Innovation Excellence in Logistics

In the jointly conducted European study "Innovation Excellence in Logistics", the European Logistics Association (ELA) and Arthur D. Little, methodologically supported by Prof. Pfohl (TU Darmstadt), analyzed more than 100 logistics service providers as well as their counterparts – the shippers – in various industries across Europe.

Management Summary
In the jointly conducted European study “Innovation Excellence in Logistics“, the European Logistics Association (ELA) and Arthur D. Little, methodologically supported by Prof. Pfohl (TU Darmstadt), analyzed more than 100 logistics service providers as well as their counterparts – the shippers – in various industries across Europe.
Innovation Excellence Pays Off
An optimized innovation management system can boost company success. Companies with a high Innovation Index (top innovators), meaning companies with an effective and efficient innovation management system, generally have lower logistics costs or higher EBIT margins.
Shippers can increase EBIT margins by 4.4% points if innovation management is optimized. Top innovators amongst the logistics service providers can even increase their EBIT margins by an average of 8.5% points. Average innovators amongst logistics service providers consider the potential to be much lower, although still significant, with a 2.7%-point increase in EBIT margins.
The potential for reducing logistics costs is between 7% and 14% for all shippers and logistics service providers. For performance-related indicators such as turnover, delivery reliability and delivery time, all participants expect a significant improvement potential.
From Cost-oriented to Customer-oriented Innovation
Today the most important objectives for innovation are the modularization of logistic services plus reduction of logistic costs. However, this importance will decline significantly in the future as cost-oriented innovations are replaced by customer-oriented innovations. The generation of new services to cover existing requirements and to stimulate new ones is likely to become the most important innovation objective (figure 1).
Price and reliability are no longer the only buying criteria, but will develop into prerequisites for contracting standard logistics services. In this context, the importance of innovation ability as a deal-clincher will increase significantly. As a result the focus will shift from cost-oriented towards customer-oriented innovation activities.

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