Page 18 - Logistics News August 2016

outsourcing
3PL’s evolving role in
supply chain management
The past few years have witnessed many mergers and acquisitions in the domestic and
global third-party logistics provider (3PL) markets, and today’s 3PLs have increasingly
positioned themselves as dynamic supply chain solution providers – from basic freight
transportation to more dynamic omni-channel distribution management and IT services.
WHILE THE scope of 3PL
services has widely increased
and customer expectations
have accelerated, it doesn’t
mean that cargo owners are
fully optimising all the services resolve additional customer
3PLs put on the table. In many
cases, cargo owners are just
scratching the surface in terms
of optimising these services,
while the providers themselves
are working on improving the
depth of current and future
cargo owner partnerships.
The trend for larger 3PLs to
consolidate could be played out
for some time, contend leading
industry analysts.
However, a major trend that
has emerged is that technology
is fast becoming the key
differentiator. The speed of
technology implementation
by the new 3PLs will need to
keep pace with the evolving
challenges of omni-channel
fulfillment. Those providers that
meet cargo owner needs will
remain dominant.
It has become clear that
the pace of technology
implementation by 3PLs will
continue to accelerate at
breakneck speed, as more and
more cargo owners need to be
interconnected by systems to
keep pace with the evolving
challenges of e-commerce and
omni-channel fulfillment. In
today’s logistics management
environment, data is the new
oil.
16 August 2016 | Logistics News
Recent research findings
note that 3PLs have extended
their services beyond the
basics, providing opportunities
to increase their value and
supply chain challenges. For
example, standard services
now include transportation
procurement, logistics network
design, returns and repair
processing, assembly and
kitting, cross-docking, shipment logistics has widely increased
consolidation, packaging,
postponement, shipment
consolidation and project
logistics.
Technology, whether
proprietary or private-label,
is playing a significant role in
sustaining growth for service
providers.
As Big Data continues to
saturate the space, logistics
managers are looking for
partners that can help
capture, analyse and execute
information. Integration with
customer processes and data
strengthens the relationship
and, as a result, technology
investment increases visibility
so logistics managers no longer
fear losing control over their
networks.
The challenge for 3PLs is
in how their customers are
choosing to engage with
technology, and whether 3PLs
are perceived as the vendors
or facilitators of technology.
Software vendors are just
By Patrick Burnson, Logistics Management
as likely to promote their
technology packages and
managed services to logistics
managers directly as they are
to their outsourced 3PL partner.
These observations mirror
those contained in a recent
study that concluded: “Today’s
3PL is not your grandfather’s
3PL”. The study found that
the scope of third- party
and expectations of have
accelerated. But, said the study,
that does not mean that firms
are using 3PLs to their full
advantage.
Another study examined
the best practices for creating
competitive advantages
through use of a 3PL. More
than 60 executives interviewed
for the study admitted the
biggest mistake they made was
not doing a thorough needs
assessment before hiring a 3PL.
The study also found that
many – if not most – bids for
third-party logistics providers
contained unrealistic data on
company operations. Omitting
business leaders from the
selection process was another
common pitfall, leading to a
lack of business-wide strategy
for the partnership.
Many industry commentators
maintain that the merger
and acquisition trend in the
3PL industry is also going
to spawn the emergence of
small niche players, just as it