READING, Pennsylvania – Outsourced supply chains will depend on good partnerships and robust technology more than ever in the Covid-19 world. These are some of the findings of the 25th Annual Third-Party Logistics Study released today.
The 2021 3PL Study explores topics that are top-of-mind in today’s supply chain: 3PL/4PL future direction; technology’s direct impact on scalability and mobility; the Covid-19 effect; and risk management.
Dr. C. John Langley, clinical professor, supply chain information systems and director of development, Center for Supply Chain Research at Smeal College of Business at The Pennsylvania State University, initiated this research to capture and measure this evolving industry.
The study finds that the future of an outsourced supply chain includes the shipper and 3PL moving closer to a strategic relationship and further from a transactional one. Study respondents indicated that 71 percent of shippers and 83 percent of 3PLs are on the same page in identifying trends and enhancing capabilities.
In addition, 92 percent of 3PL users and 96 percent of 3PL providers agree that supply chains are evolving into complex networks.
Technology is key
More technology equals a more robust supply chain. The majority of shippers indicated they are using technology to plan supply (89 percent), demand (83 percent), sales/operations (78 percent) and capacity (61 percent).
Third-party logistics providers are further along in mobile technology, with increased usage of smartphones, tablets, wearables and other handheld devices.
The majority of shippers are using dashboards and related tools in their operations for real-time access, while 48 percent noted they have systems in place to organize and access that data for reporting purposes, and 45 percent stated they collect real-time data across more than half of their supply chains.
The Covid-19 effect is real. A majority of companies (58 percent) answered that they saw at least a 25 percent reduction in supply chain operations and six percent stated they experienced a total shutdown.
Impacted areas were different for shippers and their logistics providers. The two biggest shipper areas were international transportation and logistics (55 percent) and manufacturing (46 percent). For 3PLs, the largest problem areas were labour/workforce management (54 percent) and domestic transportation and logistics (45 percent).
Among shippers, roughly 46 percent believe that recovery will take place in less than three months (the survey closed on July 31).
Risk management took on extra importance during the pandemic. “Covid-19 has revealed the vulnerability of modern supply chains,” said Andrew Hogenson, global managing partner, consumer goods, retail & logistics, at Infosys Consulting, which supported the research.
“Effective risk management will be key to prepare for future disruptions and to achieve recovery and growth in the post pandemic era.”
Among respondents, 51 percent of shippers were confident their companies possess a comprehensive risk management process. Additionally, 45 percent of shippers stated that their risk management coverage extended into multiple layers of suppliers downstream and upstream.
Over a third of shippers (37 percent) forecast that future supply chains would rely less on global capabilities and more on domestic or local capabilities; 49 percent of 3PLs answered this way as well.
When asked if supply chains are too lean, 42 percent of shippers agreed, while 49 percent disagreed with the notion; the remaining respondents were unsure.
COVID-19 also highlighted the need for supply chain visibility and real-time data.
“Visibility is increasingly vital in the supply chain, but even more so when there is a risk of disruption or during a recovery,” said Andy Moses, senior vice-president of sales and solutions for Penske Logistics.
“Visibility allows those within the supply chain to get ahead of an interruption, potentially mitigating problems before they have an impact on customers or other stakeholders in the supply chain. Properly orchestrated and tech enabled, visibility sets the stage for a rapid response by alerting supply chain execution teams to focus on the issues of greatest importance, out of the thousands and millions of ordinary transactions occurring.”
The study is created and supported by Infosys Consulting, Penn State University and Penske Logistics. The 2021 version, as well as past editions, are accessible at www.3PLStudy.com for download at no cost.