{"id":1225,"date":"2016-07-21T13:37:43","date_gmt":"2016-07-21T11:37:43","guid":{"rendered":"http:\/\/en.advancedfleetmanagementconsulting.com\/?p=1225"},"modified":"2016-07-21T13:37:43","modified_gmt":"2016-07-21T11:37:43","slug":"challenges-for-third-party-logistics-and-shippers","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2016\/07\/21\/challenges-for-third-party-logistics-and-shippers\/","title":{"rendered":"Challenges for third party logistics and shippers"},"content":{"rendered":"

\"Challenges<\/a><\/p>\n

A lifesaver during stormy weather. That is the common perception about outsourced services in many industries, specially when companies need to cut costs and to reduce risks. In general, the global market has been increasing the use of third party services in the last decades and companies has kept them as a part of their business operations, including\u00a0third party logistics <\/a><\/strong><\/span>(3PL).<\/p>\n

\u201cFollowing the recession \u2013Inbound Logistics<\/a><\/strong><\/span> explains- many manufacturers and retailers leaned on 3PLs to help streamline supply chains<\/a><\/strong><\/span>, offload bloated assets and overhead, and squeeze out costs. Austerity was a natural reaction to widespread contraction. But now, as the U.S. economy continues its rebound, and talk of a manufacturing renaissance resonates in some circles, the outsourcing value proposition is changing once again.\u201d<\/p>\n

As outsourcing\u00a0<\/strong>companies\u00a0were able to gain a place in the market as a necessary solution in times of crisis, now they face new challenges<\/a><\/strong><\/span> in a new global economic landscape.<\/p>\n

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Know our fleet management audit<\/a><\/strong><\/span><\/p>\n

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GLOBAL CHALLENGES<\/strong><\/p>\n

According to the Inbound Logistics 3PL Perspectives<\/a><\/span><\/strong>, these companies first have to deal with what customers expect from them:<\/p>\n

\"Challenges<\/a><\/p>\n

The study also considers shippers as another key player of the market, very related to what 3PL do. In this way, shippers priorities and challenges are very similar to outsourced logistics, as the following graphic shows:<\/span><\/p>\n

\"Challenges<\/a><\/p>\n

Technology defines today’s business<\/strong><\/p>\n

In the case of 3PL, is pretty much obvious that \u201ccapacity\u201d must be one of their main priorities and challenges because this is one of their business milestone, but why \u201ctechnology investment\u201d is in second place?<\/p>\n

\u201cBecause IT is ultimately the means to reduce costs, increase visibility, and affect business process change. The advent of cloud networks and on-demand solutions<\/a><\/strong><\/span>, have unlocked new potential in the supply chain<\/a><\/strong><\/span>. It’s also another reason why shippers make the initial decision to outsource,\u201d the study<\/strong><\/span><\/a> explains.<\/p>\n

\u201cTechnology implementation is a major undertaking, and risk \u2013the research<\/a><\/strong><\/span> adds-. Some asset-light service providers are leveraging IT to develop managed services that reinforce their value proposition. Not all 3PLs moonlight on the development side, but many have a track record helping companies integrate and optimize new solutions. Alternatively, the 3PL sector has become yet another wholesale channel for logistics and\u00a0supply chain<\/a><\/strong><\/span> technology vendors. 3PLs can better bundle solutions and services that best meet customer demand.\u201d<\/p>\n

The Inbound Logistic\u2019s study<\/a><\/strong><\/span> also stands that in 2015 they noticed a growing shift into predictive analytics and supply chain<\/a><\/strong><\/span> design solutions, which means that 3PL\u00a0are widely adopting this technology to align and optimize their solutions to the current global market.<\/p>\n

<\/span>\"Challenges<\/a><\/p>\n

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Adapt to Ecommerce<\/strong><\/h5>\n

\u201cReducing costs remains the primary driver behind outsourcing activity in today’s market. But the context is changing. During the Great Recession, shippers were challenged by slack consumer demand, declining freight volumes, poor asset utilization, and fluctuating fuel costs. The market contracted and industry had to respond in kind,\u201d IL<\/a><\/strong><\/span>\u00a0says.<\/p>\n

