Inside Logistics

Adaptation paramount for 3PLs

Annual survey highlights technology, relationships


February 20, 2018
by MM&D Staff

Blockchain, automation and new talent requirements are the focus of the 2018 22nd Annual Third-Party Logistics (3PL) Study. This year’s study shows the continuation of two trends: the importance of the relationship between shippers and 3PLs, and the importance of adapting to emerging technologies, including blockchain and automation. The result of these closely-forged relationships is improved services to the end customer.

Blockchain

This is the first time the 3PL study investigates blockchain. Results show that while 30 percent of 3PLs and 16 percent of shippers see blockchain as a potential application, they have yet to engage with the technology. The study describes anticipated benefits including improved supply chain visibility and potential challenges that participants will face in implementing blockchain.

“Blockchain has the potential to make significant improvements in security, transparency and governance, but only in supply chains where there is value in controlling consumer risk, valuable goods or complying with regulations,” said Ken Toombs, global head of Infosys Consulting. “Shippers and 3PLs will need to work together to drive value from blockchain, using lessons collectively learned from missteps with other emerging technologies like Radio Frequency Identification (RFID).”

Automation in transportation

The study looks at some of the exciting potential with on-road automation, such as driverless vehicles. It also examines many ways in which automation is already providing returns across the supply chain through digitalized load matching and warehouse robotics.

Competitiveness is a key driver for a majority of 3PLs (62 percent) and shippers (57 percent) to invest in automation/ digitization. However, the report also revealed a number of reasons for lack of investment in digitization and automation, including a lack of in-house talent to develop, implement and monitor (12 percent of 3PLs and 10 percent of shippers).

Technology improvements in supply chain, especially in the area of fleet operations, have had positive impacts on the industry,” said Tom Scollard, Penske Logistics vice-president of dedicated contract carriage. “It has allowed 3PLs to operate fleets that are safer and more efficient for the customer.”

Logistics talent revolution

Technology is reframing the demands on the workforce, particularly within the supply chain where automation, digitization and data collection capabilities are growing rapidly. Supply chain leaders and logistics executives play even more critical roles as companies work to build more efficient and technologically advanced supply chains.

“It’s no surprise that technology continues to unlock unforeseen value across the global supply chain in a variety of ways,” said Neil Collins, regional managing partner for Korn Ferry’s North American industrial markets. “To leverage the potential upside, organizations must now rethink their talent strategy from top to bottom. The supply chain/logistics leader must now be agile, a strategist, a visionary and a collaborator. The entire supply chain organization must now compete with technology, and the winners will be those that elevate their people using technology, rather than replacing them with it.”

Risk and resilience in shipper-3PL relationships

Through all the technological advances, the opportunity to improve upon the risk versus resilience in relationships between 3PLs and shippers continues: 79 percent of 3PLs and 64 percent of shippers report they have been involved in projects in which the ability to execute quickly was directly impacted by lack of complete, accurate and consistent information provided by the shipper.

The study shows a large increase in the percentage of shippers seeking information technology (IT) services from 3PLs, with 27 percent indicating outsourcing of IT services in the 2018 study compared to 17 percent in the previous year.

However, the percentage of shippers indicating satisfaction dropped slightly this year from 65 percent to 56 percent, potentially due to higher expectations among shippers as technology has improved or because shippers are seeking enhanced analytical capabilities to help drive more effective supply chain decisions.

The 2018 study was produced by Penske Logistics, the global logistics and supply chain management provider, Infosys Consulting, the strategy and transformation consulting arm of Infosys, Penn State University, and global talent advisory firm Korn/Ferry.
The study attracted 580 respondents, a 65 percent increase over the number of participants taking part last year. The study report and additional materials can be viewed online at www.3PLstudy.com.