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Gartner’s “Magic Quadrant” Provides Fresh Perspective on 3PLs

Researchers note that the 3PL industry is “progressing along a maturity spectrum,” and trying hard to accommodate increasing shipper requirements through a combination of acquisition and organic growth strategies. However, not all are at the same place in their “journey.”
By Patrick Burnson
May 19, 2017

Gartner’s annual “Magic Quadrant” report was released recently, on the eve of its supply chain conference in Phoenix, Ariz. The aim of the report is to provide a qualitative analysis into a market and its direction, maturity and participants.

Greg Aimi, Gartner’s director of supply chain research and co-author of the “Magic Quadrant,” says that supply chain managers are still pressing for consolidation in their 3PL portfolios, but not until providers can demonstrate that they have a truly global network.

“For this to happen,” says Aimi, “there must be a significant air and forwarding capability. Furthermore, 3PLs in the Asia Pacific region have yet to get started with western acquisitions—but I assume they will.” He adds that the report revealed that logistics managers are seeking out a high-degree of industry vertical expertise and specialized solutions, thereby driving a number of “tuck-in” M&As.

“At the same time, the technology area for 3PLs is just getting started,” adds Aimi. “Let’s just forget that they were laggards when it came to unifying software systems to a single global platform in the past. Today, global operational transparency requirements and digital business drivers from their shipper customers are just going to increase the need for 3PLs to be top dogs when it comes to tech and innovation.”

According to Aimi, this is the second iteration of the Magic Quadrant for North American 3PLs. Since the first report, Gartner made significant changes in the criteria definitions to better identify what makes a 3PL valuable to shippers seeking a North American regional provider.

Researchers note that the 3PL industry is “progressing along a maturity spectrum,” and trying hard to accommodate increasing shipper requirements through a combination of acquisition and organic growth strategies. However, not all are at the same place in their “journey.”

According to Gartner, there’s a transformation underway across today’s supply chain industry, and perceptions of supply chain service providers are changing. Relationships historically have been transactional, pragmatic and “physical-activity oriented.”

Researchers note that 3PLs contributed by competing head-to-head in low-margin pricing wars and assumed the role of an interchangeable commodity. Consequently, the idea of leveraging specialized services seemed out-of-reach…until recently.

“As acceptance has grown for an increased amount of logistics outsourcing, companies are realizing that their performance is more dependent on not only their 3PL providers’ capabilities and execution, but also the manner in which they are managed,” says Aimi. “This mandates a transition in the roles and responsibilities of tomorrow’s logistics professional from being a master of logistics execution to a master of provider orchestration; and it puts an importance on the relationship between customer and 3PL.”


About the Author

image
Patrick Burnson
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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