• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » In Shipper-3PL Relationships, Technology Comes to the Fore
Tech Watch

In Shipper-3PL Relationships, Technology Comes to the Fore

In Shipper-3PL Relationships, Technology Comes to the Fore
October 16, 2018
Robert J. Bowman, SupplyChainBrain

The latest State of Logistics Outsourcing Study, now in its 23rd year, finds shippers generally satisfied with the quality of service provided by their third-party logistics partners. But new demands generated by the omnichannel and other supply-chain innovations are posing additional challenges to 3PLs – and technology is expected to play a major role in solving them.

“Shippers are increasingly aware that if they do not have the technological capabilities to accomplish their goals, they should partner with those that do,” the study reports. The latest release was created and supported by Infosys Consulting, Penn State University, Penske Logistics and Korn Ferry.

The study validates the industry’s overall maturity, and success in attracting business from major shippers. Of the 650 respondents, 91 percent said their relationships with 3PLs have been “generally successful.” And a full 98 percent of 3PLs expressed similar satisfaction with the state of their customer relations.

Nevertheless, there are clouds on the horizon, if not directly overhead. Eighty-three percent of 3PLs reported higher transportation and logistics costs during the year under review, while 74 percent experienced network disruptions (up from 63 percent in 2013), and 67 percent saw an increase in supplier costs.

The culprits were familiar: shifting consumer buying habits, fueled by an increase in choices offered by the omnichannel, along with such critical issues as shortages of trained labor, economic instability, poor visibility into freight status, lack of strategic suppliers, changing regulations, security concerns and border-crossing delays.

Change is needed to meet those challenges, but a significant portion of shippers are lagging in that regard. Over the past five years, 42 percent of respondents haven’t made the moves necessary to improving their agility. Just over half, however, indicated an openness to new ideas, setting the stage for innovations by 3PLs.

Investments in new technology are at the heart of any attempt to adjust to consumer trends. In fact, many companies are already investing in a range of applications and systems to that end. They include enterprise resource planning (ERP) software (72 percent of respondents), warehouse management systems (56 percent), transportation management systems (38 percent), and supply-chain visibility tools (34 percent).

Shippers and 3PLs alike are casting about for solutions to coping with disruptions caused by natural disaster, extreme weather, or pandemics, any of which can affect even the most well-run supply chains. The 2019 study finds companies placing greater emphasis on this area of concern than five years ago. (Although the numbers still seem surprisingly small: just 23 percent of shippers, and 22 percent of 3PLs, deemed the issue of potential disruptions to be “significantly great.”)

Tools for mitigating that brand of supply-chain risk are plentiful. They include visibility application (adopted by 61 percent of shippers and 67 percent of 3PLs), and predictive analytics (17 percent of shippers and 33 percent of 3PLs). In addition, 34 percent of shippers and 47 percent of 3PLs said they plan on investing in visibility tools to cope with supply-chain disruptions over the next two years.

The two parties are placing a new emphasis on the sharing of data. They view it as essential to the creation of solid relationships, starting at the request-for-proposal stage. A number of applications in the area of supplier relationship management exist to make sense of the wealth of data that’s available to supply chains today, and reduce the risk of disruptions caused by supplier failures.

Technology is, of course, a central element of any 3PL’s offering. A growing number of shippers prefer to shift the burden for acquiring and maintaining information systems onto trusted partners. Expect that trend to continue, as the era of Big Data, accompanied by sophisticated analytics and artificial intelligence, brings a new level of complexity to the information-technology arena.

“Many 3PLs are already making significant investments in technology that allows them to analyze shippers’ operations,” the study says. “As a result, they can help reduce overall transportation costs, improve asset utilization and provide better service.”

As to which I.T. systems shippers are emphasizing among current 3PL offerings, the study identified those that provide execution- and transaction-based capabilities. They include transportation management, with a focus on planning and scheduling; warehouse and distribution-center management; visibility, and electronic data interchange (EDI).

In the new study, 46 percent of shippers identified a need for I.T. capabilities in support of transportation sourcing. That’s up from 38 percent last year. The reason for the increase, the study suggests, lies with a current significant shortage of overall capacity.

Other types of I.T. on shippers’ 2019 wish lists included network modeling and optimization, web portals, cloud-based systems, and tools for advanced analytics and data mining.

New to this year’s study was a question about the adoption of blockchain technology, which by all accounts is still in its infancy. Only 8 percent of shippers, and 15 percent of 3PLs, included it among “needed” technologies.

Technology-wise, the biggest takeaway from the 2019 study concerns what it calls “the I.T. Gap.” The term refers to the difference between what shippers consider to be essential I.T. capabilities, and the degree to which 3PLs are fulfilling that expectation. Over the 17 years that the study has been conducted, the percentage of shippers viewing I.T. as a necessary element of 3PL expertise has remained in the low to mid-90s. But this year, only 55 percent of shippers declared themselves satisfied with what 3PLs are giving them in the area of technology.

Consider that a wakeup call for 3PLs looking to expand their customer base. According to the study, with shippers ramping up their dependence on data to run their supply chains, I.T. competency “has become a key selection criteria in shipper bid and RFP processes.”

RELATED CONTENT

RELATED VIDEOS

General SCM Logistics Logistics Outsourcing Technology Cloud & On-Demand Systems ERP & Enterprise Systems SC Planning & Optimization Supply Chain Visibility Transportation Management Business Strategy Alignment Global Supply Chain Management Quality & Metrics All Warehouse Services Warehouse Management Systems
KEYWORDS 3PL report 3PL survey 3PLs All Warehouse Services Business Strategy Alignment Cloud, SaaS & On-Demand Systems ERP ERP & Enterprise Systems General SCM Global Supply Chain Management Logistics Logistics Outsourcing Quality & Metrics SC Planning & Optimization Supply Chain Analysis & Consulting Supply Chain Visibility Technology TMS Transportation Management transportation management systems Warehouse Management Systems WMS
  • Related Articles

    Wireless Technology Comes to the Fore in the Supply Chain

    Third-Party Logistics: Governance and Collaboration in the 3PL-Shipper Relationship

    Tighter Shipper-3PL Relationships Required, Study Mandates

  • Related Directories

    Kuebix

    SnapFulfil

Robert J. Bowman, SupplyChainBrain

Crafting a New Transportation Bill: The Battle Begins

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: J&J Shot Cleared for U.S. Distribution; Microsoft Vows to Fix Vaccination Software

    Coronavirus
  • West Coast Port Congestion

    Shippers Need Alternatives to West Coast Port Congestion

    Logistics
  • Mexico

    The Near-Shoring Trend: Will China’s Loss Be Mexico’s Gain?

    Logistics
  • Robotic automation

    Autonomous Supply Chains Are on the Horizon

    Coronavirus
  • Drugmakers

    Research Lays Groundwork for More U.S.-Made Drugs

    Coronavirus

Digital Edition

Scb feb 2021 lg

2021 Supply Chain Management Resource Guide

VIEW THE LATEST ISSUE

Case Studies

  • Remote Implementation: A Dose of the Right Medicine for B2B Pharmacy

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

Visit Our Sponsors

6 River Systems ArcBest Armada
aThingz BluJay Burris Logistics
DSC Logistics DCSA (Digital Container Shipping Association) DHL Resilience360
Genpact Geodis GEP
Honeywell Intelligrated Infor Logility
Magnitude Software MPO Old Dominion
Oliver Wight OpenSky Ports America
Purolator QAD Precision Red Classic
Riskmethods Snapfulfil TGW Systems
Transportation Insights Watson Land Company Westfalia Technologies
Workjam Yang Ming  
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2021 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing