3PL Roles in Supply Chain Transformation

Shippers looking to gain an overall competitive advantage have shown significant interest in supply chain transformation. Successful transformation efforts rely on a wide range of people and resources, and 3PLs and 4PLs are playing an important role in the transportation process.

Among respondents, 73% of shippers indicated meaningful involvement of 3PLs in processes mrelating to supply chain transformation, with 9% suggesting very significant involvement, 28% significant involvement and 36% advisory.

Responses from 3PLs/4PLs show that they see themselves having a slightly more involved role with 16% reporting very significant involvement, 30% significant and 38% advisory.

As part of this year’s survey, users and 3PL providers assessed the importance of 3PL capabilities relating to people, process, technology and execution/implementation of transformation initiatives. Both groups viewed people as the most important resource with average importance ratings of 26% from users and 30% from providers. Average importance ratings of 25% for users and 27% of providers were reported for execution/ implementation capabilities. In addition to the ratings for the process being similar for both types of respondents, users of 3PL services reported an average importance rating of 26% for technology, with 21% of providers responding similarly.

Alignment remains a component of successful 3PL-shipper relationships, but respondents drew a general distinction between 3PL “customer facing” capabilities (e.g., business development; sales and sales support; tender and trade management) and those that are more “service related” (e.g., operations; fulfillment warehousing).

Slightly more than half of shipper respondents—53%—felt that service-related capabilities were most important to the objective of alignment, while 58% of 3PL respondents felt that both were equally important. Furthermore among shippers, 71% said the availability of real-time analytics is among the most important attributes; 61% said it was trade-lane profitability analysis; and 55% valued collaboration strategies.

While transformation and change are never easy, the experiences of 3PLs and 4PLs may be of great benefit to shippers who engage them in the supply chain transformation process.  Because transformation is a continuous process, logistics providers’ ability to collect and analyze information related to shippers’ operations could continue to shape change, providing value.

Going forward, in addition to the operational expertise and experience that 3PLs contribute to the overall improvement process, there will likely be greater importance on the role meaningful analytics and data play in transformation initiatives. Transformation and continuous improvement will be a priority as shippers look for new and innovative ideas to reduce costs, enhance service and improve the management of complex supply chains.