Cap Gemini Ernst & Young US LLC, the Georgia Institute of Technology (Georgia Tech), and FedEx Supply Chain Services have announced results of the eighth annual report on third-party logistics (3PL) trends and issues released at the Council of Logistics Management's annual conference in Chicago IL.
According to the study, involving 400 logistics and supply chain executives from the United States, Canada, Mexico, United Kingdom, France, Belgium, Netherlands, Germany, Italy, China, Japan, and South Africa, more than three-quarters of North American and Western European (78% and 79%, respectively) and more than half (58%) of Asia-Pacific respondents indicate they use 3PL services. In addition, operating performance, cost management and service delivery are the three biggest ongoing concerns to 3PL customers in each of the key regions studied.
Highlights of the 2003 study also included:
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Western European respondents spend a larger portion of their logistics dollar or euro (65%) on 3PL services than do those in North America (49%) and Asia-Pacific (50%).
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Globally, the four most frequently outsourced activities to 3PL providers are warehousing, outbound transportation, customs brokerage, and inbound transportation.
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In North America and Asia-Pacific, the four biggest reasons why non-users did not use 3PL services were logistics is a core competency (44%), logistics is too important to outsource (40%), costs would not be reduced (32%), and control would diminish (32%).
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In terms of the top 3 IT-based services provided by 3PLs for each region, North American respondents said warehouse management (70%), event management (66%), and freight forwarding (66%); Western European respondents answered warehouse management (75%), freight forwarding (71%), and transportation management (68%); Asia-Pacific respondents replied that transportation management (71%), freight forwarding (47%), and warehouse management (33%) were offered by 3PLs.
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In terms of primary sources of IT systems, 32% of Asia-Pacific respondents use 3PLs (compared with 29% of Western Europeans and 16% of North Americans), 35% of North American participants use technology provider (versus 15% in Asia-Pacific and 6% in Western Europe), and 59% of Western European respondents use internal sources (compared with 56% in Asia-Pacific and 46% in North America).
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In North America, use of the Internet and independent electronic markets is up from previous studies. The 2003 study shows that 26% use industry vertical procurement markets, and 40% plan to use them in the future. This is a drastic shift from the 2001 findings of 11% and 17%, respectively. In addition, 28% use transportation/logistics electronic markets and 63% plan to use them in the future, compared with the 2001 findings of 13% and 37%, respectively.
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While more than 70% of all respondents view their 3PL as a “resource provider,” just 24% of Western European respondents view them as a “resource manager,” compared with 43% in North America.
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When comparing quantifiable measures of 3PL success between North America and Western European respondents respectively, logistics cost reduction (9% vs 7%); fixed logistics asset reduction (16% vs 5%); average order-cycle length change (from 9.8 to 7.9 days vs from 4.7 to 2.0 days) overall inventory reduction (8% vs 13%), and cash-to-cash cycle reduction from 25.6 to 18.3 days for North American respondents only.
