3PL Market Proves Positive Future
From cloud-based services to enhanced software and visibility tools, today’s third-party logistics (3PL) market is on the rise. In fact, the nature of shipper-3PL relationships proves a positive future, according to the 19th Annual Third Party Logistics Study, produced by Dr. C. John Langley. Survey results show an average logistics cost reduction of 9%, an average inventory cost reduction of 5% and an average fixed logistics cost reduction of 15%.
The report also shows average improvements in shippers’ order fill rate and order accuracy. The 2015 3PL study outlines that 73% of those who use logistics services and 77% of 3PL providers are satisfied that they have received open, transparent and effective communication from their partners. A distinct majority—92%—of shippers report that their relationships with 3PLs generally have been successful. Among 3PLs, 98% say their relationships with shippers have been successful.
While the study shows a promising outlook for 3PLs, there are some challenges. For example, levels of global economic activity are driving highly variable and sometimes sluggish or neutral demand for outsourced logistics services. Shippers report an average of 36% of their total logistics expenditures are related to outsourcing compared to an average of 44% reported last year. The most frequently outsourced activities tend to be those that are more transactional, operational and repetitive, the study says, whereas activities that are strategic, IT-intensive and customer facing tend to be outsourced to a lesser extent.
Strategic workforce management will be particularly important for the 3PL industry, according to the report. Nearly 50% of respondents say they are already having difficulty in finding or attracting talent, and the average hiring growth rate within the supply chain industry is expected to be higher than the average growth rate across other occupations.
Meanwhile, nearly one-third of the respondents say they are not prepared to handle omni-channel retailing, and only 2% of respondents rated themselves as high performing in the omni-channel space. About half of respondents say they are not testing new fulfillment strategies. However, several are either already investing in or considering home delivery from local stores (16%), Sunday delivery (15%), customer delivery in which an in-store shopper delivers goods (12%) and locker pickup (11%).
The use of customer relationship management (CRM) and mobile-cloud technologies can significantly enhance and streamline the productive activities of 3PL sales executives, says Langley. Case in point: 75% of shippers and 77% of providers agree the 3PL sector could benefit significantly from the availability of industry-tailored CRM capabilities compared with what is currently available.
Mexico is also playing a significant role in the advancement of the 3PL industry. Just under half of study respondents—40%—say they have already moved some of their operations to Mexico, citing reduced freight transport time and closer proximity to sources as the most important factors. Study respondents also said their businesses are primarily moving operations to Mexico from the United States (55%), China (36%) and Canada (9%).
Go here to learn more about this annual study and this year’s findings.
