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Swimming against the tide of commoditisation

Many companies in manufacturing and service industries are transforming themselves with solutions strategies. Market and industry structures can change fast, but such changes provide opportunities for innovation. That innovation often takes the form of moving from selling products to solutions.

Vendor-managed inventory is now common in the grocery industry. Outsourcing IT and telecommunications is the norm in some sectors. But because of the increased emphasis on customer service and logistics, the freight and logistics industry is beginning to work more closely with customers, their customers' customers, and sometimes even with competitors.

The trend is towards manufacturers and distributors outsourcing logistics to strategic partners. This is leading to alliances, acquisitions, mergers, sub-contracting, and niche marketing. Consolidation produces larger companies that have an expanded traffic base, reduced overhead costs, and improved service. Suppliers can also become global entities by recreating themselves as virtual global companies. By forming partnerships with complementary companies they can provide end-to-end services. These partnerships allow expanded services without making additional investments. Their growth has been helped by transformation since the mid-90s from service to solution companies.