Capgemini Consulting Unveils 17th Annual 3PL Study

Global study reveals shippers are placing growing importance on third party logistics providers as a key source of supply chain innovation and risk mitigation


Despite challenging business conditions, global revenues for the third-party logistics (3PL) sector continue to rise as 3PL's improve their business presence and create value for their customers, according to a new report from Capgemini Consulting.

In cooperation with Pennsylvania State University, executive recruiting firm Korn/Ferry International and global logistics provider Panalpina, the 2013 "17th Annual Third-Party Logistics (3PL) Study" finds that 65 percent of shipper respondents reported an increase in their use of 3PL services. Shippers—faced with increasing competition and a difficult economic environment—are increasingly turning to logistics providers as a key driver of both supply chain innovation and risk mitigation. The 3PL/shipper relationship continues to evolve and shippers seek to drive real value and competitive differentiation through their choice of 3PL provider. However, 3PL’s still have significant progress to make in being able to fully address the growing demands of the shippers they serve.

“Many of today’s 3PL/shipper relationships are not set up in a way that fosters innovation,” said Dan Albright, Vice President and North American Supply Chain Leader, Capgemini Consulting. “Shippers commonly engage with 3PLs on a very tactical level only, so their 3PL partners lack any real visibility or insight into their organization and its challenges. It takes truly collaborative, strategic relationships among all partners involved to develop the kinds of disruptive innovations it will take to solve the challenges facing today’s supply chains. This will require a considerable change from the way that many 3PL/shipper relationships are structured today.”

Based on responses from over 2,300 shippers and logistics service providers in North America, Europe, Asia-Pacific, Latin America and other regions, the study reveals that shippers are making increasingly complex demands of their 3PL providers as they seek bold new solutions that will create new routes to growth and market differentiation. Until recently, 3PLs could demonstrate innovation by introducing incremental process improvements, adding technology or improving execution. However, shippers increasingly believe that these process improvements are not sufficient to drive their supply chains and that more disruptive innovation is required to make a true difference within the marketplace or value chain, for example facilitating same-day delivery or introducing RFID tagging. Yet many shippers lack confidence in their 3PLs’ ability to operate at the strategic level necessary for disruptive innovation. The majority of the study’s 3PL respondents (89 percent) believe they are ready to innovate but just 53 percent of shippers agree.

Similarly, the report reveals that with today’s complex supply chains more vulnerable than ever before to negative impact from disruptive events, shippers are also becoming increasingly demanding of their 3PLs’ risk mitigation capabilities. A number of factors—including extended supply chains, reduced inventories and shortened product lifecycles—are making supply chain disruption both more likely and more costly. Economic losses from supply chain disruptions increased 465 percent from 2009 to 2011, while at the same time, the number of companies experiencing supply chain disruption grew by 15 percent. The report highlights adverse weather and the threat of a pandemic as the biggest source of supply chain disruption, cited by 69 percent of shipper respondents; and volatility in commodity, labor or energy costs as the second, cited by 59 percent of shipper respondents.

“Drawing on lessons learned from the previous global supply chain disruptions, the majority of 3PL’s and shippers we speak with indicate that employee training and talent management, as well as internal and external certifications, are areas where they plan to invest most heavily over the next two years to combat supply chain disruption,” confirmed Zack Deming, Consultant, Global Logistics & Transportation Services Practice, Korn/Ferry International. “Such planning must be lived and practiced and not simply a manual on a shelf.”

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