Thursday 27th Oct 2016 - Logistics Manager

Shippers becoming more demanding

Shippers are becoming increasingly demanding of their 3PLs’ risk mitigation capabilities, according to a new study by Capgemini Consulting,  in cooperation with Penn State University, Korn/Ferry International, and Panalpina.

Economic losses from supply chain disruptions increased 465 per cent from 2009 to 2011, while at the same time, the number of companies experiencing supply chain disruption grew by 15 per cent.

The study, which covered 2,300 shippers and 3PLs found that a number of factors, including extended supply chains, reduced inventories and shortened product lifecycles were making supply chain disruption both more likely and more costly than ever before, it said.

The report highlighted adverse weather and the threat of a pandemic as the biggest source of supply chain disruption, cited by 69 per cent of shipper respondents, and volatility in commodity, labour or energy costs as the second, cited by 59 per cent of shipper respondents.

As a result, 44 per cent of 3PLs  said they were placing a greater focus on supply chain risk and mitigation than five years ago. Closer partnerships (69 per cent), improved business continuity planning (61 per cent), advanced supply chain visibility tools (65 per cent) and better employee training (64 per cent) were the top strategies 3PLs are currently using to mitigate supply chain risk.

However, the report warned that despite the increased risk of supply chain disruption, many companies are currently underfunding supply chain disruption mitigation planning and without more advanced strategies in place such as supply chain mapping and enterprise risk management, the strategies currently in use will not be as effective at minimising the risk of supply chain disruption.

The report also shippers report spending an average 12 per cent of revenues on logistics, with an average 39 per cent of that spent on outsourced logistics services, and both shippers (86 per cent) and 3PLs (94 per cent) largely view their relationships as successful.