2012 16 Annual Third Party - enfasis.com
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Transcript of 2012 16 Annual Third Party - enfasis.com
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2012 16th Annual Third Party Logistics Study
C. John Langley Jr., Ph.D.Results and Findings of the 16th Annual Study
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About the Study
Current State of the 3PL Market
Special Topics
- Emerging Markets
- Electronics
- Talent Management
Strategic Assessment
Contents
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Recent 3PL Study themes and graphics
2012
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2009
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2008
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2012 16th Annual 3PL study – Major research thrusts
www.3plstudy.com
Paris, France
NYC – Harborside
Berlin, GermanyShanghai, China
Customer Study
E-Mail Survey2,000 + Global RespondentsMajor Industry Verticals
Special Topics
Focus InterviewsKey Industry Experts
Facilitated Discussions
Capgemini AcceleratedSolutions Environment (ASE)
Singapore Utrecht, Netherlands
Chicago
Atlanta, GA
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Survey respondents represented wide range of geographies and industries
+ 697 Survey respondents from 3PL provider firms.
Shipper respondents – Global total 1,561
North America(479) 31%
Latin America(188) 12%
Europe(514) 33%
Asia-Pacific(307) 20%
Other(73) 4%
Shipper industries represented (global)
Industry %
1. Manufacturing 16
2. Consumer Products 10
3. Automotive/Transport Equipment 9
4. Electronics 9
5. Food and Beverage 8
6. Healthcare 7
7. Chemical 6
8. Retail 5
Additional Industries (10) 18
Other 12
Mexico(25 Shippers)
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Annual Total Sales for 2011 by Responding Organizations
Annual Total Sales 2011Percentages of Respondents
US$ 25B or greaterMXN 323B or greater
14%
US$ 1B – less than US$ 25BMXN 13B – less than MXN 323B
34%
US$ 500M – less than US$ 1BMXN 6.5B – less than MXN 13B
15%
Less than US$ 500MLess than MXN 6.5B
37%
Note: As of 1/26/12, US$ 1 = MXN 12.92
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Current state of the 3PL market
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% respondents by logistics services that use a 3PL
Shippers continue to outsource a wide variety of logistics services
Others (e.g. order entry, LLP/4PL, customer services) Services within Other ranged from 13% - 16%10%
14%
15%
17%
21%
23%
24%
26%
27%
48%
57%
62%
71%
78%
Order management and fulfillment
Information technology services
Freight bill auditing and payment
Inventory management
Transportation planning and management
Product labeling, packaging, assembly, kitting
Cross-docking
Reverse logistics
Customs brokerage
Freight forwarding
Warehousing
Domestic transportation
International transportation
Legend
Operational & Repetitive Activities
Value-add Services
Strategic & IT-Intensive Services
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Financial aspects of users’ logistics and 3PL expenditures
Selected InformationPercentages
Global Mexico U.S.
Total Logistics Expenditures as a Percentage of Sales Revenues
12% 12% 10%
Percent of Total Logistics Expenditures Directed to Outsourcing
42 36% 38%
Percent of Transportation Spend Managed by Third Parties
56 45% 41%
Percent of Warehouse Operations Spend Managed by Third Parties
39 25% 38%
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Changes in Use of 3PL Services
58%
24%
64%
0% 10% 20% 30% 40% 50% 60% 70%
Consolidating Number of 3PLs Used
Some Return to Insourcing
Increased Use of 3PL ServicesShipperTrends
58% 57%
78% 73%
0%
20%
40%
60%
80%
100%
North America Europe Asia-Pacific Latin America
Increased Use of 3PL Services
Global Average64%
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Success of Outsourcing Relationships
Success of Outsourcing Relationships
- Shippers: 88% report success overall; 84% Mexico
- 3PLs: 94% report success
Key success factors include:
- Openness, transparency and good communication
- Agility / flexibility to accommodate business needs and challenges
- Interest in “gainsharing” and “collaboration” arrangements
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Shippers report measurable benefits from use of 3PLs
Results All regions Mexico
Logistics Cost Reduction (%) 13% 21%
Logistics Fixed Asset Reduction (%) 25% 17%
Inventory Cost Reduction (%) 9% 12%
Order Fill RateChanged From 70% 68%
Changed To 79% 77%
Order AccuracyChanged From 80% 81%
Changed To 87% 86%
