The State of Third Party Logistics
Capgemini has just released its 21st Annual Third Party Logistics Study for 2017 highlighting everything from the current market conditions to a strategic assessment for 3PLS going forward. With the latest breakthroughs in technology, data acquisition, and utilization; there is a lot to talk about throughout the study.
While most of the information is certainly pertinent to all parties, there are a few highlights that are useful information for shippers to keep in mind.
Setting Them Apart: The Importance of a 3PL’s IT
Information, in particular, is a powerful tool that can be used by both a Shipper as well as 3PLs. A 3PL’s IT capabilities provide invaluable resources for shippers, which creates a stronger partnership between both the 3PL and the shipper. Among the numerous IT capabilities, there are some that have been marked as “essentials” for a 3PL to be considered a viable partner. Of all the IT needs of shippers listed, these are the top rated essentials according to the study.
- Transportation Management (Planning)
- Electronic Data Interchange (EDI)
- Visibility (order, shipment, inventory, etc)
- Warehouse/ DC Management
- Transportation Management (Scheduling)
- Web Portals (booking/order tracking, etc)
While these were only a few from the top of the list, the takeaway is clear. A strong 3PL must be able to fulfill the information needs of a shipper in order to be successful. Transparency between the two is a must for a strong and lasting partnership.
3PL Services: What Matters Most to Shippers
In addition to providing a number of IT related services, there are certain factors that are important to shippers when deciding which 3PL to work with. Of course cost is always a factor, and while offering the lowest cost might be an appeal to some customers, there’s also the need to provide other value services. Other important factors that shippers are considering when looking at a third party logistics provider include guaranteed arrival dates and visibility via product tracking.
However, there is another metric which is becoming increasingly important for shippers and 3PLs alike, and that is customer service. While a low cost 3PL might be able to get a shippers products to the intended destination in a timely fashion, having a poor or low quality interaction with that 3PL might give the shipper a reason to consider looking for other service providers. With the increasing connectivity of today’s technology, a friendly face and human considerations are going a long way towards winning business.
Big Data and Analytics: The Paving Stones of the Future
You can’t read about logistics without hearing something about how Big Data is changing the game. With the mindbending amount of information that can be gathered, analyzed, and transferred on just a single shipment, let alone an entire supply chain, big data is certainly paving the way for the future of shipping.
“Data collection and analysis is taking on greater importance for 3PLs and 4PLs as they optimize the supply chain, increase end-to-end visibility and launch new capabilities for their customers. In this year’s survey, nearly all 3PLs—98%— said improved, data-driven decision-making is essential to the future success of supply chain activities and processes, and 93% of shippers agreed. Both groups—86% of 3PLs and 81% of shippers—said the effective use of big data will become a core competency of their supply chain organizations,” according to the report.
However, the ability to gather data and drill down to the important and necessary points are two entirely different matters. For this reason, many shippers prefer to default their analytics to 3PLs rather than attempting to keep them in house. The 3PLs ability to gather the data and turn that information into something actionable is becoming a deciding factor in the life and success of shippers and 3PLs alike.