Study finds supply chains reinventing themselves as logistics providers and shippers react to pandemic
READING, Pa., Sept. 23, 2020 – For the past quarter-century, the Third-Party Logistics Study has examined industry trends that matter. The 2021 3PL Study, released today in conjunction with the Council of Supply Chain Management Professionals virtual CSCMP EDGE Live! conference, explores topics that are top-of-mind in today's supply chain: 3PL/4PL future direction; technology's direct impact on scalability and mobility; the COVID-19 effect; and risk management.
The study is created and supported by Infosys Consulting, Penn State University and Penske Logistics. The 2021 version, as well as past editions, are accessible at www.3PLStudy.com for download at no cost.
These are some concepts found within the 2021 3PL Study:
- The future of an outsourced supply chain includes the customer (shipper) and their 3PL moving closer to a strategic relationship and further away from a transactional one. Study respondents indicated that 71% of shippers and 83% of 3PLs are on the same page towards identifying changes in macro-environments and to modify and enhance supply chain capabilities. In addition, 92% of 3PL users and 96% of 3PL providers agree that supply chains are evolving into complex networks. Across the next five years, shippers predicted that strategic relationships with their 3PLs would increase to 45% (from the current 28%).
- More technology equals a more robust supply chain. The majority of shippers indicated they are utilizing technology for these types of planning: Supply (89%), demand (83%), sales/operations (78%) and capacity (61%). Third-party logistics providers are further along in mobile technology, with increased usage of smartphones, tablets, wearables and other handheld devices. The majority of shippers are using dashboards and related tools in their operations for real-time access, while 48% noted they have systems in place to organize and access that data for reporting purposes, and 45% stated they collect real-time data across more than half of their supply chains.
- The COVID-19 effect is very real. A majority of companies (58%) answered that they saw at least a 25% reduction in supply chain operations and 6% stated they experienced a total shutdown. Impacted areas were different for shippers and their logistics providers. The two biggest shipper areas were international transportation/logistics (55%) and manufacturing (46%). For 3PLs, the largest problem areas were labor/workforce management (54%) and domestic transportation/logistics (45%). Among shippers, roughly 46% believe that recovery will take place in less than three months (the survey closed on July 31).
- Risk management is always vital, but it became extra important during the pandemic. Among respondents, 51% of shippers were confident their companies possess a comprehensive risk management process. Additionally, 45% of shippers stated that their risk management coverage extended into multiple layers of suppliers downstream and upstream. Over a third of shippers (37%) forecasted that future supply chains would rely less on global capabilities and more on domestic or local capabilities; 49% of 3PLs answered this way as well.
- Are supply chains too lean? Will there be more nearshoring? Is there even more e-commerce to account for? When asked if supply chains are too lean, 42% of shippers agreed while 49% disagreed with the notion; the remaining respondents were unsure. While globalization is an industry mainstay, recent occurrences have sparked talk of further nearshoring in order to retain a dynamic and responsive supply chain. According to the U.S. Department of Commerce, consumers spent over $601 billion online last year, a 14.9% increase from the previous year. Online grocery sales have seen significant growth since March.
For the last 25 years, this study has documented the transformation of the third-party logistics industry. Dr. C. John Langley, clinical professor, supply chain information systems and director of development, Center for Supply Chain Research at Smeal College of Business at The Pennsylvania State University, initiated this research to capture and measure this evolving industry.
Langley stated: "Each of the past 25 years has been a great one for the 3PL Study. Thanks very much to the study sponsors and industry executives who have participated in our research efforts. We hope that the results, findings, and perspectives in our annual reports have helped to better understand and anticipate progress and change in the supply chain and 3PL sectors. Also, we look forward to future editions of the annual 3PL Study."
COVID-19 also highlighted the need for supply chain visibility and real-time data.
Andrew Hogenson, global managing partner, consumer goods, retail & logistics, Infosys Consulting: "COVID-19 has revealed the vulnerability of modern supply chains. Effective risk management will be key to prepare for future disruptions and to achieve recovery and growth in the post pandemic era."
"Visibility is increasingly vital in the supply chain, but even more so when there is a risk of disruption or during a recovery," said Andy Moses, senior vice president of sales and solutions for Penske Logistics. "Visibility allows those within the supply chain to get ahead of an interruption, potentially mitigating problems before they have an impact on customers or other stakeholders in the supply chain. Properly orchestrated and tech enabled, visibility sets the stage for a rapid response by alerting supply chain execution teams to focus on the issues of greatest importance, out of the thousands and millions of ordinary transactions occurring."
Infosys Consulting is a global management consulting firm helping some of the world's most recognizable brands transform and innovate. Our consultants are industry experts that lead complex change agendas driven by disruptive technology. With offices in 20 countries and backed by the power of the global Infosys brand, our teams help the C-suite navigate today's digital landscape to win market share and create shareholder value for lasting competitive advantage. To see our ideas in action, or to join a new type of consulting firm, visit us at www.InfosysConsultingInsights.com. For more information, contact firstname.lastname@example.org.
Penske Logistics is a Penske Transportation Solutions company with operations in North America, South America, Europe and Asia. Penske Logistics provides supply chain management and logistics services to leading companies around the world. Penske Logistics delivers value through its design, planning and execution in transportation, warehousing and freight management. To learn more visit: www.penskelogistics.com.