3PL providers and shippers struggling to improve agility as infrastructure and workforce readiness hampers capabilities finds study

42% of respondents said they have not made the required changes to improve their agility over the past five years according to the 2019 Third-Party Logistics Study

Shippers and 3PL providers are struggling to adjust to demands in the market place, with the top concerns bugging executives being infrastructure issues and the capabilities of their labour forces. Among respondents, there was recognition of the importance of both agility and improving services in the last mile and yard. However, a whopping 42% of survey respondents said they have not made the required changes to improve their agility over the past five years and only around a third of all survey takers agreed that companies do enough to effectively manage last yard issues.

This lack of agility was further underlined by 38% of shippers admitting that they are inconsistent at operating in the omni-channel environment (serving customers both online and in physical stores seamlessly), and a further 36% noted that they have no capability in this area.

The study broke out concerns for both shippers and 3PL companies separately, although broadly the lists reflect each other. For shippers this was their ordered list of concerns

  1. Infrastructure
  2. Workforce readiness
  3. Economic stability
  4. Freight/supply chain transparency
  5. Lack of strategic partners/suppliers in the region
  6. Regulations/tax structure
  7. Security/crime/corruption
  8. Executive-level talent
  9. Border-crossing delays.

The list for 3PLs was as follows:

  1. Workforce readiness
  2. Infrastructure
  3. Economic stability
  4. Freight/supply chain transparency
  5. Lack of strategic partners/suppliers in region
  6. Executive-level talent
  7. Security/crime/corruption
  8. Regulation/tax structure
  9. Border-crossing delays.

A key complaint among consumers who choose home or office delivery is that packages become lost more frequently. Within the last mile of the supply chain, defined as the final steps of package delivery to a person's home or business, exists an undervalued concept known as the last yard. The majority of shippers (71%) and third-party firms (72%) recognize its influence on key retailer metrics such as consumer satisfaction and brand loyalty. Yet, only roughly a third of all survey takers agreed that companies do enough to effectively manage last yard issues.

Supply chains are investing in integrated technologies to reverse this trend, which include: enterprise resource planning software (72%); warehouse management systems (56%); transportation management networks (38%); and supply chain visibility tools (34%).

Disruptions break even the strongest links across supply chains. When disruptions occur due to natural disasters, extreme weather or pandemics, supermarket shelves are missing key household items and products are out-of-stock online. The most common impacts, according to shipper respondents, are increased transportation and logistics costs (75%), transportation and logistics network disruptions (73%), and higher supplier costs (66%). The level of importance that companies and 3PLs place on mitigating these disruptions is greater than five years ago, with 23% of shippers and 22% of 3PLs scoring it significantly greater.

The study notes that two major tools that companies and third-party logistics organizations can utilize to minimize disruptions are visibility tools (61% of shippers and 67% of 3PLs) and partnerships (72% and 64%, respectively). In the area of predictive analytics, 33% of 3PLs and 17% of companies are making use of these cutting-edge tools.

Data sharing between shippers and 3PLs become increasingly important. The key to a successful 3PL-shipper relationship is the foundation-building accomplished during the request for proposal (RFP) process. It ensures that both the short-term and long-term goals of both parties are clearly understood and reasonable expectations are set in the relationship. In the study, 36% of shippers and 35% of 3PLs agreed that there are opportunities to improve the sharing of insight and data collected by the sales team with account management.

Ken Toombs, global head of Infosys Consulting stated, "The last mile in the world of logistics has quickly become one of the most mission-critical areas for shippers to address, as issues that occur here have major impact on brand perception, reputation and customer satisfaction. A mix of enhanced data along with emerging technologies, such as artificial intelligence, can play a key role in meeting the ever-increasing demands of today's enterprise customers."

Joe Carlier, senior vice president of global sales for Penske Logistics, stated the following in reference to supply chain shifts that come in a market of tightening capacity: "When there is no capacity, those conversations change. Today the focus is on maximizing utilization and resources as they are becoming more limited and moving products to the end user in the most economical way."

Meredith Moot, principal at Korn Ferry, suggested that change is the only constant in the supply chain today. "The continuous transformation of the supply chain due to technology, regulations or other factors only exacerbates the talent challenges in an already tight labor market. Whether you're looking for an innovation leader or a frontline employee, you have to think about attracting, retaining and training talent to build your workforce in a new, dynamic way."

Since 1996, this study has documented the transformation of the third-party logistics industry. 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 study to capture and measure this evolving industry. As part of this year's survey process, the study recorded over 650 respondents. The 2019 study, as well as an archive of previous publications, is available at www.3PLStudy.com.

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