Tag Archives: 3pl

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.

Carrier Management Tips

Congratulations! You have successfully executed your Request for Proposal (RFP) event and contracted all of your new carriers. You have even acquired some pricing locked in for two years. All of your plant locations have routing instructions, and your vendors are onboard with entering your inbound material shipments into your Enterprise Resource Planning’s (ERP) transportation module for automatic carrier selection and tendering.

Your freight is ready to be moved within the model you have set up. You have spent a significant amount of time on network design, planning, procurement, and contracting. Then suddenly, you realize that you did not clearly and formally define expectations for performance, measures, score-carding, communication, performance improvement, and corrective action. How will you control this beast?

First, do some reflection on your business. What value, service, or product are you selling to your clients? Is the nature of your market place and competition dynamic with compressed timelines and high volatility or is it more relaxed with a slow-boat modus operandi? This element and many other business rules will determine how you choose to measure performance and success in your supply chain. Functional areas from Electronic Data Interchange (EDI) integration, freight invoicing, status tracking, timely acceptance of orders and load tenders, and communication of all information related to your supply chain is fair game when considering how to manage relationships with carriers.

The key to keeping a strong and positive relationship with your carrier partners is setting realistic expectations early enough in the procurement process. Make sure to have clear expectations for measurement types and frequency, time period, intent of the program, improvement, and corrective action processes toward mutual benefit. If there is value to the partner beyond retention of your business, you will be much more successful.

Carrier Management

customer servicce

Columbian Scores 100% on Audit

The Columbian Distribution Services (CDS) division recently scored a perfect 100% on a rigorous customer audit.  The customer, who prefers to remain anonymous, performs semi-annual unannounced (surprise!) audits of our facility, processes, and systems.  The all-day audit covers 8 key aspects of warehouse operations: Physical Security & Monitoring, Electronic Monitoring, Access Control, Product Storage, Operational Documentation, Warehouse Operation Processes, Administrative Operations, and Physical Inventory.

While the CDS crew has consistently earned satisfactory marks over the years, this is the second year in a row they’ve achieved a perfect score.  Bill Ekberg, senior facility manager, had this to say about the score:

“The audit has changed over the last few years.  It used to measure how your operation looked on that day, but now it measures your operational performance over time.  It’s much tougher to pass, let alone earn a perfect score.  This accomplishment is a testament to the day-to-day rigor with which we treat this customer’s business.”