THE SEGMENTATION OF LOGISTICS OPERATORS ACCORDING TO THEIR SKILLS

With the growing popularity of outsourcing logistics activities, the logistics operators (LOs) sector is changing rapidly to keep up with the needs of its customers. Shippers are looking for increasingly complete solutions, which forces OLs to rethink strategies to improve performance and to make choices regarding the services offered and the niches in which to operate. In this context, this article intends to show the results of a research that had as main objective to verify if there are, in the Brazilian market, different types of operators in function of their qualifications.

It was found that there are four types of LOs that differ according to the degree of training to offer transport services, inventory control and storage, value-added services and related to legislation matters. It is speculated that these four types represent different stages that an OL goes through, from starting to offer basic activities to developing all the capabilities to become a single logistical contact for its customers.

INTRODUCTION

Due to the growth of logistical costs in companies and the growing trend towards outsourcing, the economic importance of the OLs sector has generated the need for a better understanding of the evolution of the industry and how companies in this sector are preparing to monitor and take advantage of opportunities. that arise. In countries where logistics activities are more developed, there is a clear segmentation in the LO market according to the services they offer, the niches where they operate and the resources they have. In Brazil, segmentation is not so simple, due to the mix of companies operating in the market, added to the fact that it is a recent industry.

Several studies conducted around the world with the aim of understanding the segmentation of LOs have as their starting point the reasons that lead a company to outsource its logistics activities. In an attempt to consolidate the conclusions of this type of study, Wilding and Juriado (2004) generated a global ranking of such motivators, by weighing the results obtained in five different European surveys.

According to ranking, the main reason for outsourcing is cost reduction (40 points), followed by improved service level (27 points), increased operational flexibility (26 points) and focus on “core competences” (17 points). However, in the same article, those authors show the results of a study they conducted with European consumer goods companies, in which they identified that companies outsource with the main objective of benefiting from the skills of OLs (56%). The authors justify that obtaining a cost reduction is not the main reason, since companies assume this as a fact and, therefore, other aspects, such as “service”, are more important.

Thus, with so many and so many different reasons that lead a company to fully or partially outsource its logistical needs, it would be natural to expect the emergence of LOs that claim to be able to meet the variety of needs of their potential customers.

There are different opinions on the part of shippers regarding the skills that a logistics operator must have. In research carried out by Langleyet al. (2005) with executives from companies around the world, most respondents from North America (84%), Western Europe (91%), Latin America (92%) and Asia Pacific (91%) agree that the ideally, LOs would offer a wide and varied range of services. However, when asked whether a LO should provide all Core Services¹, three contrasting views were identified:

• An OL should provide only one core servicesso that you can perform it in the best way;
• An OL should be able to provide several Core Services;
• An OL should specialize in one or two Core Servicesand being able to subcontract to other providers to offer their customers additional capabilities when needed. In this way, the logistics service provider (LSP) would become your “one-stop shop” (single logistical contact for contracting companies).

Differences in customer preferences and needs are forcing LOs to rethink various strategic aspects related to the services they are going to offer, the market segments where they intend to operate and how to relate to customers, among others.

THE STRATEGIC SEGMENTATION OF THE OLS

Several authors have presented different models that try to explain the strategic segmentation of LOs in terms of characteristics such as the type of service offered, the level of added value that this service brings to the customer, ownership of assets, geographic coverage and the ability to troubleshoot.

Berglund et al. (1999) propose that the segmentation of LOs takes place according to the sophistication of the service offered and the level of added value that this service provides to customers. The first variable characterizes a scale that goes from basic services (transport, storage, labeling, cargo consolidation, etc.) to more sophisticated services, such as order processing, assembly of kits, distribution network design, etc. The second criterion ranges from providing a standardized logistics service to complete logistics solutions.

Hertz and Alfredsson (2003) proposed a segmentation model based on two dimensions: ability (low or high) to solve problems and ability (low or high) to adapt to customers. According to the authors, the four combinations obtained from these two dimensions generate four types of OLs:

• The Traditional: the one that provides standardized services, such as storage, distribution, collection and packaging;
• The Service Developer: who offers value-added service packages, such as cross docking, freight tracking and follow-up, and security systems, in a different way for each client;
• The Customer Adapter: which is distinguished by absorbing existing customer activities and improving the level of efficiency of operations, without necessarily investing a lot in the development of services;
• The 4PL, also known as logistics integrator or customer developer: who shares the risk and returns of logistics management with the customer. Like the Adapter, it integrates tightly with customers by absorbing the entirety of logistical operations.

Finally, Lai's model (2004) segments LSPs according to their capabilities to offer services. In their survey of Hong Kong LOs, four distinct types of providers were identified:

• Traditional Freight Forwarders: companies that have a very low capacity to offer value-added services and technology-enhanced services;
• Transformers: have a high capacity to offer transport services. However, its ability to offer value-added and technology-enhanced services is medium. The results suggest that these companies are struggling to transform themselves into full-service providers;
• Providers Full Service: those that have a high level of ability to perform in the three categories of services – transport, technology-enhanced and value-added;
• Nichers: are particularly weak in their ability to offer freight forwarding services. However, they have an average level of training in the other two categories of services. Thus, the author believes that these providers are likely to target niche markets that need services such as warehousing and order processing (value-added services) and information management (technology-leveraged services). In this way, they avoid competing with the Providers Full Serviceand with Traditional Freight Forwarders.

