The global 3PL services market is expected to grow at a CAGR of more than 5% over the next five years due to the difficulties in handling the vast geographic presence of supply chain operations driven by globalization, according to a procurement intelligence report from Technavio, London.

The report, “Global 3PL Services: Procurement Intelligence Report 2017-2021,” provides an in-depth analysis of category spend, best procurement practices and cost-saving opportunities aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.

“The growth can also be attributed to the lack of internal expertise to manage logistics activities; this has driven demand for specialized third-party service providers,” says lead procurement expert Angad Singh. “Buyers of 3PL services focus on transactional relationships with suppliers for repetitive services, whereas they focus on collaborative partnerships for strategic services such as IT-intensive and customer-centric activities.”

The adoption of cost optimization levers can help buyers of 3PL services realize cost savings and achieve category management and value benefits, including a reduction in procurement complexities.

The cost-saving opportunities in the 3PL services market are segmented into the following value-enhancement opportunities:

• Adoption of technology
• Supplier competition
• Adoption of negotiation strategies
• Optimization of procurement practices
• Bundling of services

The use of AR in freight handling allows suppliers to obtain important freight information such as weight, destination and content, helping them speed up delivery processes and improve the ways in which objects are handled. It is a direct or indirect view of the real-world environment in which computer-generated inputs such as sound, videos and graphics augment elements.

Drones are UAVs that can be controlled either remotely or programmed to fly in a particular path. Drones are utilized by 3PL companies to deliver small packages to customers and help suppliers reduce significant amounts of transportation costs.

Service providers are increasingly automating complex manual processes, especially in warehouses, to improve productivity, minimize fatalities and enhance efficiency.

Buyers prefer to enlist 3PL providers that help manage transportation costs, especially while dealing with ocean and air freight costs.

Cloud-based analytics platforms can help buyers track inventory on the go, conduct what-if scenario analysis to minimize risks associated with global supply chains and help in demand-supply planning.