3PL News: Annual 3PL Study focuses on green, security, and integration
Jeff Berman, Group News Editor -- Logistics Management, 10/13/2008
DENVER—While shippers turn to third-party logistics (3PL) services providers for help and guidance in myriad areas, the findings of the 13th Annual Third Party Logistics Study, published by Capgemini, in conjunction with the Georgia Institute of Technology, Oracle, and DHL, indicate that the top three services shippers turn to 3PLs are domestic transportation, international transportation, and warehousing.
The Web-based survey polled 1,644 logistics and supply chain executives from more than 60 countries in North America, Asia Pacific, Europe, South America, and Latin America. Data was also based on focus interviews with industry observers and experts.
Along with the “top three” outsourced logistics services of domestic transportation (85%), international transportation (81%), and warehousing (72%), customs clearance and brokerage (65%), forwarding (52%), and shipment consolidation (46%) rounded out the top six.
As in past years, the survey took a close look at some specific 3PL service segments, focusing on the Green supply chain, supply chain security, and integrated logistics.
Thinking Green: Nearly 90% (86%) of survey respondents stated that green supply chains are somewhat or very important, with 98% stating they are somewhat or very important to the future of their companies. But that does not indicate everyone is sold on “going green” just yet; about half of the survey’s respondents indicated they are unsure or pessimistic about taking action and advantage of going green.
Despite this split, the survey points out that “doing nothing is not an option” and cites three main steps as the drivers to a green supply chain: becoming educated, measuring your company’s carbon footprint and identifying change levers, and then moving ahead on business-case supported initiatives that need to be accepted financially, environmentally, and socially.
“The great thing about carbon reduction…is that it always results in a lower-cost operation,” said Peter Rusy, chief operating officer for DHL Neutral Services Ltd., at the Council of Supply Chain Management Professionals Annual Conference in Denver last week. “The cost of going green is almost always going to pay for itself.”
Basic ways of going green, according to Rusy, include changing warehouse lighting systems to energy-efficient methods, modal shifts, change packaging processes, and network optimization, among others.
Supply chain security: While a majority of respondents—76%—said their supply chains are secure or very secure, there still is a gap between shippers’ security expectations compared to the current supply chain capabilities of their 3PLs, according to the study.
The biggest security-related concerns as identified by survey respondents include: theft of material goods (74%), natural disaster disrupting supply chain activities (33%), and tampering with material goods (32%).
To ensure their supply chains are secure, there are several steps shippers can leverage a 3PL provider for to take to make sure they are going about things correctly, noted Capgemini Senior Manager Jim Morton. These steps include: providing physical security for material goods with locks, fences, cameras, etc. (57%), developing security procedures in collaboration with customers (57%), providing proactive reports and alerts when shipments deviate from planned route or schedule (54%); and scanning shipments at key points—origin, destination, intermediate point—to facilitate in-transit visibility (50%), among others.
“The more collaboration [between a shipper and a 3PL] when it comes to supply chain security will drive more overall value,” said Morton.
This sentiment is reflected in the survey, with a cumulative 13% of respondents saying they need to begin collaborating with their 3PL to drive security improvements and 48% noting they are currently collaborating with their 3PL to achieve selected security improvements.
Integrated logistics: The survey report reveals that over time the needed integration of systems and services was handled by shippers as they bought individual logistics services from 3PLs, but now 3PLs provides shippers with systems and service integration capabilities that mesh—or integrate—processes, technology, people, and services.
This integration—or as the survey notes “bundling”—of services rings true with 75% leveraging 3PLs for integrated systems and services as opposed to doing things internally. And there are a wide range of benefits, including: greater ease of managing outsourced logistics services (75%), reducing management time and effort (69%), enabling a company to focus on its core business (67%), and overall logistics efficiency and lower costs and improved service, among others.
The top five services that 3PLs provide in an integrated manner, according to the report’s findings were: domestic road transportation (78%), warehousing (74%), shipment consolidation (66%), customs clearance and brokerage (63%), and international road transportation (60%).
Although the data backs the notion that integrated services fill a vital need for shippers, it also suggests there are drawbacks, too. These include a loss of flexibility, not wanting to be dependent on a third-party, and loss of control and gaining access to supply chain visibility.
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