages. Slovakia certainly benefits from its advantageous geographical position, either within the extended European Union or within Europe as a whole. One of its relative advantages in comparison with neighbouring countries is its adoption of the euro. For companies doing business in Slovakia and carrying out their trades especially in the eurozone that means cost stability.

Markus Jelleschitz (MJ): Slovakia has an advantageous position in the middle of Europe and use of the euro and attractive conditions for companies has given it a comparative competitive advantage, especially in the manufacturing sector over the last several years. Flows of goods must be carried out quickly and effectively and the presence of car producers as well as the desire of trade and electro-technical companies for fast movement of goods has led to a high level of logistics solutions. Know-how, especially in logistics, is being brought into the spotlight, too. A good outlook continues in the area of partial-load traffic even while the general development is downward. But the position of Slovakia, in the European context, can be evaluated as steady.

The biggest advantages for Slovakia lie in its tax legislation as well as in its early adoption of the euro. Furthermore, its industrial structure is at a highly-developed level in comparison with neighbouring countries. But this good business development has not been matched in terms of transfer of know-how and the qualification of specialised workers. The country’s education policy is trying to keep pace with development in the industry but for now it is failing to do so.


TSS: Where do you see the biggest space or prospects for further tapping into Slovakia’s potential in the logistics business?
RB:
I see the biggest prospects for development in human resources and in infrastructure, especially in terms of road and intermodal infrastructure. This is because Slovakia still lacks a development strategy for its regions – in defining basic, and especially realistic, starting points for individual sectors of transport and logistics.

MJ: Due to its geographical position Slovakia faces harsh competition from its neighbouring countries, especially in the realisation of the concept of central warehouses. The missing infrastructure in the east and the middle of the country can be seen as a negative factor. To the contrary, there is a surplus of space in the west of the country and that is a large challenge for providers of [logistics] services.

Basically, three main pillars have to be further developed to strengthen the position of Slovakia: infrastructure (construction of highways), personnel (education of specialised workers) and economic attractiveness for investors.

The low scope of outsourcing of logistics by small and medium-sized companies also provides space for further development.


TSS: What are the latest trends in logistics? What specialised services, apart from storage and transport, do logistics companies offer or might offer?
RB:
The changes which I see are especially the better view of managers in understanding the relationship between logistics and its task in managing a company. Management of a company’s supply chain is becoming an inseparable part of managerial tools, equal to those in production, marketing, finances, human resources or sales. Logistical processes in many companies are becoming the critical criteria when deciding where, how and what will be produced or offered. The latest trend that follows as a corollary is for suppliers of logistics and transport services to move more and more into the role of consultants.

Goals and expectations of clients are changing too. The price of services is no longer the only criterion used when choosing a logistics partner and firms are focusing to a greater extent on the credibility, performance and flexibility of the service provider. Stress is being attached to a higher standard of services, past experience in a given sector, a transparent attitude and the ability to secure added-value specialised services.

MJ: Along with the basic services of storage and transport, logistics companies must offer clients added value. This can be done by optimisation of processes on one side and also by an increase in overall quality. Providers of logistics services also have a large advantage when they are able to connect several modules within the chain of added-value services through which they can give a client a one-stop solution. The key points of this added-value service are procurement, storage, commissioning, consolidation, dispatching and distribution.

It is important for all these processes to be supported by a proven IT system which enables the client to have simple but accurate monitoring of the services.


TSS: What further development do you foresee in Slovakia?
RB:
During the last decade the view of logistics has changed considerably and the extent of logistics activities has grown significantly. Properly-controlled logistics flows are becoming a key factor that affects a company’s productivity. As a consequence, the importance of outsourcing logistics services has increased. But outsourcing of internal logistics within a company is also coming more and more under the spotlight. Within this area we can include the entire scope of transportation, storage and manipulation activities but we can add as well the customs and administrative activities related to logistics within a company. I expect that small and medium-sized companies will also gradually comprehend the advantages of doing this. Outsourcing of logistics services can bring these companies higher effectiveness in their activities and thus also better profitability.

MJ: Slovakia will further develop in the context of the automotive industry. Apart from automotive products, it is possible to see positive development in the consumer electronics segment. During the last few years some large foreign direct investments have been made in this segment. These investments have contributed to the positive economic development of the country. All this will have a positive influence on the transportation industry.

In the future large players will dominate the transportation market and the number of small and medium-sized companies will be reduced.


TSS: What are your company’s plans in Slovakia?
RB:
This year our company has launched a number of new services: for example, DHL Coldchain is a service for temperature-sensitive shipments and DHL Highvalue is transport service for large-value shipments. In the future we plan to further follow the path of specialisation and we want to be an innovation leader – either in services offered, technologies used, or our attitudes towards environmental protection.

MJ: Gebrüder Weiss will further present itself in the market as a proven provider of quality services in the field of comprehensive logistics and transportation solutions. In the logistics field we see ourselves as a provider of solutions which put at our clients’ disposal overall concepts to secure their business processes.

We will focus on platform solutions in the transportation segment. Gebrüder Weiss, as the provider of collection services for TEN (the Trans-European Network) in central Europe, will considerably develop its position in this area via IT measures. Additionally, we will further develop our offers in the cross-docking, high-value and business-to-business (B2B) fields.

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