Capgemini's Third-Party Logistics Study: full findings
Capgemini Consulting, the global strategy and transformation consulting brand of the Capgemini Group, in cooperation with Penn State University, executive recruiting firm, Korn/Ferry International, and global logistics and supply chain management provider, Penske Logistics, today announced findings from the 2014 18th Annual Third-Party Logistics (3PL) Study which examines the global outsourced marketplace across topics such as big data, preferential sourcing, smart growth and shipper-3PL relationships.
The latest worldwide report reveals an increasingly global marketplace, with shippers continually focused on globalization, competition and shifting economic conditions, leaving many to re-evaluate their supply chain strategies, in order to meet demand. Encouragingly, shippers continue to recognize the important role 3PLs can play in the new normal, as nearly all shipper respondents (91 per cent) stated they regard their relationships with 3PLs as important or strategic in today’s global marketplace.
This has left shippers in a position to revisit sourcing and distribution decisions to take advantage of expanding opportunities, and opens the door for 3PLs, on a global level, to provide shippers with new paths for growth, sourcing and/or distribution relationships across borders. However, it was found that shippers still take a tactical, rather than strategic approach to Global Trade Management (GTM), relying on traditional departments, namely logistics (23 per cent), compliance (13 per cent) and procurement (12 per cent), to lead the charge. By investing further in global operations and experience, 3PLs have positioned themselves to support shippers in their GTM needs and help them to overcome common obstacles to global trade.
“As global operations expand, it‘s important for shippers to think collaboratively and build long-term relationships with 3PLs, setting a standard for cost-effective and efficient operational practices while opening the door to greater success on a worldwide scale,” said Dan Albright (pictured, right), Vice President and North American Supply Chain Leader at Capgemini Consulting.“As the latest iteration of our study found, although shippers are increasingly working with 3PLs, there is an over-emphasis on short term goals at the expense of long-term, partner-focused relationships. This is hindering their ability to attain a more highly functioning and cost effective supply chain, as well asa solid foundation for mature, strategic 3PL relationships.”
The study found that with an increase in global trade and cross-border operations, a number of international firms have looked toward Africa as a growth market, as it presents a similar landscape of opportunities that characterized Asia in the 1970s. Cited in the most recent findings, the International Monetary Fund forecasts that 11 of the world’s fastest-growing economies through 2017 will be African. Promising traits seen across the continent not only include fast-growing economies, but also an abundance of low-cost labor and a commitment to improve infrastructure and remove barriers to trade.
However, challenges remain as Africa still sees high logistics costs and clearance of goods at ports can often be slow, cumbersome, and bureaucratic. Shippers and supply chain leaders must remain open to operations across the continent, and as many suppliers, carriers and 3PLs already in the African logistics industry operate differently due to unique environments, there is an opportunity for logistics processes to become more standardized.
“With continued growth not only in local markets, but across-borders, organizations need to remain committed to building their skills in order to remain relevant and ensure a continued success in the new normal, global marketplace,” said Zack Deming, Consultant, Global Logistics & Transportation Services Practice, Korn/Ferry International. “However with that comes a need for increased transparency across 3PLs and shippers, as the annual report still sites a discrepancy between shippers and 3PLs rating of agility and flexibility to accommodate current and future business needs and challenges.”
The study also found that shippers are relying on centralized sourcing in 3PL selection more so than in past years, as 48 per cent of shippers and 61 per cent of 3PLs say centralized procurement functions play a much bigger role in the selection process, compared with three years ago. Shippers are seeking strategies to control costs while striving for optimal 3PL relationships by seeking a balance between centralization and decentralization. Those that can properly balance cost and quality and strive for strategic, collaborative relationships with 3PLs stand to gain the most advantages.
“Shippers and 3PLs successfully endured the downturn through greater collaboration,” said Penske’s Sherry Sanger, Senior Vice President, Marketing. “Today, shippers and 3PLs view their relationships as much more strategic, closely aligned, and collaborative than just three years ago. Logistics service providers are well-positioned to help shippers continue to drive continuous improvement, savings and supply chain innovation as the economy continues to gradually improve.”
Importantly, for the last 12 years the study has been tracking the “IT Gap” – the difference between the percentage of 3PL users indicating that IT capabilities are a necessary element of 3PL expertise (98 per cent) and the percentage of the same users who agree that they are satisfied with 3PL IT capabilities (55 per cent) – and has found that percentage beginning to stabilize. However, proper management of Big Data – which has increasingly grown in its importance across the supply chain with 97 per cent of shippers and 93 per cent of 3PLs feeling strongly that improved, data-driven decision-making is essential – still faces significant internal hurdles. These include a disconnect between internal supply chain and IT operations and a lack of supporting IT infrastructure.
For more information and to access the full study visit : https://www.capgemini.com/resources/2014-third-party-logistics-study-the-state-of-logistics-outsourcing
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany