3PLs: Opportunities and Threats
Global markets are evolving into regional production and consumption models. As ecommerce grows —with its consumer expectations of fast deliveries—manufacturers and retailers will need to position inventories in more regional-based supply chain networks.
Third-party logistics providers that can enable such a strategy will reap significant rewards, according to Jérôme Lorrain, an executive at CEVA Logistics. Lorrain’s comments were published in a paper released by eft.
“Global companies will continue to lean towards 3PLs to provide flexibility in space and transport capacity,” he said, “especially with trends in regional consumption of nearly all products in the evolving e-commerce space….The 3PLs who have invested in regional real estate and who have excellent execution capabilities for warehousing and transportation—as well as flexible commercial models—will see the growth that continues to be available with this new market demand.
Global 3PLs that offer integrated and flexible solutions to customers will also be a position to grow, according to Lorrain. “Both Fortune 500 bluechip companies and smaller market entrants will continue to rely on outsourced expertise to help them facilitate global trade,” he added, “”and those 3PLs who have true execution capability will drive the growth for themselves.”
The single biggest threat to 3PLs are companies that insource the management of their supply chains, and do it well. These tend to be companies, such as those in consumer retail, where logistics directly impact customer service.
“In today’s supply chain management marketplace,” said Lorrain, “there are increasing capabilities available to companies in the forms of human talent and technologies, both of which manufacturers, distributors, and other shippers have access to, which they are increasingly tapping into to bring these capabilities in-house.”
Insourcing companies are able to tap into higher education, 3PL industry alumni, and advanced technologies to support their strategies. Increasing numbers of universities have supply chain and logistics programs. The growing number of individuals who have worked for 3PLs can bring competencies to support companies’ insourced management. In addition, Lorrain noted, “the evolution of supply chain toolkits…have made it easier for insourced companies to leverage the capabilities of these systems and operate better in-house supply chain departments.”
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