Third-party logistics (3PL) providers need to become experts in radio frequency identification (RFID) if they expect to accommodate ongoing demands from their shipper customers. That's according to a global 3PL study conducted by Capgemini and Georgia Tech's C. John Langley, Jr., PhD, and sponsored by FedEx. According to the study, over three-quarters of respondents currently use 3PL services and more than eight in 10 feel their 3PL relationships are successful. However, customer demands for 3PL performance and sophistication are also on the rise, suggesting 3PLs need to be proactive in making improvements and investment in those areas.
The overwhelming number one information technology (IT)-based 3PL service needed in the future by all regions is RFID (North America 53%, Western Europe 61%, Asia Pacific 59% and Latin America 48%). With many RFID supplier mandates scheduled to be launched in 2005, including Wal-Mart Stores Inc. and the U.S. Department of Defense, shippers see a big challenge and opportunity for 3PLs to assist them with RFID implementations. "The study suggests 3PL customers throughout the world seek competency in areas such as operating efficiency and effectiveness, cost management, service delivery, IT and globalization," says Dr. Langley, professor of supply chain management and 3PL study leader at Georgia Tech. "However, the findings show that 3PLs cannot rest on their laurels and need to implement capable IT, institute effective management and relationship processes, integrate services and technologies globally and deliver comprehensive solutions that create value for 3PL users and their supply chains."
"While 3PLs provide good service to their clients today, they have considerable challenges ahead when it comes to IT," says Erik van Dort, global distribution sector and 3PL leader for Capgemini. "This is caused by a large backlog of legacy systems, while they are faced with significant technology solution demands for areas like transport management and RFID. In addition, the global players need to free up considerable resources to standardize and modernize their IT systems and processes in their expanding global footprint."
| Activities most frequently outsourced to 3PLs |
| Outbound transportation ........................................................80% |
| Warehousing ...........................................................70% |
| Inbound transportation ...........................................67% |
| Customs clearance ..................................56% |
| Customs brokerage ..............................53% |
