Staying ahead of the pack
Staff -- Logistics Management, 8/1/2002
Third-party logistics companies (3PLs) are getting better at what they do, if our Quest for Quality survey results are any indication. This year, five contract distribution providers earned a spot on the Readers' Choice list compared to only three for the past two years.
Distinguishing themselves from the rest of the pack this year were FedEx Supply Chain Services (formerly known as FedEx Logistics), Maersk Logistics, TNT Logistics, UPS Logistics and C.H. Robinson Worldwide. Both FedEx and UPS have earned honors in this category for the past two years.
Because shippers have different service expectations for 3PLs than for carriers, our readers are asked to evaluate 3PLs on separate criteria. 3PLs are judged on carrier selection/negotiation, order fulfillment, transportation/distribution, inventory management and logistics information systems. Of those five criteria, respondents attach the most importance to transportation/distribution, which was given a weight of 3.7 for tallying purposes. Next in importance comes order fulfillment, which is weighted at 3.4; carrier selection (3.0), logistics information systems (2.7) and inventory management (2.2). Those numbers are used to weight the raw scores to produce the final numbers.
Although more individual providers earned high marks for their performance, the overall customer satisfaction score dropped—an indication that although some contract logistics providers have begun to truly stand out from the pack, other providers in this highly competitive market may be failing to keep pace.
Specifically, the overall customer satisfaction score for the 3PL industry slipped to 33.48 from last year's 33.99. That number is higher, though, than the score recorded two years ago, which was 32.08.
Given the drop in the overall score, it's not surprising that ratings in three categories fell, too. The rating for carrier selection and negotiation dropped to 6.63 from 6.68. The order fulfillment grade also dipped—to 7.53 from 7.62. The mark for logistics information systems slipped as well, sliding to 6.02 from 6.98.
Two scores, however, showed some improvement. The grade for transportation and distribution climbed to 8.49 from 8.07. The number for inventory management also increased—to 4.81 from 4.63.
Overall, contract distribution companies continue to receive kudos from our readers for their distinguished service in supply chain activities. Increasingly over the past decade, our readers have turned to outside providers to handle their warehousing and transportation management needs. On top of that, third parties have begun providing value-added services in areas such as information technology. They've also found a valuable niche in helping shippers conquer overseas markets.
Although our readers are recognizing more contract distribution providers as quality companies, the industry overall will have to work harder to boost its performance. In the months ahead, it will be interesting to see whether contract distribution providers can meet the challenge and get back into shippers' good graces.
Table Head
| Third-Party Logistics Providers | Carrier Selection/Negotiation | Order Fulfillment | Transportation/Distribution | Inventory Management | Logistics Information Systems | Weighted Score |
| All scores are weighted. Weighted scores are determined by multiplying the average raw scores by the average weighted importance of each attribute. (1=least important; 5=most important) |
||||||
| FedEx Supply Chain Services | 7.38 | 8.60 | 9.25 | 5.27 | 6.56 | 37.07 |
| Maersk Logistics | 6.57 | 7.60 | 9.59 | 4.95 | 6.66 | 35.37 |
| TNT Logistics | 6.86 | 7.93 | 8.69 | 5.13 | 6.60 | 35.21 |
| UPS Logistics | 6.58 | 8.16 | 8.81 | 5.01 | 6.27 | 34.84 |
| C.H. Robinson Worldwide | 6.57 | 7.36 | 8.80 | 4.58 | 6.22 | 33.51 |
| Average | 6.63 | 7.53 | 8.49 | 4.81 | 6.02 | 33.48 |
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