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The IT Gap continues, but opportunity remains …
89%85%
91% 90% 92% 92% 92% 88%94% 93%
27%33%
42% 40% 35% 42% 37% 42%
54% 54%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
02 03 04 05 06 07 08 09 10 11Year
IT Capabilities Necessary Element of 3PL Expertise
Shippers Satisfied with 3PL IT Capabilities
IT “Gap”93%54%
Mexico96%40%
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Reasons why some shippers choose not to use 3PLs
9%
12%
13%
14%
17%
18%
19%
0% 2% 4% 6% 8% 10%12%14%16%18%20%
We Have More Logistics Expertise Than Most 3PL Providers
Service Level Commitments Would Not Be Realized
Control Over the Outsourced Function(s) Would Diminish
Too Difficult to Integrate Our IT Systems with the 3PL’s Systems
Cost Reductions Would Not be Experienced
Logistics Too Important to Consider Outsourcing
Logistics Is a Core Competency at our Firm
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Emerging markets
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A substantial 80% of shippers conduct business with or within an emerging market
23%
29%
48%
20%
28%
52%
Neither
Based in an emerging market
Based in a mature market, but conduct business with or within an emerging
market
Shippers 3PLs
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Mexico is among the most frequently-mentioned emerging markets by global shippers
27%
37%
39%
40%
41%
41%
41%
56%
60%
61%
80%
0% 20% 40% 60% 80% 100%
Colombia
Phlippines
Russia
Turkey
South Africa
Vietnam
Indonesia
Brazil
Mexico
India
China
Percentages of Shippers
Mexico
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What are the challenges to consider when entering/working in emerging markets?
58%
47%
47%
47%
32%
42%
21%
33%
22%
55%
29%
42%
19%
19%
20%
42%
47%
50%
Lack of security
Lack of IT capabilities
Corruption
Ability to deliver against promises / agreed service levels
Cultural differences
Difficult laws and regulations
Shippers Based in Mature Markets Shippers based in Emerging Markets Mexico
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Mexico competes with BRIC nations for supply chain investment
Mexico is becoming an increasingly attractive alternative to China for low-cost manufacturing
Location decisions that include Mexico have some distinct advantages
- Mexico has 13th largest nominal GDP and the 11th largest by purchasing power
- Economy strongly linked to those of NAFTA partners, particularly the U.S.
• Free trade agreements with 42 other countries
- Mexico’s strategic location in relation to other North America and Latin America
• Proximity to U.S. markets impacts communication, logistics, cost and time factors
- Improvements in Mexico’s logistics infrastructure, highways, rail and port systems
- Stable production and quality standards
- Skilled workforce
Companies moving into Mexico face some challenges:
- Operating in Mexico (as in any emerging market) requires a great deal of attention and preparation
- Ongoing drug war violence and crime in certain areas
- Need for supply chain redesign and transformation, as with a move to any emerging market
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3PLs can play a critical role in both the planning and execution of shippers’ entry & growth in emerging markets
Provide shipment visibility
Providing expertise on the latest global trade regulations
Managing and optimizing shipment routing based on free trade agreement knowledge
Managing and validating import/export documentation
Proactive compliance consulting
In selecting an Emerging Markets 3PL Partner, more than half of the shippers say the ideal is to find a global player with strong local knowledge.
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Most successful operating models for 3PLs in emerging markets
17% 20%
63%
22%27%
51%
26%32%
42%
0%
10%
20%
30%
40%
50%
60%
70%
Global 3PL Locally-Based 3PLs Global / Local 3PLs
Operating Models (Percent Preferred by Shippers)
Mature Markets Emerging Markets Mexico
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Shippers and 3PLs agree that 3PL knowledge of Free Trade Agreements is important
Understanding and keeping up with the changes and nuances
Significant paperwork, requiring administrative resources
Shippers value 3PLs that can streamline these processes and maximize FTA/FTZ resources through knowledge and execution of compliant processes
3PLs are able to consolidate customs entries
FTA’s can be an important factor in choosing whether to enter an emerging market,and the most advantageous ways to operate in that market.
