Here’s Our Take on The Annual 3PL Study

Each year, Dr. C. John Langley looks forward to the final week of September and CSCMP Edge, the annual conference of the Council of Supply Chain Management Professionals. This year, Dr. Langley, Clinical Professor of Supply Chain Management at Penn State University, and a group of consultants sat on a panel discussion as they normally do to discuss their findings in the 22nd Annual Third Party Logistics Study. The Study is a collaboration between Penn State, Infosys, Korn Ferry, and Penske and can be found and downloaded at www.3PLstudy.com.

This year’s study covered a number of topics, with many of the findings less than surprising for keen watchers of the Third Party Logistics (3PL) industry and marketplace. The report focused on several macro-trends in the world of 3PL/Shipper relationships, including:

  • The rise of blockchain technology and related increases in supply chain visibility
  • Automation/Digitization in the Supply Chain, especially with respect to autonomous vehicles
  • Risk/Resilience in Shipper-3PL relationships to guard against uncertainties and supply chain disruptions, and
  • Logistics talent – a subject so thoroughly studied that reports and responses specifically focused here are readily available

For us here at Columbian Logistics Network, the discussion of those trends ranges from informational – as with blockchain technology – to redundant – as with the rise of self-driving automobiles and the gap in logistics talent across the country. What’s more interesting, however, is what can be found when looking at the differences between the perceptions of 3PLs and those of their customers (shippers).

The IT Gap

Professor Langley identifies “The IT Gap” as the difference in the perceptions of shippers and 3PLs when it comes to IT capabilities. Specifically, in 2017, 91% of shippers responded that IT capabilities are a necessary element of 3PL expertise, but only 56% of shippers reported that they are satisfied with the IT capabilities of their 3PL provider. This difference of 45% is referred to as the IT Gap, and it widened this year for the second year in a row.

What does this really mean when the rubber meets the road?  If 45% of respondents are unsatisfied with their provider’s capabilities, why aren’t we seeing more turnover in the industry?  Why aren’t shippers insourcing to get rid of their providers and close the gap? Does anyone even care?

The answers to these questions are far more nuanced than the report’s citation of shippers looking to providers to make analytical decisions. At Columbian, we have a few thoughts on why this gap might exist, and what we can all do to close it:

Business Goals – At Columbian, we like to say that for every customer we have, we see a different reason to outsource. Inherent in our business model is that we assist customer organizations in achieving their business goals, regardless of what those goals are. Sometimes those include IT capabilities, sometimes not.

Expectations – “Technology capabilities” may be very important to most shippers, but when pressed, many shipper representatives would struggle to explain exactly why that’s the case, other than that’s what they hear, or that’s what they read in an industry publication. Technology comes at a price, so it’s not a stretch to think that while a shipper may want its provider to upgrade IT capabilities, s/he may not want see financial value in it.

Communication – It seems elementary, but far too often, gaps in knowledge or expectations can be closed with simple communication. A robust request for proposal (RFP) process when searching for the right provider can weed out 3PLs with cultural differences that don’t meet a shipper’s needs. Even after implementation, a regular, formal review process ensures that 3PL performance and shipper business goals don’t drift apart over the duration of a relationship.

So what of the IT Gap? Is it a fabrication of an academic mind, explained only in a series of charts and graphs? Is it a fundamental pillar of the shipper-3PL relationship that causes pain either explicitly or implicitly? At Columbian, we’d love to have a deeper conversation. We would love to hear what investments in the forefront of IT capabilities would do for a shipper’s confidence in its 3PL. We invite the chance to discuss how to accomplish business goals with multiple tools, including but not limited to IT capabilities. Call us. Tweet us. Contact UsContact us through www.columbianlogistics.com. Come chat with us at our next Pints with Peers series happy hour. Let’s see if we can close that IT Gap through collaboration, insight, and meaningful discourse.

Dave Cotto | Columbian’s Very Own Food Safety Expert

Meet Dave.

Dave Cotto is the Food Safety Specialist at Columbian. He manages the entire quality program at CLN, including all Food Safety, Food Defense, and HACCP Programs. He manages their inter-dependencies, their structure, their administration, and most importantly, the accountability related to those programs. Dave works hard to make sure that our customers are happy and their product is safe.

In fact, Dave was recently nominated by a customer for the Legendary Customer Service (LCS) Award and won it. You can read more about the nomination in our second quarter newsletter. His work defines LCS because of his diligence.  There are so many people in the organization who have no idea of the depth of knowledge that Dave holds because they might only see him out in the warehouse pulling samples for a customer quality audit. That’s just the tip of the iceberg.  He almost single-handedly keeps Columbian “in the game” with customers who require quality programs and auditing structures, and most people never even hear about him.

We decided that his hard work should be recognized, and his behind-the-scenes work should be spotlighted.

Q&A

  • Describe what your life is like when a customer shows up for an audit.

“Previously, I would have been super nervous. Today, I think our facilities are ‘food safety audit ready’. I am real comfortable. I think everyone is comfortable with the way our facilities look. Cosmetically, it’s excellent.”

  • What food safety certifications do you hold?

” Science of Food Manufacturing (AIB), Principles of Sanitation in Manufacturing (AIB), Principles of Warehouse Sanitation (AIB), Quality Assurance & HACCP (AIB), HACCP (AIB), FSPCA Preventive Controls for Human Foods (IFPI), SQF Food Safety Practitioner (NFS), PCQI training (IFPI).”

  • How did you get started in food safety?

“My previous employer had a mentoring program in place. During that process, I was exposed to sanitation and food safety. I was able to attend third party audits. That peaked my interest at that time, and I thought that this was something that I would like to do.”

  • What are some of the key differences you see between food safety in a manufacturing company vs. a logistics company?

“BIG difference. Manufacturing companies deal with exposed foods and all the risks that come with exposed foods. At a third-party warehouse, we are dealing with concealed foods. It’s very limited in the supply chain, but very important.

  • How long have you been working in food safety?

“I have been working in food safety for 29 years. I have been in the food business for 35 years. I started at Columbian in 2006.”

  • What regulatory agencies do you work with?

“Most of our facilities fall into the FDA jurisdiction. But, one or two facilities have the USDA come in because we have milk or egg byproducts in those warehouses.”

  • What’s your average day like?

*Laughs*
“It varies quite a bit. It depends on what is going on with the customer. There’s a lot of communication with the customer and myself.”

  • What teams at Columbian do you work with?

“I work with the Product Integrity Team mostly. I also work a lot with facility management. Depending on the issue, I could work with everyone and anyone.”

  • What’s your favorite part about your job?

“My favorite part of the job and I’m not kidding you… I like answering questions and I really like dealing with food safety procedures. I find it interesting.  What triggered a standard? Why do we have to implement that standard? I find that intriguing. My favorite part is problem-solving the root cause of an issue.”

  • Lastly, how did you become a Buckeye fan?

“Born and raised in Ohio.”

 

food safety

Dave’s diligence in tying our programs and actual practices together really keeps us in good standing with our customers. On a recent audit from our customer’s customer, they were asking many detailed questions and Dave was able to point to the policy, procedure, and written verification quickly and accurately. Our customer’s customer auditor was trying hard to find a chink in our armor, and Dave wouldn’t let it happen. We all were extremely impressed but even the auditor made the comment that ‘he could learn a thing or two from Dave’. -Jim Gadziemski, Vice President of Warehouse Operations