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12th Annual Third Party Logistics Study

Area Development Online (Apr 08)

A new study by Capgemini, Georgia Institute of Technology, DHL and SAP reveals that for the first time since 2003 the gap between IT expectations and user experience is narrowing

An Explosion of 3PL Services: How Are These Expanding to Meet Customer Needs?

Logistics Distribution & Warehousing 2006: Computer-Managed Inventory

The number of users satisfied with the IT capabilities of third–party logistics providers (3PLs) is up 7% after 4 years of decline according to a new survey. The study, 2007 Third–Party Logistics, is the twelfth in a series of studies on the state of logistics outsourcing and the first to show a rising level of satisfaction.

“2007 Third–Party Logistics” a web–based survey of 1,568 logistics executives from 61 countries shows that the gap is now shrinking between IT expectation and IT performance. Satisfaction hit an all–time low of 35% in 2006; this has now increased to 42% in 2007, while the expectation percentage remained the same at 92%; resulting in a shrinking of the IT expectation/performance gap. However, 3PL providers should not become complacent; IT performance and insufficient IT capability continues to be one of the top three performance issues recorded.

As in 2006, visibility tools (91%) and web–enabled communications (88%) are the top two technologies that 3PL users would like to add to their current capabilities, yet there has been a limited increase in usage. RFID remains the technology with the highest future expectations and this year’s survey recorded a marginal increase from 12% (2006) to 14% (2007) in the use of 3PL–provided RFID technology. However, this percentage is far lower than the 56% of 3PL users who expect more from this technology in coming years.

“IT skills are key to the success of third–party logistics providers, yet there is a significant gap between the services required and those provided. To maintain a competitive edge, 3PL providers must take action,” said Erik Van Dort, Global Distribution Leader at Capgemini. “Many 3PL providers recognize the value of standardized IT processes and the impact on adoption rates. However, it is difficult to improve performance without a formal agreement. IT is still the least favorable option for inclusion in a contract, despite effective contracting practices being named as one of the most important factor for success with 3PLs, second only to ‘personal relationships at an operational level’.”

• There is a disconnect between the desire and the ability to work collaboratively.
• China remains a top expansion destination but proximity increasingly influences choice.
• Outsourcing logistics market is growing but there has been little change in industry trends and processes.