Become a Member · About 24/7
Already a member? Login
 
Transportation

Shortfalls in the Management of Third-Party Logistics

More than 80 percent of domestic Fortune 500 companies outsource their logistics operations and most expect to use third party logistics providers more in the coming years, according to the University of Tennessee study sponsored by Kenco. By 24/7 Staff



The study, Selecting and Managing a Third Party Logistics Provider, finds that companies are still struggling to optimize their use of 3PLs despite growth in every sector of the supply chain over the last quarter century.

“Today’s 3PL is not your grandfather’s 3PL,” says Paul Dittmann, executive director of the Global Supply Chain Institute (GSCI) at the University of Tennessee’s Haslam College of Business.

“The scope of third party logistics has widely increased and expectations of them accelerated, but that does not mean firms are using 3PLs to their full advantage.”

Dittmann partnered with Kate Vitasek, author of “The Vested Way,” to find the best practices for creating competitive advantages through use of a 3PL. Their research resulted in the GSCI’s latest white paper. 

More than 60 executives interviewed for the study said the biggest mistake they made was not doing a thorough needs assessment before hiring a 3PL.

Paul Dittmann, Kate Vitasek, David Caines

The report also found that many, if not most, bids for third party logistics providers contained unrealistic data on company operations. Omitting business leaders from the selection process was another common pitfall, leading to a lack of business-wide strategy for the partnership.

Selecting and Managing a Third Party Logistics Provider is the second in UT’s Innovations in Supply Chain Series. Kenco a Chattanooga-based provider of integrated logistics solutions and technology, sponsored the report.

“Communication is key to helping our clients succeed,” said David Caines, chief operating officer at Kenco.

“The companies that connect us with the right people and have clear strategies in place are the ones we can help the most. This paper reflects that and gives insight into how 3PLs can be better partners as well.”

The study emphasizes clarity of expectations and a balance between accountability and independence for best management of 3PLs.

The most successful 3PL partnerships employ elements of Vested methodologies, focusing on outcomes instead of processes, and implementing contracts that provide incentives for 3PLs.

Selecting and Managing a Third Party Logistics Provider - Excerpt

Reverse Bow Tie Alignment
Download the White Paper
The important thing to remember is that your governance structure should be tailored to the needs of your relationship. The larger and more complex your supplier relationship, the more effort you should expect to allocate to governance.

Download the White Paper



Comments
Be the first to post a comment.
You must be logged in to post a comment. Login.







Supply Chain Logo
Supply Chain 24/7 is the ul­ti­mate online bus­i­ness re­source for Trans­por­ta­tion, Dis­trib­u­tion, Log­istics and Supply Chain pro­fes­sionals.
About Us
Contact Us
Advertise
Privacy Policy
Newsletters
RSS


Follow Us


©2017 SupplyChain247.com is owned and produced by Peerless Media, LLC., a Division of EH Publishing, Inc. All rights reserved.