Some 82 per cent of shippers are employing cost-cutting tactics and 60 per cent are rethinking their supply chains and relationships with third party logistics providers as a result of the recession, according to the 14th annual Third-Party Logistics Study from Capgemini, Georgia Institute of Technology, Oracle and Panalpina.
The survey found that 88 per cent of shippers feel that IT-based logistics services are important, but only 42 per cent are satisfied with the capabilities of their provider – as a result of this IT capability gap, 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.
It also revealed significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – only 59 per cent of shippers feel their use of 3PLs has a positive effect on customer service compared to 88 per cent of 3PL respondents
[asset_ref id=”622″]
“Companies worldwide are still dealing with the effects of the economic downturn,” said Jim Morton (pictured), senior manager within Capgemini Consulting’s Supply Chain practice. “But shippers should embrace the opportunity to rethink their supply chains and the role that 3PLs can play in helping to attain business goals.”
The study shows that while shippers continue to outsource logistics services that are more operational and repetitive, they outsource less frequently those that are more strategic, customer facing and IT intensive. However, economic volatility presents an opportunity for shippers to assess their supply chains and make changes designed to increase agility and responsiveness, reduce costs and reconsider their relationships with 3PLs to drive them deeper. Overall, 75 per cent of shipper respondents agree that more strategic 3PL relationships would help them reduce costs.
IT is viewed as central to the overall performance of 3PL-customer relationships, said the survey. “However, lack of IT integration within 3PLs leads the list of shipper respondent issues (55 per cent) with 3PL IT capabilities. Shippers and 3PLs seek IT that is responsive, delivers valued information such as order, shipment and inventory visibility, builds on existing investments and allows for innovation. However, widespread use of manual practices and variations in standards make it difficult for shippers and 3PLs to exchange data reliably and connect workflows. Real-time interfaces to shipper order management systems (63 per cent) and timely demand forecasts (54 per cent) are the most desired IT capabilities 3PLs need from shippers.
“When shippers outsource logistics functions to a 3PL, IT is an essential part of the relationship,” said Jon Chorley, vice president, SCM Product Strategy at Oracle. “3PLs and shippers need to leverage integrated IT platforms that deliver visibility across the entire logistics network to keep productivity and customer service levels high.”
The survey highlights the perception gap between shippers and 3PLs.
“While there is significant agreement between shippers and 3PLs on critical issues, 3PLs generally have a more positive view of relationship success than shippers and have lower awareness about potential problems. This suggests that 3PLs still have some way to go before they fully meet the expectations of their customers.
“For example, 82 per cent of 3PLs believe they provide new and innovative ways to improve logistics effectiveness, compared with only 50 per cent of shipper respondents who feel they receive services of this nature. Similarly, only 54 per cent of shippers reported improvements in service levels compared with 71 per cent of 3PLs,” the survey said.