Logistics Outsourcing Seen as Important Driver of Top-line Growth

3PLs beginning to show signs of maturity, but radio frequency identification beckons as a challenge and opportunity













3PL Overall Trends:

  • Western European respondents continue to spend a larger portion of their logistics dollar or euro (61 percent) on 3PL services than do those in North America (44 percent) and Asia-Pacific (49 percent), but Latin American respondents spend more of their logistics budget (65 percent) on 3PL services.

  • Security issues are most prominent among 3PL users in North America and Latin America (69 percent and 78 percent respectively).
Logistics Activities Outsourced:

  • Globally, the five most frequently outsourced activities to 3PL providers are outbound transportation (80 percent), warehousing (70 percent), inbound transportation (67 percent), customs clearance (56 percent) and customs brokerage (53 percent).

  • The use of freight bill auditing/payment services is far more prevalent in North America (53 percent) than in Western Europe (19 percent), Asia Pacific (8 percent) and Latin America (11 percent), while cross-docking/shipment consolidation is more prevalent in North America and Western Europe than Asia Pacific or Latin America.
3PL Service Offerings & Technology:

  • In terms of primary sources of IT solutions, the highest percentage of respondents in each region indicated they turn to internal resources for technology (North America 43 percent, Western Europe 41 percent, Asia Pacific 19 percent Latin America 34 percent), but the regions with the highest percentage (19 percent) of users turning to 3PL providers as their primary source of IT were North America and Latin America.

  • Transportation management technology from a 3PL provider is the most used by Western European respondents (80 percent) and the least used by North American respondents (53 percent).

  • About half the users in Latin America and Asia Pacific use Web-enabled communications from a 3PL provider , compared with 61 percent and 65 percent of the users in North America and Western Europe respectively.

  • A third of the Latin American respondents indicated that they use their 3PL provider's customer order management systems. None of the other regions are over 20 percent in this category.
Management Relationship Issues:

  • In terms of 3PL deal structures, North America clearly preferred cost-sharing arrangements (48 percent), Western Europe participates heavily in cost-sharing but stands above all other regions with risk/reward sharing programs (46 percent), and Latin America has significantly more joint ventures (29 percent).

  • Only 54 percent of all respondents feel like 3PL providers would be able to keep up with the challenges of global supply chain integration, down from 86 percent in last year's survey.
Customer Value Framework:

  • When comparing quantifiable measures of 3PL success, logistics cost reductions across all regions averaged more than 10 percent, while the fixed logistics asset reduction reported by North America was 16 percent, with the percentage reductions in the other regions were somewhat higher, led by Latin America at 41 percent.

  • Overall inventory reductions ranged from 7 percent in North America to 16 percent in Latin America, while cash-to-cash cycles dropped as a result of 3PL use, with the number of days reduction ranging from 2.4 days in North America to approximately 10 days in Asia Pacific.
Views of Non-Users:

  • In all regions, the four biggest reasons why non-users did not use 3PL services were: logistics is a core competency; logistics is too important to outsource; costs would not be reduced; and control would diminish.







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