CSCMP's Supply Chain Quarterly
September 26, 2016
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3PLs still struggle with an IT image problem

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While third-party logistics providers continue to invest in advanced technology, customers still do not see them as innovators, according to a recent survey.

A recent survey conducted by the research and events firm eyefortransport and the information technology (IT) service and solutions company L&T Infotech shows that although third-party logistics service providers (3PLs) are becoming more technologically advanced, their customers and supply chain partners still do not see them as IT innovators.

The resulting report, "Logistics Technology Report: The State of Innovation in Logistics," found that while 65 percent of logistics service providers said they were increasing their investment in technology, only 22 percent of their shipper customers see them as driving innovation in logistics. The report is based on the results of a survey of 357 executives from logistics service providers, IT solutions providers, and shippers.

The report found several pieces of evidence that logistics companies are becoming increasingly tech-savvy. For example, more than 87 percent of the 3PLs who participated in the survey now include software developers in their workforce and more than 57 percent have data scientists on staff. Additionally, investment in more mature technologies such as transportation management systems and warehouse management systems has flattened, while investment in business intelligence solutions and predictive analytics has risen. According to the report, this shift indicates the rising importance of data and analytics in the industry.

The report says that it is increasingly important for logistics service providers to be able to roll out technology to customers and connect with their IT solutions, and logistics providers seem to be responding to this need. More than half of the logistics organizations polled have created an internal innovation center that focuses on new solutions and products, and logistics companies are making a greater effort to have their information technology department collaborate with customers. Half of the respondents said their IT staff is working directly on a continuous basis with customers during the development of customer-facing IT solutions.

Despite these advances, logistics service providers continue to be seen by their customers as only moderately innovative. According to the report, 78 percent of respondents felt that 3PLs were only "somewhat open" to new technologies. That suggests, perhaps, that along with their investment in new technologies, third-party providers may also need to invest in better communicating their capabilities to customers.

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