\u201cToday’s economics present a different dynamic. E-commerce growth is rampant. The evolution of omni-channel retailing and expedited deliveries places more pressure on shippers to match consumer expectations (…)\u00a03PLs are ramping up direct-to-store (79 % in 2015 vs. 73 % in 2014) and direct-to-home services (48 % vs. 38 %).<\/p>\n

Return to sender<\/strong><\/p>\n

Closely related to the previous challenge, SHD Logistics<\/a><\/strong><\/span> explains that, as returns are a key part of today\u2019s eCommerce, \u201cit\u2019s vital to have an efficient delivery service, but equally as important to customers is an effective returns operation \u2013 and of course it\u2019s important to suppliers to get products repacked and back on the shelves (\u2026) Recent research showed that online shoppers estimated they would return nearly a third (31%) of their purchases.\u201d<\/p>\n

\u201c3PL providers are about so much more than delivery and returns. Companies such as Unipart Logistics can manage the whole supply chain operation from top to bottom (\u2026) Such companies offer supply chain design, warehouse and facility design, forecasting and demand planning (to help meet the huge peaks and troughs caused by events such as Black Friday and Cyber Monday), and materials management to ensure optimum stock control,\u201d SHD <\/a><\/strong><\/span>says.<\/p>\n

To maintain lower costs as a key advantage<\/strong><\/p>\n

3PL isn\u2019t always the solution to every problem, SHD <\/a><\/strong><\/span>says, but while these companies remain a cost effective option for many, so they\u2019ll continue being a good solutions for current global markets.<\/p>\n

\u201cUsers of 3PL services questioned in the Third Party Logistics Study reported an average reduction in their costs of 11% and an average reduction in their fixed costs of 23% \u2013 which are savings well worth having,\u201d SHD underlines.<\/p>\n

 <\/p>\n

Performance is a top challenge<\/strong><\/h3>\n

According to Take Supply Chain<\/a><\/strong><\/span>, a ChainLink Research<\/a><\/strong><\/span> study conducted in 2015 showed that manufacturers, distributors and retailers agree that keeping a high level performance is the number-one challenge for 3PL.<\/p>\n

\u201cManufacturing and logistics are such critical functions, embodying the company\u2019s brand, creating the customer\u2019s experience, and directly touching customers as the face of the company; thereby significantly impacting customer satisfaction and market share. In this sense, the performance of outsourced service providers for manufacturing and logistics is more critical than outsourcing of inward-facing functions such as IT, facilities, legal, or payroll,\u201d Take Supply Chain says.<\/p>\n

\u201cManufacturing and logistics are also much less standardized -they add- (compared to say payroll or lawn mowing) and require developing strategic partnerships and deeper integration with the outsourced service providers. Integration with outsourced service providers covers both process and technology integration.”<\/p>\n

In your experience, how important are third-party logistics in the current global market? Are these companies useful only in crisis times, or are they the answer for today\u2019s needs? We would like to know your opinion and points of view about this or other related topics.<\/p>\n

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\"FranciscaWriten by\u00a0Francisca Howard<\/h4>\n<\/div>\n<\/div>\n
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Francisca is a commercial engineer by University Adolfo Iba\u00f1ez. She worked 10 years in the retail industry and the last few months she has been working as a business developer for\u00a0Drivin<\/a><\/strong><\/span>, a\u00a0SaaS solution that allows to distribution companies to reduce its transport costs as well as increase the service quality of their final clients.<\/p>\n<\/div>\n<\/div>\n

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A lifesaver during stormy weather. That is the common perception about outsourced services in many industries, specially when companies need to cut costs and to reduce risks. In general, the global market has been increasing the use of third party services in the last decades and companies has kept them as a part of their…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[100,50],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/1225"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=1225"}],"version-history":[{"count":0,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/1225\/revisions"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=1225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=1225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=1225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}