total visibility, streamlining product movement, and forecasting demand – as well the capabilities to share and communicate this information with disparate business partners. Among service providers polled, 64 percent offer solutions in this area. The emerging promise of sophis- ticated supply chain technologies such as RFID/wireless and customer relationship management solutions are gradually gaining traction in the 3PL space as well. Shippers have traditionally been cautious about engaging and investing in these innovative, but costly, IT tools. 3PLs are helping to allay some of these concerns, with 68 percent and 57.2 percent offering services in these respective niche technologies.
FIGURE 5 Technology Solutions 3PLs Offer
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3PLs are pushing the
IT investment envelope
further to placate
SOURCE: IL 3PL Market Insight Survey, 2007
shipper concerns over
Just as global strategy and technology go hand in hand, trans- port-focused 3PLs are investing in mission-critical communication and visibility technologies to expand their value proposition to customers. Electronic data interchange and visibility technologies remain indus- try standards, with 92 percent and 78 percent of 3PLs offering these services ( see Figure 5, Technology Solutions 3PLs Offer ). Both numbers reflect marginal growth over last year. Widespread use of these tech- nologies has essentially rendered them mainstream, and shippers have come to expect these types of capabilities as standard applications. Pushing the Envelope Inevitably, 3PLs are pushing the IT investment envelope further to pla- cate shipper concerns over rising freight transport costs. Web enable- ment – which includes e-fulfillment, e-operations, and e-SCM – is becom- ing a common service offering among 3PLs, especially as their customers migrate away from legacy systems. Internet-based supply chain solutions present shippers with user- friendly interfaces for enhancing
rising freight transport
Warehousing and Distribution
costs. Web enablement
As a result of growing unpre- dictability and pressure to reduce costs, global companies are diver- sifying their offshore sourcing and manufacturing operations to create additional flexibility and scalability. This, in turn, means stateside con- signees are charged with designing and integrating U.S. distribution net- works that properly interface with global networks so they are equally responsive to shifting demand and supply conditions. Outsourcing is often the most effi- cient and economic approach to engineering these strategic changes and third-party logistics providers are increasingly capable of managing warehouse and distribution opera- tions, with 80 percent of providers offering DC management services (see Figure 6, Warehousing Services 3PLs Offer ). Faced with the diverging chal- lenges of ensuring supply pipelines remain reliable and viable while reducing total landed costs is no
is becoming a common
3PL service offering,
especially as their
customers migrate away
from legacy systems.
108 Inbound Logistics • July 2007
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