Nurturing 3PL Relationships

Editor’s Note: In this month’s print edition, Logistics Management addresses “Optimizing 3PL Relationships: How to avoid commoditization.” Analysts note that while shippers may generally be content with the reliability of their 3PL partners, new research indicates that there’s considerable concern about the value of long-term, strategic relationships. Here in an exclusive interview with Jerry Hammon, VP, Transportation & Logistics at Genpact, we explore the greater implications of this trend.

Logistics Management: What are the greatest barriers to entry in the 3PL marketplace?

Jerry Hammon: Creating sufficient and compelling differentiation – Basic services are already well-addressed, such that new players to the market must exploit some inflection point to create higher value than established competitors currently provide. As supply chains become more complex and more global, new players would need to exploit some creative combinations.

LM: Can you expand upon that observation?

Hammon: Yes, of course. The first might be agility…in terms of ability to respond optimally to dynamic network changes, supporting ever-tighter feedback loops driven by increasing data granularity and frequency. Then you might consisider contribution to end-state performance such as fill rates on retail shelves, zero dwell or detention times in the ports/warehouses. This would and just-in-time for the automotive industry.

LM: What about risk mitigation?

Hammon: Good point. Risk mitigated operations such as higher assurance for cargo security or anti-terrorist monitoring and prevention capabilities deserves our attention. Shippers should also demand improved compliance and tracking for carbon footprint reduction targets through reduction of empty miles from back haul maximization or other network optimization to reduce total emissions.

LM: When does it make more sense for a manufacturer to use one 3PL rather than multiples?

Hammon: Highly-engineered and specialized value chains where the supply chain is completely integrated to ensure quality and service continuity are the best candidates for service by a single 3PL provider.

LM: Can you outline the basis trend changes in the 3PL space?
3PLs continue to explore ways to extend and differentiate their contribution to a manufacturer’s supply chain.

Hammon: With the advent of on board reporting services (OBRS) and other evolved, real-time technology available to track assets and related performance, 3PLs will continue to fine tune their asset utilization performance models while providing global, real-time visibility to shipments. This increased granularity and frequency will lend itself to enabling improved secure cargo compliance. In addition, insights from increased data proliferation (Big Data) extracted through evolved analytics tools will present opportunities for value creation.

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