THE SEARCH

The three models just presented suggested researching whether the LOs operating in Brazil can be grouped into categories according to their capabilities to offer logistical services.

In view of the generalized and indiscriminate use of the figure Logistic Operator in the Brazilian market, it was necessary to adopt a definition of OL to delimit the researched companies. The definition presented in Revista Tecnologística (Feb. 1999) was used:

“The logistics service provider is specialized in managing and executing all or part of the logistics activities in the various stages of its customers' supply chain, adding value to their products, and is competent to, at least, simultaneously provide services in the three activities basic tasks: inventory control, warehousing and transport management. The other services that may be offered work as differentials for each operator.”

The adoption of this concept brought a convenience to the study: the magazine annually publishes a list of LOs operating in Brazil and it was this list that served as the basis for planning the fieldwork and delimiting the set of target companies for the study. The population consisted, then, of the 118 OLs listed in the Revista Tecnologística in June 2005.

The first stage of the data collection process was a phone call to all companies in order to identify the qualified respondent: an executive with extensive knowledge of the services offered by the company. Then, by e-mail, they were asked to participate in the research through an invitation to fill out the questionnaire hosted at the website from the company Zoomerang². 64 questionnaires were completed.

The analysis of the responses obtained forced the researchers to eliminate 12 of them for a series of reasons, such as filling errors or inconsistencies. In addition to company demographic data, respondents were asked to give a grade from 1 to 5 to the company's ability to offer each of the 18 logistics services consulted.

RESULTS AND DISCUSSION

The 52 valid questionnaires refer to companies with reasonable experience in the market (42% have been in the market for over 16 years). The survey was answered by 44% of managers, 21% of directors, 4% of presidents and the remaining 31% divided between coordinators, supervisors, heads of contracts and others. As for the origin, it was found that 46% of the sample started their activities in the transport sector, 25% in storage services and the rest having the most diverse origins. As for the number of employees, 46% of the sample declared having more than 500 employees; 15% between 201 and 500; 27% between 41 and 200 and the remaining 12% with less than 40 employees. With regard to revenues, the majority (56%) presented, in 2005, revenues of less than 60 million reais, 19% had revenues between 61 and 200 million and 10%, revenues greater than 200 million reais. 15% of companies did not answer the question.

Table 1 presents the descriptive statistics corresponding to the training to provide services, according to the responses of the interviewees, and the 18 services consulted are listed, as well as the meaning of grades 1 to 5.

*(1) the company has never provided the service and will not provide it in less than a year; (2) the company has never provided the service, but is able to provide it in less than a year; (3) the company does not currently provide the service, but it has in the past; (4) the company currently provides the service, but not to one of the top four customers; (5) the company currently provides the service to at least one of its four main customers.

Table 1. Descriptive statistics of services offered

When analyzing the variables that were in the first four places of the ranking, two comments can be made. Firstly, it was to be expected that the services “Transfer between units”, “Storage” and “Inventory Control” would obtain a high average, since a LO must have the capacity to offer them, according to the definition used In this job. Secondly, it is noteworthy that the “Interfaces with ERP” service obtained such a high score, as it is the least used technology by the LSPs that participated in the study conducted by CEL/Coppead and BAH (2001). A possible explanation would be that, in the period between 2001 and 2005, LOs intensified the use of this technology after recognizing its advantages.

It should be noted that, as the means of the variables decrease, the standard deviations increase. This means that there is a group of basic services that most OLs have a high capacity to offer and that have practically become commodity (services related to transport, warehousing and inventory control), and other, more specialized services that are dispersedly offered by LOs that seek differentiation through their offer.

In Table 1, it can also be observed that the maximum value obtained for all 18 variables was 5 (maximum score, according to the scale). This indicates that, for all evaluated services, there is at least one OL that claims to provide it to at least one of its four main customers.

To verify whether the OLs can be grouped into categories according to the services for which they claim to be qualified, a series of statistical procedures were carried out. Factorial analysis, for example, allowed us to identify correlations between the original items of the questionnaire, resulting in four factors that can be interpreted as the different types of capabilities that a LO can have to offer services.

• Factor 1 – Warehousing and Inventory Control Services: comprises the service elements related to warehousing, warehouse management system (WMS) and inventory control.
• Factor 2 – Added Value Services: it is related to services such as assembly of kits, packaging of finished or semi-finished products and project development.
• Factor 3 – Transport Services: consists of services such as transfer between units, reverse logistics and vehicle tracking.
• Factor 4 – Services Related to Aspects of Legislation: includes tax advisory and import/export/customs clearance services.

In the following statistical procedure, the analysis of clusters, the skills identified in the factorial analysis were used as a selection criterion. After eliminating three non-representative observations, we arrived at four clusters presented in Table 2. As the ability of the LOs to offer services was measured on an interval scale between 1 and 5 (1 being the minimum capacity and 5 the maximum), the scale was divided into three intervals (1 to 2,33; 2,34 .3,66 to 3,67; 5 to XNUMX) to characterize the LOs with low, medium or high training, according to the centroids for each factor.

