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The majority of shippers worldwide are increasing their use of 3PL services, according to the 16th Annual Third-Party Logistics Study released by Capgemini Consulting in cooperation with Penn State University, leadership advisory firm Heidrick & Struggles, and Panalpina. Some 64 percent of respondents reported an increase. The report was released at the annual conference of the Council for Supply Chain Management Professionals.
At the same time, the report indicates an average of 42 percent of total logistics expenditures being spent on outsourcing, the same as last year's study. However, 24 percent of shipper respondents reported some return to insourcing 3PL services and 58 percent report they are reducing or consolidating the number of 3PLs they use, indicating uncertainty about the global economy continues to impact 3PLs.
The 2012 Third-Party Logistics Study is based on more than 2,250 responses from shippers and logistics service providers in from around the world. In addition to documenting the evolution of the third-party logistics market, this year's report also provides an in-depth analysis of logistics operations in emerging markets and the electronics industry as well as talent management to address the skills shortage in the logistics industry.
Today's 3PL marketplace is experiencing significant change, and established 3PLs are adjusting their business models to provide greater value to shippers. The report shows relationships between shippers and 3PLs continue to be successful with 94 percent of 3PLs and 88 percent of shippers stating communication, flexibility and openness are key to contributing to their success. However just 68 percent of shippers judge their 3PLs as sufficiently agile and flexible, down from 72 percent last year suggesting this is an area where 3PLs can make significant further contributions to supply chain success.
A substantial 80 percent of shippers in the survey conduct business with or within an emerging market, with the majority (52 percent) doing so from a mature market. China, India, Brazil and Mexico are considered the top emerging market opportunities amongst respondents. With mature, industrialized markets largely growing at a slower pace, the emerging markets offer significant growth potential. The 3PL capabilities shippers most value when entering emerging markets are expertise on the latest global trade regulations and managing and optimizing shipment routing based on free trade agreement (FTA) knowledge. The majority of shippers in mature (65 percent) and emerging markets (73 percent) recognize 3PLs' knowledge of FTAs as very important.
Multiple layers, supply constraints and the specific challenges the various channels present, coupled with short product lifecycles, mean the electronics industry demands a fast and nimble supply chain. Because electronics products are often high value, they pose specific challenges, including assuring security, preventing counterfeit and packaging sufficiently to handle long distance transportation. Pressure to reduce operating costs was cited as the top logistics challenge for shippers in the electronics industry (59 percent), but just 28 percent believe 3PLs can help them with this challenge. The report's findings suggest that within the electronics industry, 3PLs need to perform better in selling to electronics customers and shippers need to be more open to collaborating with 3PLs to address their top challenges.
Despite the positive reports of the supply chain's role as a significant contributor to attaining business goals, the logistics industry is experiencing a shortage of capable supply chain managers prepared to work in vital management positions. As supply chains grow more complex, they require leaders who are more diverse and multi-faceted. The report revealed shippers and 3PLs most highly value operational execution (51 percent and 60 percent respectively) followed by people management and development skills (54 percent and 43 percent respectively) in their leaders. To date, the majority of both shippers and 3PLs recruit from inside their own industries but many are increasingly looking to recruit talent from other industries. Company success and performance, attractive salary and benefits and personal development opportunities within the company are considered the top qualities needed to attract talent.
For more information and to access the full study, click here.
Source: Capgemini
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