BY SUSAN K. LACEFIELD, ASSOCIATE MANAGING EDITOR
OUTSOURCING
strategicinsight
Are you keeping your
3PL from innovating?
Shippers often complain that their 3PLs aren’t
bringing enough new and creative ideas to the
table. But are they themselves the main
obstacle to innovation?
DO YOU FEEL YOUR THIRD-PARTY LOGISTICS SERVICE
provider isn’t innovative enough? That it’s failing to come to
you with new—or at least, new to you—ideas for cutting
costs or streamlining your operations?
If so, you’re not alone. A 2012 survey by the Tompkins
Supply Chain Consortium, Outsourced Distribution:
Emerging Trends and Performance Satisfaction, found that 37
percent of respondents were dissatisfied or very dissatisfied
with their logistics service providers’ ability to come up
with innovative solutions. A second study, The 2013
Third-Party Logistics Study, conducted by Penn State
University, Capgemini Consulting, and others, showed
that only 53 percent of shippers believe their third-party
logistics service providers (3PLs) are even ready to innovate
(meanwhile, 89 percent of 3PLs insist that they are).
What are shippers looking for with regard to innovation? It varies all over the map, says John Langley, a professor at Penn State University and lead author of The
2013 Third-Party Logistics Study. While some are looking for a “disruptive” or game-changing innovation—
such as using social media to track order status in real time—most are simply looking for ideas that
are “innovative to them,” he explains. Examples of “new to them” practices might include using
RFID chips to track assets, replacing spreadsheets with a transportation management system, and
introducing back hauls.
While it’s easy to blame your 3PL for failing to come up with new ideas, it might not be the
provider’s fault. You might be partly responsible as well. Many times, shippers unintentionally sabotage their 3PL partners’ best efforts to innovate and discourage them from proposing new ideas.
How do you know if you might be one of those shippers? Here are five questions to ask yourself:
1. Are you constantly bidding and rebidding the business? Some shippers are so intent on reducing
rates and finding the lowest-cost provider that they’re constantly putting their business out to bid.
“Shippers and 3PLs remain, for the most part, entrenched in the … low-cost-at-all-times
approach to doing business. This is not conducive to innovation,” says Kate Vitasek, founder of
