Dual perspectives (page 3)
-- Logistics Management, 1/1/2005
Page 3 of 3
Shippers painted a different picture: Two-thirds said they are committed to using RFID in their logistics networks or are actively considering doing so, but most said they wouldn't require RFID support from 3PLs. Those who did recognize a need to collaborate with their 3PLs focused on bringing RFID technology into the warehouse. That result may have been skewed because the respondents are manufacturers, which are adopting RFID less quickly than retailers, notes Bentz.Providers might be concerned about shippers' comments on how they would change their use of 3PLs if they had complete responsibility for that decision. Just 5 percent said they would "substantially increase use," a sharp decline from 25 percent in 2000. Forty-five percent said they would "moderately increase use," and 10 percent would "moderately decrease use." Most telling is that 30 percent said it would "remain the same," compared to 11 percent in 2000, and 10 percent said they would "eliminate use"—a notable jump, considering that no respondents said so in 2000 or 2001.
Those responses support the researchers' belief that the shippers, most of whom have been using 3PLs for more than five years, have passed the early, "big bang" stage of their relationships and are now seeing incremental improvements in their operating costs. "Users go into these deals to save money and outsource labor. They may save 10 or 15 percent over the first three to five years, but after that they can't continue to save that much," says Bentz. "What's on their minds is, 'What have you done for me lately?' "
Despite the fact that shippers and third-party providers sometimes have different visions, Lieb sees cause for optimism. For one thing, the CEOs indicated a clear commitment to providing customers with what they want. And although shippers focus on cost cutting when they first enter a 3PL arrangement, respondents said that providers' service performance is most important when it comes time to renew those contracts.
The key to continuing mutually beneficial agreements in the future, then, is for both parties to be realistic about their service and technical capabilities on the one hand, and what those services are worth on the other.
| Logistics Service | % citing use 2001 | % citing use 2002 | % citing use 2003 | % citing use 2004 |
| Freight payment | 53% | 63% | 72% | 54% |
| Shipment consolidation | 49% | 49% | 66% | 42% |
| Direct transportation service | 61% | 56% | 62% | 67% |
| Customs brokerage | 41% | 67% | 62% | 58% |
| Warehouse management | 59% | 42% | 60% | 46% |
| Freight forwarding | 45% | 59% | 53% | 46% |
| Carrier selection | 43% | 51% | 51% | 38% |
| Tracking/tracing | 33% | 44% | 51% | 42% |
| Measurement of carrier performance | — | — | 47% | 29% |
| Rate negotiation | 37% | 47% | 38% | 29% |
| Relabeling/repackaging | 25% | 23% | 38% | 25% |
| Order fulfillment | 33% | 33% | 34% | 33% |
| Product returns | 25% | 23% | 30% | 29% |
| Reverse logistics | — | — | 26% | 33% |
| Operation of IT systems | 20% | 16% | 21% | 13% |
| Merge in transit | — | — | 19% | 17% |
| Fleet management/operations | 20% | 23% | 19% | 17% |
| Order processing | 8% | 9% | 17% | 17% |
| Issue | Very negative | Negative | No impact | Positive | Very positive |
| Employee morale | 5% | 35% | 35% | 25% | — |
| Logistics costs | — | 10% | 20% | 50% | 20% |
| Customer satisfaction | — | 10% | 35% | 55% | — |
| Systems development/support | — | 25% | 30% | 35% | 10% |
| Logistics service levels | — | 10% | 20% | 65% | 5% |
| Supply chain integration | 5% | 25% | 20% | 45% | 5% |
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