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Electronics
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Price pressure tops Electronics shippers’ logistics challenges
59%
54%
41%
36%
35%
60%
60%
47%
54%
47%
Price Pressure to Reduce Operating Costs
Global Supply Chain Complexity and Risk
Lack of Supply Chain Visibility
Service Parts Logistics Including Product Returns
Supply Chain Security
Shippers 3PLs
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More 3PLs than shippers believe 3PLs can help with these challenges, but shippers don't use 3PLs often enough to meet their challenges
28%
24%
22%
21%
20%
38%
39%
42%
32%
43%
Price Pressure to Reduce Operating Costs
Lack of Supply Chain Visibility
Global Supply Chain Complexity and Risk
Supply Chain Security
Service Parts Logistics, Including Product Returns
Shippers 3PLs
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Supply chain visibility, security and reverse logistics are the top services desired by the electronics companies from 3PLs
74%
56%
44%
40%
40%
38%
12%
8%
15%
11%
6%
4%
Global supply chain visibility
Supply chain security
Reverse logistics
Vendor managed inventory
Experience with local product regulations
Quality certifications such as ISO 9000
Important Today Important in Near Future
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Electronics manufacturers use well established methods to reduce their logistics operating cost
Top Three Methods for Cost Reductions
Reported by Shippers Reported by 3PLs
Renegotiating rates for logistics services
63%Improving distribution center processes
61%
Improving distribution center processes
62%Renegotiating rates for logistics services
58%
Improving forecasting and inventory visibility
57%Redesigning supply chain network
57%
Interestingly, electronics companies do not use 3PL’s help very often in implementing these cost reduction methods
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3PLs can help Electronics companies overcome their challenges with long and complex supply chains
Electronics Industry Challenge 3PL Opportunity
Price pressure Proactively bring cost savings ideas to the table
Supply chain visibility Act as a 4PL to manage smaller/ local 3PLs to provide global visibility
Supply chain security/ counterfeiting Bring best practices from Pharmaceutical industry
Emerging market sourcing and delivery Provide knowledge of local laws regulations and culture
Postponement/ Local market customization Help design/ implement these activities
Inventory obsolescence due to short product lifecycle
Proactively identify slow moving inventoryHelp sell them on line
Environmental and social sustainability Help reduce carbon footprintHelp reduce air freight
Complex network with unpredictable demand Redesign the supply chain networkBring best practices from fashion retail industryHelp identify and dispose obsolete inventory
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Talent management
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Talent Management – Overcoming the Talent Shortage
According to Manpower Group, 52% of employers experience difficultly in hiring into supply chain positions
Invest, develop and attract next generation of managers into logistics
Leadership requires an extensive cadre of experiences to manage complex situations
Top 3 strategic issues for Shippers and 3Pl’s are
- Having the right people and leadership in place
- Having the right strategy and roadmap
- Ability to execute and drive operational efficiencies
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The Talent Cycle
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Talent Management – Opportunities for tomorrow
3PL’s and Shippers share the view that leaders are prepared for today but fall short on capabilities to face longer term issues
- Learning Agility
- Leading change
- Engagement of team
- Delivering results
- Mastering complex problems
Leaders will continue to develop a broad range of competencies including:
- Financial & competitive analysis
- Highly skilled communicators
- Influence, persuade and motivate
- Complex problem solvers
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Strategic Assessment
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What are the growth prospects for this innovative way to achieve supply chain visibility?
What factors drive decisions as to what “shores” are most attractive for future economic activity?
How will social media “weave” itself into the fabric of supply chain, logistics, and outsourcing activities?
What are the emerging drivers in decisions to use or not use outsourced logistics services?
Some key trends impacting change and innovation in supply chains and the 3PL sector
Global Trends in Outsourcing / Insourcing of Logistics Services
Supply Chain “Control Towers”
Emerging “Near-Shore” Markets
Leveraging Social Media in the Supply Chain
What Do You Think Are Some Additional Key Trends and Issues for Future Consideration?
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Plans for2013
Seventeenth Annual 3PL
Study
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The 2013 Seventeenth Annual 3PL Study will focus on several key topics
State of 3PL industry – 2013
Supply chain innovation
Supply chain disruption
Talent management
“Deeper-dive” into Information Technology “Gap”
Greater emphasis on Mexico and Latin America?
Look to the future – strategic assessment
The 3PL study team welcomes any available input and suggestions for the upcoming and future studies.
