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Shippers Looking to 3PLs to Deliver Greater IT Capabilities Supporting Agile Supply Chains
14th Annual Third-Party Logistics Study examines global market for shippers and logistics providers, highlights role of 3PLs in helping shippers adapt to economic challenges
Capgemini explores the main supply chain challenges facing consumer products and retail companies in this video (posted July 22, 2008) for the consulting firm's "Future Supply Chain 2016" report.
New York — October 12, 2009 — Most shippers value IT-based logistics services, but only a minority are satisfied with the current capabilities of their providers, and this "IT capability gap" is leaving shippers wanting for the key performance indicators, alerts and supply chain visibility they need to build agile supply chains, according to the results of a recent study examining the current global market for logistics outsourcing.
Consulting firm Capgemini, together with Oracle, the Georgia Institute of Technology and logistics provider Panalpina, released the "Fourteenth Annual Third-Party Logistics (3PL) Study," which was based on responses from both shippers and logistics service providers in North America, Europe, Asia Pacific and Latin America.
Not surprisingly, the study found that the economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs), with 82 percent of shippers employing cost-cutting tactics and 60 percent rethinking their supply chains and relationships with 3PLs as a result.
Nearly nine in ten shippers (88 percent) said that IT-based logistics services are important, but only 42 percent said they are satisfied with the capabilities of their provider. As a result of this IT capability gap, the study authors said, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain, and 3PLs reported similar difficulties in getting the data and commitment they need from shippers.
The study also found significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers. Only 59 percent of shippers feel their use of 3PLs has a positive effect on customer service, compared to 88 percent of 3PL respondents.
Shipper respondents devote an average of between 47 percent (in North America) and 66 percent (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years, according to the study results.
"Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets," said John Langley, Jr., professor of supply chain management at Georgia Institute of Technology. "It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause."
Economic Uncertainty and the Use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, they are also seeking to improve forecasting and inventory management (77 percent).
Consulting firm Capgemini, together with Oracle, the Georgia Institute of Technology and logistics provider Panalpina, released the "Fourteenth Annual Third-Party Logistics (3PL) Study," which was based on responses from both shippers and logistics service providers in North America, Europe, Asia Pacific and Latin America.
Not surprisingly, the study found that the economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs), with 82 percent of shippers employing cost-cutting tactics and 60 percent rethinking their supply chains and relationships with 3PLs as a result.
Nearly nine in ten shippers (88 percent) said that IT-based logistics services are important, but only 42 percent said they are satisfied with the capabilities of their provider. As a result of this IT capability gap, the study authors said, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain, and 3PLs reported similar difficulties in getting the data and commitment they need from shippers.
The study also found significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers. Only 59 percent of shippers feel their use of 3PLs has a positive effect on customer service, compared to 88 percent of 3PL respondents.
Shipper respondents devote an average of between 47 percent (in North America) and 66 percent (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years, according to the study results.
"Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets," said John Langley, Jr., professor of supply chain management at Georgia Institute of Technology. "It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause."
Economic Uncertainty and the Use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, they are also seeking to improve forecasting and inventory management (77 percent).
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