Supply chains were hit hard by the coronavirus pandemic, which revealed vulnerabilities and friction points that retailers and brands may not have been aware of. As many companies turn to external services to streamline their fulfillment processes, a new report from Penske Logistics reveals that relations between shippers and their third-party logistics solutions are at a high.
The use of a third-party logistics provider has grown more appealing to many companies that need support with their fulfilment strategies. Whether a business is expanding into new markets or scaling their distribution, a 3PL can support existing shipping strategies and provide additional warehousing, technological infrastructure and decentralization. This variety is reflected in Penske’s findings: 92% of 3PL users and 96% of 3PL providers agree that supply chains are evolving into complex networks.
In order to maximize benefit from the 3PL solution, shippers are looking for services that can either work with their existing technologies or can offer their own, superior tools. The report found that shippers are leading the digital charge, using technology for supply planning (89%), demand planning (83%), sales and operation planning (78%), and capacity planning (61%). 3PLs were behind in all categories except for capacity planning (82%).
However, 3PLs reported greater adoption of mobile technology, ranging from smartphones to wearable technology. Mobile has been growing in importance for both B2C and B2B purposes, as it offers convenience and flexibility. Real-time data is another focus area, with Penske reporting that a majority of shippers are already using dashboards that provide real-time data visualization.
While both groups declared that they would invest in digital infrastructure in the coming years, Penske identified that this could be a key way for 3PLs to differentiate themselves from the pack and earn business; shippers will have competing areas to invest in and will therefore value a service that can provide this technology for them.
Offering added value is important if 3PLs want to improve their performance with their customers. The report found that while overall satisfaction was high for both groups, shippers reported lower numbers than 3PLs when it came to describing whether the relationship was successful (91% vs. 99%); whether 3PLs contributed to improved service (88% vs. 99%); and whether 3PLs provide new and innovate ways to improve logistics (76% vs. 92%).
Looking ahead, the Penske report identified that future success for 3PLs must be “driven by the extent to which they understand, anticipate, and get out in front of trends and innovations in shippers’ supply chains.” This will require working closely with shipping customers to identify friction points; during COVID-19, these were predominantly tied to international transportation/logistics (55%) and manufacturing (46%).