Many third-party logistics providers gained an advantage from being early adopters of supply chain technology, but they soon met challengers in the form of pure-play technology providers, says Peter Weis, chief information officer and senior vice president at ITS Logistics.
Now, however, because those newcomers haven't capitalized on their approach to win definitive market dominance, 3PLs have a fresh chance to prove their worth.
“The grounds have shifted,” says Weis. “They were the early movers because they managed the freight. They were the first ones to build supply chain solutions for customers. For the most part, they had no competition. But the world changed as the internet and the cloud came along.”
3PLs were challenged by two types of new companies. The first were purely software companies that built great customer-facing software and took advantage of the fact that 3PLs were not steeped in technological innovation. The others were what Weis describes as “tech-forward” 3PLs, “perhaps at the expense of getting the back-end right.”
There’s a collision going on between the three types, Weis says. “These companies that made some early progress in the software play, if it's not a backlash, it's at least a healthy dose of skepticism that they haven't been able to get the back-end data right. So as a result, they're going through some real growing pains. This creates, I think, a new opportunity again for the traditional 3PLs, if they can innovate as well as operate.”
The trustworthiness of the result remains a key competitive consideration, Weis continues. “Despite all the sexiness of the UI [user interface] and the analytics that these new entrants have built, the core issue remains: How strong is your core enterprise IT platform? Can you trust the data?”
Weis compares what’s at stake for a 3PL versus a tech company to the parable about a bacon-and-egg breakfast. “The chicken is involved in making breakfast by laying an egg. The pig? The pig's committed.”
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