CSCMP's Supply Chain Quarterly
February 22, 2020
Forward Thinking

Big data, analytics gaining traction, annual shipper-3PL survey concludes

The vast majority of survey respondents say the new discipline will have a significant impact on their supply chain.

The use of "big data" is taking on bigger relevance among shippers and their logistics providers.

"The 21st Annual Third-Party Logistics Study," which canvassed 342 shippers and their third-party partners on issues impacting their businesses and partnerships, found that 98 percent of third-party logistics providers (3PLs) and 93 percent of shippers believed data-driven decision-making was essential to the future of supply chain activities. About 86 percent of 3PLs and 81 percent of shippers said the massive data sets—and a process known as "analytics" used to leverage the data in an effort to improve organizational processes—would become a core competency of their supply chain organizations.

Among 3PLs, 71 percent said big data's most valuable attribute lies in improving process quality and performance. About 70 percent said it is most important in enhancing logistics optimization, and 53 percent said it is optimally used to create better integration across the supply chain.

Similarly about 60 percent of shippers said big data and analytics would work best to improve supply chain integration. About 55 percent said it would have the most impact on enhancing data quality. About 52 percent said it would have the most value in improving process quality and performance.

However, there is a modest disconnect between the importance that shippers attach to big data, and the perceptions held by their partners about their interest in the subject, according to the survey. About 79 percent of shippers said they see significant value of big data and analytics. About 65 percent of their providers—a 14 percentage-point drop—reported their customers thought the subject was key to their supply chain performance. This gap may indicate that 3PLs are understating the importance of the big data process inside their customers' organizations.

Also, shippers have become more pragmatic about how much their partners can hope to achieve through their efforts. About 35 percent of shippers surveyed said they believed 3PLs could support their big data initiatives, down from 44 percent in 2014.

Tom McKenna, senior vice president, engineering and technology for Reading, Pa.-based 3PL Penske Logistics, said the supply chain is still just beginning to understand how to process the avalanche of data as well as how to then properly evaluate where it would have the biggest bang for the buck. In an interview earlier this week at the Council of Supply Chain Management Professionals (CSCMP) annual global meeting in Orlando, McKenna said one of the challenges faced by shippers and 3PLs alike is that each side collects its own mountain of data, which then must be merged to gain the most visibility into a problem and its execution.

Penske uses the process to support what McKenna called its "strategic accounts," which are larger companies with deep, long-term relationships that are not based on transactions, but on the overall value a company sees in the relationship.

The survey's core finding—a broad gauge of how the two sides feel about their relationships—appeared to bring modestly encouraging news. About 91 percent of shippers and 97 percent of 3PLs said their relationships were mutually successful and the work was yielding positive results. About 86 percent of shippers and 98 percent of 3PLs said their efforts led to improvements in customer service.

At the same time, 90 percent of 3PLs said they brought innovative solutions to the table, while about 73 percent of shippers felt that way. In addition, 93 percent of 3PLs said the joint work yielded cost reductions, while 75 percent of shippers thought was the case, the survey found.

The two sides were deeply divided on how much value stems from collaborating with other companies, even rivals, to achieve greater overarching value. About 86 percent of 3PLs thought collaboration with outsiders would be beneficial, while only 44 percent of shippers surveyed felt that way. The gap may underscore that a 3PL is quite comfortable working with multiple shippers, some of who may compete with each other, while shippers are loath to see much positive coming from deep dives with the competition.

McKenna said the broad outcome of the survey is that shippers increasingly see more value in their 3PL relationships. This, in turn, is narrowing the long-standing perception gap between shipper's views on a 3PL's value, and how effectively the 3PL believes it's performing.

The survey was produced by Capgemini Consulting, Penn State University, and Penske Logistics. Shippers comprised 44 percent of respondents, providers accounted for 43 percent, and so-called nonusers made up the rest. About 54 percent of respondents worked for companies with more than $1 billion in sales, while 21 percent represented firms with annual sales of $25 billion or more.

Mark Solomon is executive editor—news at DC Velocity, a sister publication of CSCMP's Supply Chain Quarterly.

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