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Research finds that 3PLs still lack innovation

Third-party logistics companies (3PLs) are lacking in proactivity and continuous improvement, according to the latest research from leading supply chain and logistics consultancy, SCALA.

SCALA surveyed a selection of the UK’s best-known businesses and 3PLs (whose revenue runs into the billions and whose number of clients run into the thousands) to ascertain companies’ satisfaction rates and areas of concern regarding the performance of their 3PLs.

The findings revealed that a key shortfall in 3PLs’ performance is their inability to innovate and bring fresh ideas and solutions to the table.

More than half (59%) of the companies surveyed stated that their 3PL is ‘poor’ at introducing new initiatives. None said that their 3PL is extremely good at this.

However, the research highlighted contrasting views from 3PLs; the majority of which were overly optimistic in their performance. Indeed, 84% of 3PLs said they are good at introducing new ideas and initiatives.

John Perry, managing director at SCALA, commented: “These findings show that there is clearly a major conundrum for both parties. There is definitely a feeling amongst client companies that 3PLs do not bring enough innovation, particularly after the 3PL has won the contract.

“However, in our experience, the 3PL’s response to this is often to point out that the greatest improvement potential comes from looking at the supply chain and service more holistically, but they find their clients can be resistant to this level of collaboration. Yes, there are opportunities for standalone innovation in operations, but greater impact can be gained by looking at logistics as a whole. The two respective companies need to work together to truly achieve that.

“More upfront discussion and negotiation, together with ongoing regular reviews and sharing of information, would lead to more consistent expectations and better performance.”

Participating companies that shared their views in SCALA’s research cover a wide range of sectors but predominantly operate in the grocery, FMCG, electrical appliance and homewares sectors. The 3PLs range from regional providers to the very largest in the UK, with the majority having in excess of 100 clients.

The findings of the research were discussed at SCALA’s recent Supply Chain Debate, which looked at how 3PLS can deliver more for their customers. Notable speakers at the event included Chris Marrow, director of logistics at Sainsburys; Jim Gallagher, supply chain and logistics director at Bosch Home Appliances; Peter Broome, supply chain director for UK and Ireland at Ferroro; Simon Hobbs, director of aerospace, hi-tech and pharma at Kuehne + Nagel Ltd, and Rebecca Attoe-Butt, who heads up supply chain for the UK and Ireland at Dyson.

Last year’s debate found that 76% of senior industry professionals believed that 3PLs should be doing more to drive supply chain developments, when compared to retailers and technology providers.

To download the report please visit: https://www.scalagroup.co.uk/wp-content/uploads/2019/03/3rdpartyreportv2.pdf

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