Capgemini concludes: satisfaction, expectations on the rise for third-party logistics providers

When starting a new business relationship, it is important to map out common goals and objectives using a two-way communication process. Then, when problems or challenges occur, both parties can work to solve them together. When it comes to outsourcing, new research shows that although many organizations want to work collaboratively with their third-party logistics (3PL) providers, they are uns...


When starting a new business relationship, it is important to map out common goals and objectives using a two-way communication process. Then, when problems or challenges occur, both parties can work to solve them together.

When it comes to outsourcing, new research shows that although many organizations want to work collaboratively with their third-party logistics (3PL) providers, they are unsure how to begin and then maintain the relationship. However, new research data indicates companies are more satisfied than they have been in the past with the quality of work done by their 3PL providers.

After conducting an annual study for 12 years, it is easy to spot trends and track specific metrics. Such is the case with Capgemini , a Paris-based consulting firm, which recently released its report, The State of Logistics Outsourcing in 2007. The study included 1,500 supply chain executive respondents in various levels, including managers and directors.

The greatest potential benefits of collaboration with 3PL partners are associated with business processes such as inventory management, customer order management, customer service, and supplier order management.

The top factors considered when choosing a 3PL can reveal a great deal about trends in the current outsourcing market, says Jim Morton, senior manager for Capgemini. Respondents cited capable information technology as the primary consideration. They also said inventory management and customer service are two areas that would benefit most from improved collaboration between outsourcing partners.

Many companies want to be pragmatic and use collaboration to measure return-on-investment, says Morton. “However, if they want to improve planning or visibility, the challenge is to look at how to use technology to improve cycle times or other business processes. You should not use collaboration just to boast about your progressiveness, but [leverage it] to achieve more tangible business benefits.”

Warehousing and transportation remain the most popular outsourced applications. When asked what technologies 3PL users would like to add to their current solution sets, respondents indicated visibility tools (91 percent) and Web-enabled communication (88 percent) as their top choices. Given that the current usage of warehouse management and transportation management systems already is very high serves to point out the growth potential for visibility and Web-enabled tools.

The percentage of users that expressed satisfaction with the IT capabilities of their 3PLs has increased from 35 percent (2006) to 42 percent (2007). “This indicates that 3PLs are starting to invest more time in their IT expertise,” says Morton. “It also hints that 3PLs could use this knowledge to improve their relationships with their extended supply chains.”

Over the past few years, client companies have started asking for more flexibility and responsiveness from their 3PLs, to adapt to their changing needs. As a result, more 3PLs are implementing best-of-breed solutions to enhance their IT capabilities, says Adrian Gonzalez, director of the logistics executive council for Dedham, Mass.-based ARC Advisory Group .

Capgemni asked survey respondents to indicate how important the IT capabilities of 3PL providers are to them, and whether they are satisfied with those capabilities. The difference between these two answers has become known as the IT expectation/performance gap.

Several years ago, supply chain systems did not cater to the 3PL community, which led many 3PLs to write their own software. However, with today's open standards and protocols, many 3PLs are moving away from their proprietary systems and investing more heavily in transportation management and other supply chain solutions, says Gonzalez.

“Customers used to request that their 3PLs use specific applications, and it was common for 3PLs to have numerous systems from different vendors,” says Gonzalez. “But today, companies do not necessarily dictate which systems their 3PLs should implement, as long as they can supply timely data feeds and establish the visibility clients need.”

By meeting these expectations, 3PLs are more likely to be viewed as equal partners. “The typical business framework that is formed is one of 'I am the customer and you are the supplier,'” says Gonzalez. “However, 3PLs want to be viewed as more than just a cheaper way to do things.”

No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Prescriptive maintenance; Hannover Messe 2017 recap; Reduce welding errors
Safety standards and electrical test instruments; Product of the Year winners; Easy and safe electrical design
Safer human-robot collaboration; 2017 Maintenance Survey; Digital Training; Converting your lighting system
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Big Data and bigger solutions; Tablet technologies; SCADA developments
Automation modernization; Predictive analytics enable open connectivity; System integration success; Automation turns home brewer into brew house
Commissioning electrical systems; Designing emergency and standby generator systems; Paralleling switchgear generator systems
Natural gas for tomorrow's fleets; Colleges and universities moving to CHP; Power and steam and frozen foods

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
Compressed air plays a vital role in most manufacturing plants, and availability of compressed air is crucial to a wide variety of operations.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me