Feature Article
The State of the 3PL Business
“An Opportunity for Greatness”
Seems it wasn’t that long ago industry trade magazines were discussing capacity constraints of the nation’s ports, the high-volume of containers being shipped and unloaded, and the burdens high fuel charges levied on transportation providers. Now, we are faced with a glut of inventories and a review of most recent US-Consumer Price Index data show transportation and energy categories having Yr/Yr price adjustments of -13.3% and -40.5%, respectively. What a difference a year makes!
The 3PL industry is well versed in change. Whether that change is one of strategic direction, or supply chain network design, or partnering relationships, clearly the 3PL industry has displayed competence responding to changes in market forces. The current economic situation nonetheless offers the industry great opportunity from which to capitalize and leverage its strengths. The issue is not so much how these changes will affect the industry but how the industry can best leverage and maximize its value proposition from the changes occurring.
A recent survey, conducted by eyefortransport, shed light on viewpoints, planned responses and concerns of 500+ 3PL, Manufacturing, and Transportation industry executives as they face this economic uncertainty head-on. A detailed view of the report can be found at the website http://www.eyefortransport.com.
The data showed >70% of respondents affected by the economic slowdown and a general expectation for growth to resume in the 2010 timeframe. Net effect, 2009 will be a year of constrained growth. Measures being taken, to mitigate the climate conditions, include reducing costs through efficiencies, concentrating on core markets, selectively adding new customer accounts, diversifying product offerings, and working with contractors to reduce costs. The biggest challenges facing those surveyed, in order of importance, include the economy, supply chain forecasting, consumer/customer optimism, managing relationships and fuel price volatility.
In terms of opportunity, 42% of 3PL users indicated they were planning on changing 3PL providers. 40% were changing due to price whereas 60% were changing due to poor service levels. When asked if those surveyed were planning on increasing use of 3PL services, 68% indicated they were with 60% indicating the change as being possible whereas 40% noted the change as being very likely.
So, how might your organization find itself on the short-list for those companies looking to change 3PL providers? Consider the basics as a roadmap for revenue preservation and growth. These basics include service delivery excellence, continuous cost management and predictable performance absent of surprise, relationship management and process/technology innovation. Take the time to understand your customer, know what’s important to them tactically and strategically, what are they struggling with and how your organization might help, and be willing to put skin in the game for you both to succeed. Now is the time for reinvention of what it means to be a 3PL. It is an opportunity, not to be dealt with, but to be seized. Seize the opportunity for greatness and lay the tracks to your team’s future.
The staff at ASIL has extensive Logistics and Operations experience and is known across the industry for developing value-added logistics network solutions. If you are a 3PL, or a client of a 3PL, and would like to review options for logistics supply chain designs consider ASIL as a source for pragmatic and timely solutions. Call us today and let us help you achieve new areas of profitability and success in this ever changing economy.
Contributed by Warren White
February 2009 Spotlight
Greening to Win
Everywhere you look today you can find articles regarding Corporate Social Responsibility (CSR). Simply stated it is about becoming accountable for the wasting of our world’s precious resources. There are many facets of CSR that range from changing the fuels we consume, to reducing our consumption, to ultimately reducing the carbon footprint we leave behind when we are done.
Most US companies are beginning to get the message. Yet they trail their neighbors across the pond. European countries have been very keen on managing the impact of business on the environment for many years. The opportunity for US companies is to understand that you don’t have to go into the red to become green in your supply chain.
Sustainability is about going green while staying in the black. There are many ways that this can be accomplished. Ultimately, it requires a clear strategy and commitment to make a positive change even in small increments.
Take as an example the packaging of products being sold and then returned for warranty or repair. The cost and useful life of corrugated cardboard becomes an immediate target for developing change in the Supply Chain. Today’s plastics based products are achieving higher environmental standards, leaving a smaller carbon footprint, and have a useful life of at least 10 times greater than their cardboard counterpart.
If you would like to learn how to establish a CSR strategy or learn more about greening your supply chain, give us a call at ASIL. We can work with you to establish a meaningful plan to make a difference on the future.
Contributed by Peter Pazmany
Industry Trends
Partnering is Pervasive – Especially Among Outperformers
In a recent survey by IBM, eight-five percent of CEOs plan to partner to capitalize on global integration opportunities – more than half plan to do so extensively. The survey also found that outperformers are 20 percent more likely to partner extensively than underperformers. This reinforces data from a previous survey that found that those who partner outperform their competitive peers.
CEOs see partners as a source of valuable talent – an ingredient in short supply. “Partnering has shifted from tactical ‘Enter a new market’ to strategic ‘Access to capabilities’.” explained one CEO. Drawing on skills that their partners already have and in many cases from a new or different perspective, many companies have been able to secure a competitive edge over their competition.
Outperformers are planning 40 percent more industry model innovation than underperformers. The question is whether these outperformers are pursuing more industry innovation because they have the clout or because of insight and inclination to continually question industry norms? The answer is both, a reinforcing cycle. Innovation success can provide the financial means and industry position to attempt bolder moves, which, in turn, can improve business performance.
The business of the future does blue-sky, green-field thinking. Its goal is to spark innovation by thinking about “starting over from scratch.” It finds ways to work with people and organizations that are not part of the industry status quo to develop new models. It challenges every assumption of its business model, just as an outsider would.
The business of the future is a student of other industries because it realizes that game-changing plays spread like wildfire. It scours customer and technology trends that are transforming other sectors and segments of the market and considers how they could be applied to its own industry and business model.
The business of the future understands the challenges of achieving business model innovation from within. It empowers its innovators with support, funding, and freedom to drive disruptive change, which may threaten competitors’ current models – even its own.
New business models are often at odds with established ones, creating inherent tension within the organization. Even if the models are not directed at the same customers, they are still competing for resources and attention. The business actively manages those potential conflicts so it can try out bold business model innovations, while ensuring business as usual delivers results.
Some questions to ponder:
- Is a disruptive business model about to transform your industry? Is it more likely to come from you or your competitors?
- Do you spend time thinking about where the next disruption will come from?
- Are you watching other industries for concepts and business models that could transform your market?
- Are you able to create space for innovative business models while continuing to drive performance?
Partnering can help resolve and answer these questions. Call the experts at ASIL, Inc. to join the ranks of the Outperformers.
Adapted from: IBM Global CEO Study
Contributed by Michael Singleton
Our Software Products
Click on the links below to view ASIL, Inc.'s MAX Partnering® self paced software demonstrations:
Self Assessment Sample Questionnaire - This demo will enable you to respond to a small sample of self assessment questions focused on change management and create a Heat Map of your responses to see areas that may need attention. The Driving Complex Change® methodology addresses the six areas of Direction, Ability, Incentive, Resources, Structure, and Action that can impact your effectiveness of change management.
