Familiar refrain: Shippers
dissatisfied with LSPs’ efforts to
be proactive, innovative
An ongoing complaint of shippers that their logistics service providers (LSPs) struggle with being proactive and
innovative in solving complex supply chain problems seems
to be, well, ongoing.
According to the Outsourced Distribution Report issued
by the Tompkins Supply Chain Consortium, 37 percent of
survey respondents were “dissatisfied” or “very dissatisfied”
with their partners’ ability to bring new solutions to the
table and to do so without any prompting from the customer. Nearly 26 percent of the respondents were neutral
on the issue, according to the survey. Only 37 percent said
they were satisfied with the status quo.
The study was based on a survey of 95 companies by the
consortium, which provides data on supply chain benchmarking and best practices. What the survey may have
lacked in quantity of respondents, it made up for in heft.
More than half of the respondents had annual revenue of
$1 billion or more. Nearly 14 percent reported annual revenue of more than $25 billion.
The results underline a long-standing problem in shipper-provider relationships. In the 2010 Third-Party Logistics
Study led by academic C. John Langley Jr., only 68 percent of
shippers surveyed said their logistics partners were delivering new and innovative solutions to improve logistics effectiveness. In contrast, 95 percent of providers said they were
bringing new ideas to shippers, according to the 2010 survey.
In response to this criticism, logistics service providers
contend their customers often exclude them from strategic
discussions. As a result, they can’t obtain the needed business intelligence to be as proactive and innovative as they
and their customers would like.
In a statement accompanying the Tompkins study, Chris
Ferrell, director of the consortium, said more frequent
communications between shippers and providers “will go a
long way toward improving the satisfaction ratings in innovation and problem solving.”
OVERALL SATISFACTION HIGH
Still, as with the 2010 study, the Tompkins survey reflects an
overall level of satisfaction on shippers’ part toward their
providers. For example, more than two-thirds of respondents
said they were either satisfied or very satisfied with their
providers’ productivity efforts. In addition, nearly 77 percent
said they were satisfied or very satisfied with their providers’
flexibility to grow and adapt to their changing needs.
One area of potential concern is that only 55 percent were
accolades
Clark Material Handling Co. has recognized its top
parts managers, service managers, and customer service specialists for 2011. A complete list can be found
at www.clarkmhc.com/news/showStory.asp?id=69. …
Eric Chambers, senior vice president of BlueGrace
Logistics, received the Transportation Marketing and
Sales Association’s (TMSA) Transportation Sales
Executive of the Year award. Patrick O’Neil, director
of corporate communications at Railinc Corp.,
received TMSA’s Transportation Marketing Executive
of the Year award. … Crown Equipment
Corp. has earned two International Design
Excellence Awards (IDEAs)—a Gold IDEA
for the Crown RM 6000 narrow-aisle reach
truck and a Bronze IDEA for the Crown
QuickPic Remote Advance low-level order
picking system. … Penske Logistics has earned two
awards for supply chain excellence from Whirlpool
Corp. It was named both 2011 Third-Party Logistics
(3PL) Supplier of the Year for Warehousing and 2011
Specialty Service Supplier of the Year. This is the third
year in a row that Penske has received the 3PL award.
… Dollar General Corp. has recognized the Marion,
Ind., distribution center serviced by U.S. Xpress
Enterprises Inc. as “site of the year.” U.S. Xpress
Enterprises has also received a Ryder Carrier Quality
Award. … England Logistics was recognized by Utah
Business magazine as one of Utah’s fastest-growing
businesses, ranking 24th overall.
satisfied with their providers’ ability to reduce their operating costs. Respondents said the need to achieve cost reductions is the top reason they outsource.
As for plans for the future, 42. 5 percent of companies
surveyed will have conducted a bid for logistics services or
rebid their existing outsourcing agreements by the end of
2012, according to the survey. Most respondents said their
3PL contracts run more than three years.
Ferrell said shippers’ decisions to rebid their 3PL contracts are being driven more by a desire to obtain better
lease terms than by a general frustration with their
providers’ performance. “[Those with] leases that are expiring in the next 12 months are likely to find a lot of substantially more favorable opportunities available,” Ferrell said in
an e-mail.
Ferrell said providers should look at the findings as an
“opportunity … to increase their partnership status” and as
a way to “differentiate their service and make themselves
more indispensible, rather than something that puts them
at risk of getting fired.” ;
—M.S.