Table 2. Cluster analysis results

Moving on to the interpretation of clusters, the first, formed by five companies, has high qualification to offer basic services (transport, inventory control, storage), but has low qualification to offer the other two categories of services. Therefore, the companies in this group are called “Basic Logistic Operators”. The OLs of this cluster obtained the maximum value (5) for training to offer transport services. This result is probably due to the fact that they have a smaller scope of services, which allows them to focus their resources on the basic services they offer.

The second cluster, composed of 13 companies, despite also having a low capacity to offer services related to aspects of legislation, presents a score high in training to offer value-added services. This group was then called “Value Added Logistics Operators”.

The biggest cluster comprises 19 companies. Like the previous one, this one shows high training in all categories, except for services related to aspects of legislation. However, it differs from the “Added Value LOs”, since the members of this cluster have an average capacity to offer such services. This one cluster was named “Advanced Logistic Operators”, as it contains companies that are close to having high qualification for all categories.

The last cluster, consisting of 12 companies, obtained a high level of training for all categories. These are companies that could offer practically all kinds of services to their customers. Therefore, these companies are the ones that most resemble the concept of one-stop shop; hence, they were called “Logistic Operators One Stop".

Although the present work was inspired by Lai's research (2004), the types of training to offer services are not the same. In this research, two categories that did not exist in that work were identified: “training to offer warehousing and inventory control services” and “training to offer value-added services”. On the other hand, Lai identified a skill that did not appear in this study: “training to offer services leveraged on technology”.

CONCLUSION

Given that basic services (transport, warehousing and inventory control) have become commodities in the logistics outsourcing market, “Basic OLs” must be more concerned with lowering their costs, since competition is mainly based on price. That is, price is an order-winning criterion.

In the case of “Value-Added LOs” or “Advanced LOs”, price becomes an order qualifying criterion, as value-added activities increase the perception of customers who, therefore, do not mind paying higher prices. prices in exchange for better services.

Finally, in the “One-Stop OLs” market niche, it is possible that price is not even a qualifying criterion. It is speculated that both service quality and reliability are the order-winning criteria. However, the relationship itself is what defines the hiring and renewal of the contract with an OL, given the value it represents for a shipper not having to manage multiple relationships, one of the most complex issues when outsourcing.

The way in which one cluster differs from the other leads to the interpretation that each of the four categories represents one of the different stages through which a LO passes from when it begins to offer basic activities until it develops all the capabilities to become a single logistical contact for its customers. customers. The first step in the evolution of an OL, of course, is to master the basic services that it is expected to offer: transport, warehousing and inventory control. Subsequently, it must gain expertise in the services that add more value to the customer. According to this survey, the last services for which a LO acquires training are those related to aspects of legislation.

The categorization identified in this study can help OLs to self-evaluate and determine which market niche they are operating in. That way, they can question whether their capabilities are in line with their customers' needs. If they are not, the categorization facilitates the identification of capabilities that should be developed to meet the expectations of served and potential customers.

For those OLs that fit into the Added Value or Advanced groups and whose goal is to compete in the One-Stop niche, the model gives an insight into how they could rapidly evolve from one stage to another: joining or subcontracting companies with knowledge of legal aspects. On the other hand, for companies that intend to enter the OLs market, the model makes it easier to know what skills and knowledge they should accumulate over time, depending on the niche in which they aspire to compete.

BIBLIOGRAPHY

BERGLUND, M.; LAARHOVEN, P.; SHARMAN, G.; Wandel, S. (1999). Third-Party Logistics: Is there a Future? International Journal of Logistics Management, v.10, n. 1, pp. 59-70.

CEL/COPPEAD and BAH (2001). Development Internship of Logistics Service Providers in Brazil. Available at http://www.centrodelogisitca.org/new/fs-pesquisa.httm, pp.1-17. Accessed on 10/07/2007.

HERTZ, S.; ALFREDSON, M. (2003). Strategic Development of Third Party Logistics Providers. Industrial Marketing Management, vol. 32, pp. 139-149.

LAI, Kee-Hung (2004). Service capability and performance of logistics service providers. Transportation Research Part E, p. 385-399.

LANGLEY. J.; DORT, E. VAN; ANG, A.; SYKES, S. (2005). Third-Party Logistics: Results and Findings of the 10th Annual Study. Available in:

http://www.de.capgemini.com/branchen/distribution. Accessed on 10/07/2007.

WILDING, R.; JURIADO, R. (2004). Customer perceptions on logistics outsourcing in the European consumer goods industry. International Journal of Physical Distribution & Logistics Management, v.34, n. 8, pp.28-48.
Kleber Figueiredo is a Professor and Researcher at ILOS – Institute of Logistics and Supply Chain.

Dinia Monge Mora is a BCG consultant
NOTES
¹ Outbound and inbound transport, warehousing, customs clearance and customs brokerage were considered as “core service” in this research.
² www.zoomerang.com.

Authors: Kleber Figueiredo and Dinia Monge Mora