The perceptions that shippers and their third-party logistics providers (3PLs) have of each other have rarely been aligned. 3PLs believe shippers are satisfied with their partners' capabilities, especially in the information technology (IT) realm. Shippers believe their providers are not as technologically agile as they need to be. Shippers complain their 3PLs think too tactically and reactively; 3PLs argue they would behave more proactively if they had access to their customer's strategic thinking.
The needle hasn't moved much in recent years. However, the "2014 18th Annual Third Party Logistics Study," which canvassed 1,300 shippers and 3PLs on four continents, predicts that the relationship has reached an inflection point. The triggers, it finds, will be the two mega-forces of globalization and "big data," the term used for a collection of data sets so large and complex that it is difficult to process with traditional applications. The ability of 3PLs to master massive and increasingly complex data flows and to manage cross-border and extraterritorial trade will determine which partnerships succeed and which will not, according to the report.
For the past 12 years, a subsection of the study has tracked the differential between the percentage of 3PL users indicating that IT capabilities are a necessary element of a provider's skill set and the percentage of users that are satisfied with their partner's IT capabilities. This year, 98 percent of shippers said IT expertise is important but only 55 percent said they were happy with their provider's efforts. That ratio has remained largely unchanged, and the study's authors expect it to stabilize at current levels. About 70 percent of 3PLs said their capabilities are in line with shipper expectations.
Both sides (97 percent of shippers, 93 percent of 3PLs), however, agree to the importance of data-driven decision making. The need to make sense of information and to do it on a global scale, has become so paramount that it will either force a narrowing of the IT gap or widen it exponentially as more 3PLs find themselves not up to the task, said Shanton J. Wilcox, principal of Capgemini Consulting, which conducted the survey along with executive recruiter Korn/Ferry International, Penn State University and logistics and supply chain concern Penske.
THE GLOBALIZATION CHALLENGE
In what is seen as an encouraging trend, 91 percent of shippers said their 3PL relationships are critical to navigating today's global landscape. However, the report found that shippers fail to take a holistic approach to global trade management functions, relying on siloed departments to perform specific tasks rather than operate in a cross-functional manner. This, in turn, makes it more difficult for 3PLs to deliver a high level of service, especially in emerging markets that are already tough enough to navigate.
For example, Africa, a region with great potential but with a challenging operating environment, will comprise 11 of the world's fastest-growing economies by 2017, according to International Monetary Fund data cited in the report.
The report also noted that shippers still view the world through a short-term prism at the expense of relationships that could yield greater benefits over the long haul. This "overemphasis" on the next-quarter's results is "hindering [shippers'] ability to attain a more highly functioning and cost-effective supply chain," Dan Albright, vice president and North American supply chain leader at Capgemini, said in a statement.Channel: Strategy Classification: 3PL Companies: Capgemini, Penske, Korn/Ferry