In modern logistics, information technology systems are as common as forklifts. But the best companies have gone beyond putting bar codes on their containers and tracking shipments by computer. According to a survey of more than 100 logistics services providers (LSPs)—companies that primarily offer shipping and warehousing services—and of manufacturers and retailers using their services, the best performers are investing in highly integrated systems across internal and external supply chains.1
This global survey, conducted in 1998-99 by McKinsey and the Department of Planning and Logistics at the University of Cologne (Professor Werner Delfmann), confirmed that IT expenditures alone can't create or maintain a top-performing logistics service: once the fundamentals are in place, IT investment must create greater transparency and integration in both internal and external applications. The survey also suggested that shippers might outsource more logistics work to LSPs if their information systems provided higher-quality data.
Basic operational IT applications are no longer a competitive advantage for LSPs or their customers. About 75 percent of all shippers surveyed use planning and scheduling software known as enterprise resource-planning (ERP) systems,2 and most have warehouse-management systems as well. LSPs that operate warehouses almost all use bar codes and warehouse...