Survey shows companies want more from 3PLs

By Staff -- Logistics Management, 1/1/2001

Customers of third-party logistics (3PL) companies want more than just transportation services - they want 3PLs to provide the technology that drives the supply chain process, according to the results of an annual survey. Survey participants included logistics executives in the automotive, chemical, computers/peripherals, consumer products, medical supplies/devices, and retail industries. The joint survey was conducted by the University of Tennessee's Center for Logistics Research, consulting firm Cap Gemini Ernst & Young, and 3PL Exel of Westerville, Ohio.

Customers of 3PLs have high expectations for providers' information- technology services, according to the survey results. Respondents also indicated that technology-based services were among their highest priorities for future outsourcing. Keeping pace with those expectations has been a challenge for some providers, however, the study found. "The growth and development of e-commerce and information-technology - based capabilities ... is clearly identified as a leading concern for both users and providers of 3PL services," says C. John Langley Jr. of the University of Tennessee, one of the study's authors.

That emphasis on electronic commerce and other technology applications will shape the competitive environment for 3PLs in the future, says co-author Gary Allen, senior manager with Cap Gemini Ernst & Young's supply chain solution team. "Third-party logistics providers that establish strategic alliances with software providers, expand their service offerings, partner with integrators, and develop new business models will have a competitive advantage in this current technological revolution," he predicts.

The survey also found:

• The market for 3PL services is growing by 18 to 22 percent a year.

• More than 80 percent of 3PL customers were satisfied with their providers. The industries that reported the highest satisfaction rates were computers (92 percent), medical (88 percent), and retail (100 percent).

• Across industries, respondents said they planned to focus on more effective and meaningful use of 3PLs in the future.

• Eighty percent of respondents said the integration of transportation and distribution systems was important to their overall strategies.

• Customers were placing more emphasis on value, innovation, and performance provided by 3PLs than on cost control.