In any market, there are advantages to bringing in a fourth party logistics contractor—one that oversees and coordinates your other contractors.
A well-managed logistics control tower allows for maximum visibility, cost savings through inventory control, freight management, and better transparency with contractors, among other things. It also allows a business to focus on what it is truly good at, instead of struggling with supply chain issues.
There are a few advantages with having an experienced logistics service provider in Japan, too. Let’s take a look what they are.
To be a global player
Many Japanese companies are interested in expanding beyond Asia Pacific. And an experienced partner in global supply chains could help.
The reason is simple: the growth markets are also outside of Japan. Although Japan has had eight consecutive quarters of economic growth (its longest winning streak since the 1980s), other indicators tell another story.
Household savings (always high in Japan) hit an all-time high of 50% late last year. Inflation remains fairly stagnant at around 1% as Japanese consumers choose to pocket the extra money instead of spending it.
Perhaps the biggest topic for Japan is demographics. Japan is ageing, and its population is shrinking. According to the National Institute of Population and Social Security Research, the country’s population is declining by 900,000 people every year.
It is not easy to find growth in a market that is getting smaller. In fact, most consumer markets in Japan have reached saturation point. In other cases, even Asia Pacific can be seen as saturated market for major Japanese conglomerates, according to PricewaterhouseCoopers, because of fewer merger and acquisition activities taking place in Singapore, Indonesia and Thailand.
For Japanese companies hoping to expand overseas and ‘go west’, a partnership with a logistics provider that has experience with global supply chains, expertise, network and people could be a good move.
Domestic freight management and limited options
Japan’s demographic problem has affected the trucking industry too. There is a huge shortage of drivers because fewer young people are coming into the industry to replace the older drivers who are retiring.
This has pushed prices up, and in some cases, Japan’s major freight providers are unable to accept jobs because they do not have a driver to take on the job. The problem has been made worse by the growth of ecommerce platforms like Rakuten and Amazon, which have employed the majority of drivers.
What is more, Japan’s freight market is heavily consolidated, with just a few large incumbent domestic players delivering most of the country’s products. So if your provider doesn’t deliver according to expectations or if you don’t have the proper relationship with this provider, there are not many other choices.
How a control tower can help:
- Taking your company global would mean having to manage multiple supply chains in diverse markets with an increased number of suppliers. The more complicated your supply chain becomes, the more important the need to provide a global view of the supply chain. A supply chain control tower can help deliver enhanced visibility of the flow of goods, data and payments. It simplifies supply chain complexity through integrated end-to-end solutions that enables you to optimise your logistics operating costs, lead times and inventory levels.
- A logistics control tower automates and centralises processes. Efficiency increases as fewer people are involved to perform the same task. Tasks are also performed faster—increasing productivity—and with higher quality, which improves service levels for businesses. These help to improve the bottom line for clients.
- Deliveries can also be better coordinated, as the analytics the control tower provides allows businesses to plot out the most efficient possible routes for drivers. This means that they might make seven or eight stops before they return to the warehouse, whereas previously they might have made only five.
With a logistics control tower, businesses can generate cost savings—a significant and attractive incentive for the return on investment. So it does pay, in cost and other savings, to invest in a logistics control tower or an experienced partner, especially if you’re a Japanese company looking to expand—domestically or globally.
Supply Chain Management
With our logistics resources and global reach, we are able to make your supply chain lean, agile and demand driven. Partnering with us gives you the opportunity to focus time and resources on your core business. We integrate end-to-end solutions from order fulfilment and transport management to visibility and monitoring.