Nine out of 10 shipping companies believe that IT-based
logistics management is vital to controlling costs and improving
efficiency, but less than half believe that third party logisitics
(3PL) firms are up to speed.
This emerged from research released yesterday by IT consultancy
Capgemini, Oracle, the Georgia Institute of Technology and
logistics provider, Panalpina, into the global market for logistics
outsourcing. Over 1,000 logistics executives from both 3PL users
and providers in North America, Europe, Asia Pacific and Latin
America took part in the web-based survey, which was followed up by
in-depth interviews with a sample of respondents.
The recession has hit shippers and 3PL firms hard. More than
eight out of 10 shippers are cutting costs, and 60% are rethinking
their supply chains and relationships with 3PLs as a result.
The researchers found that 88% of shippers felt that IT-based
logistics services were important, but only 42% believed in the IT
capabilities of their provider. This came through from a lack of
key performance indicators, alerts and visibility required for an
adaptive supply chain. 3PLs reported similar difficulties in
getting the data and commitment they need from shippers, the
researchers said.
This gap was important because 47% of North American shippers
and 66% of European shipppers use 3PLs, and these are expected to
rise over the next five years.
Cost cutting and better reliability were the main factors likely
to increase shipper respondents' use of 3PLs. This included
converting fixed to variable costs (59%), expanding to new markets
or offering new products (56%), and restructuring the supply chain
network to improve financial performance (48%).
The study showed that while shippers continue to outsource
logistics services that are more operational and repetitive, they
outsourced less frequently those that were more strategic, customer
facing and IT-intensive.
The lack of IT integration led the list of shipper respondent
issues (55%) with 3PL IT capabilities. Widespread use of manual
practices and variations in standards made it harder for shippers
and 3PLs to exchange data reliably and to connect workflows.
Real-time interfaces to shipper order management systems (63%)
and timely demand forecasts (54%) were the most desired IT
capabilities 3PLs needed from shippers, researchers said.