Transportation News

A Wide-Ranging Look at the Role of Third-Party Logistics in Different Supply Chain Areas

The 2017 21st Annual Third-Party Logistics Study shows that shippers and their third-party logistics providers continue to move away from primarily transactional relationships and toward meaningful partnerships.

Penske Logistics Resources

Companies

  • Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a…

  • LEGACY Supply Chain Services is a third party logistics (3PL) provider. For over four decades, they’ve enhanced operations performance for businesses of all sizes by optimizing distribution and warehousing, domestic transportation brokerage, global freight forwarding, customs brokerage, and…

  • MD Logistics is a third party logistics ( 3PL ) company specializing in customized supply chain solutions. Each opportunity represents unique, client-specific challenges that are evaluated utilizing proven strategic methodologies to deliver turnkey solutions. Our vertical markets include Life Sciences…

  • The Smeal College of Business at The Pennsylvania State University offers highly ranked undergraduate, MBA, executive MBA, Ph.D., and executive education opportunities to more than 5,000 students at all levels. Smeal is among the largest business schools in the United States, and is accredited in…

  • Penske Logistics is a wholly owned subsidiary of Penske Truck Leasing. With operations in North America, South America, Europe and Asia, Penske Logistics provides supply chain management and logistics services to major industrial and consumer companies throughout the world. Penske Logistics delivers…

  • Company Quicklook

Myriad trends and themes germane to the third-party logistics (3PL) sector focusing on the roles 3PLs play in serving shippers, the ongoing evolution 3PL-shipper relationships, and the role of and investment in technology used by 3PLs, among other factors, was highlighted in the 2017 21st Annual Third-Party Logistics Study, which was released last week by Capgemini Consulting, Penn State University, and Penske Logistics at the Council of Supply Chain Management Professionals Annual Conference in Orlando, Florida.

Data for the study was based on feedback from 194 usable responses from both shippers, or users of 3PL services, and non-users of 3PL services, as well as a separate, related version of the survey by 148 respondents from the 3PL sector.

Not surprisingly, technology continues to increase in importance and the role it plays.

That was highlighted with the study highlighting the role of big data and analytics, with 98 percent of 3PL’s indicating that improved, data-driven decision-making is essential to the future success of supply chain activities and processes, which was supported by 93 percent of shippers.

Tom McKenna

“There is now less of a technical concern in regards to big data”Tom McKenna, Senior Vice President, Engineering and Technology, Penske Logistics

What’s more, 86 percent or 3PLs and 81 percent of shippers noted that effective use of big data will become a core competency of supply chain operations.  

Penske Senior Vice President, Engineering and Technology, Tom McKenna explained at CSCMP that big data has continued to grow in importance over the years, with 3PLs and shippers leveraging big data to drive insights and improve supply chain visibility, too.

“There is now less of a technical concern in regards to big data in terms of collecting, capturing…and storing that data,” he said.

“Platforms are out there today for that. Three years ago, we were still struggling a bit with the architecture for the technical aspects, but now the movement has really shifted to what can be done with it, and there is more of a focus on that.”

Some of the biggest focus areas related to big data cited in the study for shippers included: improving integration across the supply chain; improving data quality; improving process quality and performance; increasing levels of data transparency; improving customer interaction and service; and improving logistics optimization.

Even though there are many supply chain benefits that come with big data, McKenna made it clear it also comes with concerns regarding data privacy and security, too.

A common theme of this annual study centers on what it refers to as the IT Gap, which is defined as shipper’s opinions on whether they feel information technologies are a necessary element of 3PL expertise and whether they are satisfied with their 3PL providers’ IT capabilities.

C. John Langley Jr., Ph.D.

“As 3PL offerings mature, shippers are increasingly taking advantage of logistics providers’ expertise”C. John Langley Jr., Ph.D., Professor of Supply Chain Management at Penn State

The IT gap in the earlier years of this study was wide, but in recent years it has narrowed, with 91 percent viewing IT as a necessary element of 3PL expertise and 65 percent of shippers indicating they are satisfied with 3PL IT capabilities.

This represents a significant gain from 2002, when the IT gap was first measured in the study, with a mere 27 percent of shippers saying they were satisfied with 3PL IT capabilities.

Another prevalent theme noted over the years focuses on 3PL and shipper partnerships in tandem with the strategic nature of relationships, and this year was no exception.

This was outlined with 91 percent of shippers and 97 percent of 3PLs indicating they have successful relationships that are bringing about positive results, which is up from 2012, which showed that 88 percent of shippers and 94 percent of 3PLs cited successful relationships.

What’s more, the study took that data a step further in explaining that strategic shipper and 3PL relationships create value throughout the supply chain.

And 75 percent of shippers and 93 percent of 3PLs indicated that using 3PL services has led to over all logistics cost reductions, and 86 percent of shippers and 98 percent of 3PLs said that has led to improved customer service.

“Both [shippers] and providers, whether we are talking about innovation in asset-based services or the growth of non asset-based providers and the forces they are all under-whether it is regulatory or imbalanced supply and demand or capacity-related-are seeing success in meeting these challenges through 3PL collaboration,” said C. John Langley Jr., Ph.D., professor of supply chain management at Penn State University.


Article Topics
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About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
 
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