The Relationship Between Innovation in the 3PL Industry and Collaboration Revealed
The commoditization of logistics has been an ongoing pain-point for 3PLs for the better part of the last decade.
Manufacturers and retailers more often than not see logistics as a cost-center who’s price they need to squeeze. 3PLs have been trying to fight against this pricing trend through adding value-added services and differentiating themselves against the competition. The key driver 3PLs have been banking on to increase margins has been ‘innovation’. Ultimately, 3PLs have had significant difficulties driving innovation without the buy-in from their customers.
In this ground-breaking research conducted by eft collaborator Dr. Richard S. Bushart, Information Architect for Ford Motor Company explores how 3PLs can transform their corporate culture and financial results through increases in collaborative behavior, internally and externally, leading to incremental and disruptive innovation.
Research shows that despite the positive revenue increase, the growth trend in the 3PL industry is in jeopardy because shippers view their 3PL partners as mostly transactional and incapable of fostering the collaborative business relationships leading to the types of inter-organizational innovation required to solve the vexing challenges facing today’s global supply chains. This compelling research provides the background, methodology, findings, recommendations, and insights on how to address and conquer one of the most threatening 3PL issues facing the industry today; a deficiency of collaborative relationships leading to organizational innovation.
Third-Party Logistics (3PL) industry revenues in the United States have increased by 9.2% from $146.4 billion in 2013 to $160.2 billion in 2014. Despite the positive revenue increase, the growth trend in the 3PL industry is in jeopardy because shippers view their 3PL partners as mostly transactional and incapable of fostering the collaborative business relationships leading to the types of inter-organizational innovation required to solve the vexing challenges facing today’s global supply chains. The problem examined in this study was the deficiency of collaborative relationships leading to organizational innovation within the 3PL industry in the United States. This quantitative, cross-sectional study used two published and validated survey instruments to measure the predictor variable of collaborative relationships and outcome variable of organizational innovation. Data were collected from 222 employees working in the 3PL industry and analyzed using SPSS statistical software.
The results linked to the first research question indicated that increased collaboration between 3PLs and shipper-partners can produce greater organizational innovation. The Pearson product-moment correlation test revealed that the relationship between the predictor and outcome variables was moderately positive with r = .36 and statistically significant with a p-value < .0005. The results linked to the second research question utilizing a multiple linear regression analysis indicated that demographic variables (age and gender) were not a significant amount of the variance in organizational innovation over and above what was explained by collaborative relationships with p-values of .42 and .31 respectively.
This study provides new empirical evidence on the statistically significant relationships between increased collaborative relationships and organizational innovation within the 3PL industry in the United States as well as a foundation for future research using other innovation, creativity, and relationship variables. The practical application of the empirical evidence from this research is significant for the 3PL industry in several ways. First, senior 3PL leaders should strategically consider how an increase in collaborative relationships with their shipper-partners including both internal and external customers can become part of the organizational norm. This would involve a potential paradigm shift in corporate culture along with new policy, training programs, and a knowledge sharing intranet site hosting best practices. Next, senior leaders within 3PLs should consider methods used by other industries and corporations to increase organizational innovation. Some of these methods include Six Sigma problem-solving, Lean practices, and employee motivation and satisfaction training at all levels.
Lastly, shifting 3PL service offerings from transactional-based to more strategic and innovative solutions focusing on disruptive change will be a key driver to a 3PL industry transformation. Creating an innovative corporate environment where employees, regardless of age or gender, feel empowered to solve problems and suggest new incremental and disruptive innovative ideas can be a challenging paradigm shift for the 3PL industry, but a critical next step to remain competitive and continue to realize growth. As the global economy increases, competition tightens, and shippers look to their 3PL partners for innovative solutions, 3PLs now have empirical evidence and recommendations on how to produce the disruptive innovations that are desperately needed to move the 3PL industry forward.
Dr. Richard S. Bushart, Information Architect for Ford Motor Company will be sharing more on his research at this year's 3PL Summit and Chief Supply Chain Officer Forum, June 21-23, Chicago. www.3PLSummit.com for details. You can also reach Richard here.