LONDON--(EON: Enhanced Online News)--According to the latest procurement intelligence report from Technavio, the global distribution services market is expected to grow at a CAGR of 5.1% over the next five years due to the increasing dependence of buyers on third-party distribution service providers to benefit from the economies of scale and leverage the supplier’s technology infrastructure.
“The growth of the e-commerce industry is a primary driver of the global distribution services market”
The research report titled ‘Global Distribution Services Market: Procurement Market Intelligence Report 2017-2021’ provides an in-depth analysis of category spend, best procurement practices and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning, and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“The growth of the e-commerce industry is a primary driver of the global distribution services market,” says lead Technavio procurement specialist Angad Singh for category spend intelligence. “The growth in the adoption of technological innovations to reduce the overall labor required to complete tasks and optimize the services provided also impact the growth of the market,” adds Angad.
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Cost saving opportunities in the global distribution services market
The adoption of various cost-optimization levers helps buyers in the global distribution services market realize direct cost savings and enhance category management and value benefits (including reduced procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the global distribution services market into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Adoption of technology
Distribution services provide adoption technologies such as logistics software, web portals, barcodes and RFID, and cloud-based systems to offer savings up to 14% of the total category spend to buyers.
Advanced logistics software such as WMS, TMS, YMS, and WFM are adopted by consumers to facilitate the integration of logistics services and improve the planning process.
Technavio analysts advocate competitive bidding based on expertise, experience, value-add, and transparency in pricing, and enlist distribution services from the most compatible vendor.
Buyers also need to consider if the supplier provides dedicated DC operation or a shared DC operation model. Choosing the appropriate engagement type can result in savings of up to 8% of the total category spend to buyers.
Bundling of services
Suppliers often bundle services such as packing, kitting, light manufacturing and reverse logistics to ensure the sales of a higher number of services.
The bundling strategy is also beneficial for buyers as they get a higher number of related services for lower cost, higher operational efficiency, and shorter time frame.
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Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, resellers, and end-users.
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