For the 22nd consecutive year, Dr. John Langley of Penn State University again led the annual Third Party Logistics Study, released as usual this year at the CSCMP conference in Atlanta in late September, a collaboration between Langley, again this year Penske Logistics, and new sponsors recruiting firm Korn Ferry and consultant Infosys, basically replacing Capgemini, which was a sponsor for many years.
In part 1 of our review, we focused on the core data from the survey of shippers and 3PLs, including the dreaded “IT gap” relative to the perception of 3PL IT capabilities (see Highlights from the 22nd Annual Third-Party Logistics Study.)
Again this year, the report augments that core data with commentary and other survey data on what might be called special topics, which this year included use of blockchain technology in the supply chain, automation and digitization, and risk and resiliency in shipper-3PL relationships.
We provide highlights of each of these sections below.
Use of Blockchain in the Supply Chain
Blockchain, the technology that first broke into prominence as the foundation of the digital currency Bitcoin, has much promise in the supply chain by its potential ablity to make it easier and less expensive to share data across the supply chain versus traditional IT approaches.
As the 3PL study notes, the technology also “improves security because each transaction is validated and recorded by an independent third party. No one party can modify, delete or append any record without a validation of the edit from others in the network. The goal is to create one version of the truth, link information and create transparency.”
For every each movement of goods across parties, blockchain could identify the parties involved, price, date, location, quality, state of the product, and other information relevant to managing shipments and the products on those shipments.
The report says “The public availability of the ledger makes it possible to trace back every product to the very origin of the raw material used.” But this isn’t exactly correct, as often a controlling party – say a Walmart – will restrict which parties have permission to see what information – and it seems highly unlikely to SCDigest that Walmart would open up all its supply chain data to its supplier and carrier base.
That noted, the report says “The information shared would increase visibility and minimize the potential for human error. It could also dramatically reduce time delays, eliminate added costs, minimize human error and decrease corruption,” – and could even conceivably provide insight into real-time demand for goods and logistics services.
Nevertheless, the technology is very new, with conflicting standards – and is still little known or understood by most. The study found the majority of respondents – 67% of shippers and 62% of 3PL providers – said they don’t know enough about blockchain to rate it at this time.
However, the report encourages 3PLs to consider adopting blockchain as a way of differentiating their offerings.
This section of the report concludes with the observation that “Costs to collect information have decreased, but it isn’t free, and the value proposition [of blockchain] is yet to be defined. There is a balance of mitigating risk and improving security and the costs associated with doing so. More time is needed to determine which companies are willing to invest in the technology.”
Automation and Digitization in the Supply Chain
This section covers a broad range of technologies that are impacting the supply chain, from AI and big data to autonomous trucks, with a lot of space devoted to various levels of truck driving automation.
More traditionally, the report says that there is often a lot of data in core Warehouse Management and Transportation Management systems that could be mined for the mutual benefit of shippers and 3PLs.
From a 3PL perspective, an executive from Penske Logistics notes that “Granular data related to the handling of an order and the handoff to the warehouse or the fleet, as well as the visibility out on the road and time records of deliveries, makes you much more efficient and provides insight into the costs to serve individual customers or individual stops. Then you can make better decisions on how you price your product in market.”
Moving to newer technologies, the report noted the rising interest in and availability of on-line freight matching services, as the Uberization of load matching – from companies including Uber itself but a growing number of others – is already having an impact on shippers and 3PLs.