2008 Third-Party Logistics - Capgemini

Current State of the 3PL MarketMost Customers are Satisfied, But Improvement Opportunities Continue to ExistIn the thirteen-year history of this study, it’s become clearthat companies across industries and around the globe regardlogistics and supply chain management as intrinsic to theirsuccess. Many place a high value on their partnerships withthird-party logistics (3PL) companies. They credit 3PLswith helping them to attain goals related to service, cost, andcustomer satisfaction.In this study, 1,644 logistics and supply chain executives sharetheir experiences as customers or non-customers of 3PLs,revealing important trends that can help others shape andenhance their own 3PL relationships. See Figures 1, 2, and3 on the page at left for more information on the geographic,industry and revenue levels of these respondents.3PLs’ Role in Logistics SuccessIn North America and Europe, 87% of user respondents agreethat logistics represents a strategic, competitive advantagefor their companies; 90% of respondents from Asia Pacificand 97% from Latin America agree.This may be why: Each year users are asked to quantifythe result of their 3PL relationships. They consistentlyreport logistics cost reductions in the range of 12% to15%, fixed logistics asset reductions in excess of 20%, andorder cycles reduced by 20% to 30%. (Percentages tend tobe a little higher for Asia Pacific and Latin America thanfor North America and Europe.) Also, an average of 76%of respondents to the 2008 survey agree that the ability toaccommodate significant variations in demand with fewerfixed assets represents a key benefit of 3PL use, and 67%feel 3PLs help them increase service reliability.It’s not surprising, then, that so many users characterizetheir 3PL relationships as successful. As indicated inFigure 4, those rating their 3PL relationships as extremelyor somewhat successful range from 81% in Latin Americato 84% in Europe, 86% in North America, and 90% inAsia Pacific.Figure 4: Generally, Customers Report SuccessfulExperiences with Logistics Outsourcing100%90%80%70%60%50%40%30%20%10%0%The factors cited by 3PL users as contributing to this successcan help others maximize the benefits they receive from3PLs:ßß86% 86% 84%21%65%All Regions25% 19%61%NorthAmericaSomewhat Successful65%90%20%70% 68%Europe Asia Pacific LatinAmericaExtremely Successful81%13%Strong relationships: A substantial 74% of 3PL userssee personal relationships at an operational level ascontributing to their success in working with 3PLs.Just over half, 54%, agree that executive relationshipsbetween 3PLs and customers are also important, tohelp provide guidance and sponsorship. This needfor executive support is also strongly advocated byparticipants in the ASE workshop, one of whom comments,“Everything goes well but also can fail becauseof relationships.” The lesson: Client and provider mustforge strong bonds up and down the organization, fromthe executive level through operations.Strong contracts: The second-most cited factor, at60%, is a carefully designed and signed contract thatfeatures detailed descriptions of services and performancetracking. Although ASE participants agree withthe importance of the contract, there was a concern that“over-use” of the contract on a daily basis can becounterproductive to building strong people andprocess relationships between 3PLs and their clients.11