8 TECH OUTLOOKAPRIL - 2020IN MY OPINIONYour company’s performance is most likely becoming more dependent on third-party logistics (3PL) providers as the demand for logistics outsourcing grows. This dependence mandates a change in the role of today’s logistics professional from a master of execution to a master of orchestration.Aggregate global revenue for the 3PL sector continues to rise and more shippers are increasing their use of 3PL services. To sustain this trend, the role and responsibilities of the corporate logistics professional must change, moving from an internal execution focus toward orchestrating and managing outside parties. Logistics outsourcing contracts and relationships, performance management, and governance need to become core competencies. The overall market for the U.S. 3PL providers has surpassed $116 billion after six consecutive years of expansion. In line with that growth, two-thirds of shippers plan to increase their use of outsourced logistics services, as opposed to keeping logistics functions in-house (26 percent). Several factors are driving continued growth in logistics outsourcing:• Outsourcing continues to save companies money, with an average logistics cost reduction of nine percent. In addition, 3PL providers continue to invest in technologies like Radio-Frequency Identification (RFID), Customer Relationship Management systems (CRM), and mobile technologies, closing the IT gap in the process. • The complexity of operating today’s advanced value chain networks requires increased knowledge and capabilities as companies try to balance inventories with demand across a much more complicated global supply chain network. Specialized competency is imperative. Increased reliance on outside experts to navigate the complexity is necessary, considering the internal supply chain talent issues.• Outsourcing continues to gain acceptance in the C-level suite, as companies now consider 3PLs for a multitude of non-traditional business functions such as customer service, managed IT systems, manufacturing assembly, and packaging.Although a majority of companies are increasing their use of logistics outsourcing, 53 percent of them also maintain they are reducing or consolidating the number of 3PLs they use. Most By Greg Aimi, Supply Chain Research Director, GartnerA Growing Reliance on Outsourcing Warrants a Change in Logistics ManagementGreg Aimi
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