The modern supply chain is complex and in order for the world’s leading companies to deliver their goods and services in an expedient, cost-conscious and environmentally-friendly manner, they are increasingly turning to third-party logistics companies to achieve these goals.
The main topics in this year’s study are analytics in the shipper (companies that manufacture and distribute goods and services) and 3PL relationships; the growth of supply chain finance; and the continued greening of the supply chain.
Here are six things we can extract about the modern supply chain and its needs from this 2020 3PL Study:
- When shippers turn to 3PLs for supply chain improvements, their biggest need is technology. Top 3PLs have already built out a robust tech infrastructure that contains the right tools for the job and best practices already underway by being field-tested with an array of customers.
- The top challenges in the modern supply chain:
- e-commerce growth
- economic uncertainty following what is arguably the longest bull market run in the history of the stock market
- the truck driver shortage; disruptive technologies (e.g., drones, automated vehicles, cloud-based capabilities)
- relationship necessities, namely supply chain alignment strategies
- competitive challenges.
- Analytics fit into the supply chain in the following five common ways:
- descriptive (explain what is happening)
- diagnostic (understand why);
- predictive (forecasting);
- prescriptive (suggest what should be done)
- using cognitive/artificial intelligence/machine learning, to identify patterns of activity.
In the study, 95% of shippers and 99% of 3PLs agree that analytics are a necessary element of 3PL expertise. But, only 26% of shippers and 27% of 3PLs are satisfied with current analytic capabilities. The issues rest with the ways to create clean and useful data, and insufficient resources to best utilize analytics (are there data scientists on the team?). This has created a large analytics gap that warrants further study. Why is there an analytics gap? According to the study, a big roadblock is when the shipper and 3PL are not in total agreement on a strategic plan on the best use of analytics: what is the need and how to best serve it? It could be a battle of the old vs. the new. Many shippers currently employ legacy systems that are difficult to connect with today’s hardware and software. In general, the supply chain, like many areas of the business world, may be slow to adopt new approaches.
- As geopolitical volatility affects global operations, supply chain finance is becoming critical. The survey revealed that 26% of shippers employ a supply chain finance professional at the vice president level; 31% report having someone with the director title. For shippers their top supply chain finance costs are freight payment audit (72%), total landed cost (57%) and letters of credit (37%). For 3PLs, top supply chain finance costs are freight payment audit (71%), letters of credit (39%) and open accounts (36%). The study also unearthed that 70% of shippers manage their impact of global political decisions internally; 20% aren’t managing it at all, and 19% use 3PLs to do so.
- Yes, there is still a heavy focus on greener solutions. Why do shippers and 3PLs feel the need to introduce more sustainability into their supply chains? The top reasons are regulatory requirements, public perception and cost savings. For shippers, these are the leading uses: optimization, such as route and load (76%); tracking and reporting emissions (42%); voluntary programs (38%) like the U.S. Environmental Protection Agency (EPA) SmartWay program; and the use of alternative fuels (16%). For 3PLs, the lists reads as follows: optimization (78%); voluntary programs (63%); tracking and reporting emissions (39%); and using alternative fuels (19%). Today’s heavy-duty Class 8 trucks get better fuel efficiency when they’re outfitted with effective aerodynamic packages, employing late-model trucks with cutting-edge engines that lead to better miles per gallon results, and have truck drivers that are better trained. Electric vehicle technology is a hot topic.
These were among the themes of the 2020 Third-Party Logistics Study, released today at the Council of Supply Chain Management Professionals (CSCMP) EDGE conference. The publication, available at no cost at www.3PLStudy.com, is created and supported by Infosys Consulting, Penn State University and Penske Logistics.