The Center of Supply Chain Research® (CSCR®) is pleased to share highlights from the 2021 Third-Party Logistics Study (3PL), sponsored by Penn State University, NTT Data Services and Penske Logistics.
Dr. John Langley, clinical professor of supply chain information systems and director of development at CSCR, founded the study in 1996 and oversees the study each year.
“The Annual 3PL Study has been able to focus on a wide range of issues that are central to the success of 3PL-customer relationships,” Langley explained. “Additionally, the study continues to address parallel issues that relate equally directly to the state of our supply chains.”
This year marks the 26th iteration of the study and the findings address the following special topics: Sustainability and ESG, the Intelligent Supply Chain, Cold Chains, the effects of COVID-19, the Need to Rebalance, the Risk of Non-Traditional Models, and Keeping Supply Chains Connected.
The prestigious report addresses each topic, with an underlying nod to the issue that is at everyone’s top of mind – the global pandemic.
The report addresses the relevance of the pandemic and its pivotal role in current supply chain disruptions. Consumers have experienced firsthand the essential need of on-time supply goods. Whether it’s due to truck driver shortage, supply chains becoming “too lean,” or unfulfilled needs in an otherwise growing market – consumers are developing an understanding of supply chain demand, challenges, and role of technology in the supply chain. As consumers become savvier, data shows that 3PLs are working to develop smarter supply chains to meet those expectations.
The study reported more than half of shippers (52%) and 3PLs (63%) said 5G technology, the fifth generation of mobile networks, is either moderately or critically important to maximizing “supply chain operations, performance and real-time communications” consumers and clients expect. The report also noted that as providers are investing more and more in 5G, 53% of 3PLs are now indicating that they can provide real-time data to clients in 50% or more of their supply chain services.
Moreover, the pandemic has brought forth the importance of contingency planning and risk mitigation strategies worldwide. Supply chains were needed everywhere and all at once — products were expected at doorsteps, brick-and-mortar storefronts, or warehouses for large corporations. “Shippers and 3PLs continue to adjust to market demands and capacity constraints, but it may take 18 to 24 months or more before supply chains may be in balance,” the study articulated.
Langley is eager to see how companies will leverage such areas of opportunity.
“While the COVID-19 related pandemic was a regrettable occurrence having global impacts, it required organizations of all types to reassess their supply chain capabilities. One of the most obvious areas of concern included the abilities of organizations to be agile, resilient, and changeable to address and deal with new challenges,” he summarized.
Just as importantly, the study addressed how Environmental, Social and Governance (ESG) is becoming a trending topic of conversation and priority among the industry’s thought leaders. The study reported, “among shippers, 59% indicated their organization had an ESG program with defined goals and objectives, and 51% indicated their supply chain had an ESG program with defined goals and objectives. Meanwhile, under half of 3PL providers, 45%, said their organization had an established ESG program.”
The report also listed examples of how big-name companies are making ESG moves, one being Fed Ex’s goal of becoming completely carbon-neutral by 2040. The company plans to invest more than 2 billion to make the vision reality.
This year’s study ultimately pointed to the pandemic’s impact on the supply chain landscape. Now more than ever, there is a need for effective procurement, production, and sustainable supply chains— especially when it comes to cold chains and moving sensitive products.
“Maintaining temperature parameters, meeting regulatory requirements and maximizing efficiency is critical in cold chains, and 3PLs and shippers are relying on infrastructure, technology and human resources to deliver products on time and within range,” the study aptly surmised. Whether it’s shipping restaurant goods, groceries, or vaccines, cold chain capabilities and requirements represent a significant part of the conversation and insights in this year’s study results.
Langley is excited to share the study’s primary focus on the intense pressure, planning needs, and ongoing labor challenges that are faced by today’s supply chains.
“In comparison with results of previous years’ studies, the current year’s study results evidenced a significant need for improvement in our supply chain practices and capabilities,” he concluded. “This leads directly to additional recognition of the need for innovation and transformation in our supply chains and in our relationships between 3PLs, 4PLs and customers.”
For more information on this year’s 3PL study, please download the study results here.