Economy Puts New Demands on Logistics Firms, Surveys Find
A robust economy is placing new demands on third-party logistics service providers, based on survey results from two long-running university-sponsored studies released at the Council of Supply Chain Management Professionals annual conference.
“The economy’s check engine light is blinking and needs attention,” said Mary Holcomb of the University of Tennessee and Karl Manrodt of Georgia College in summarizing results of the 27th annual survey of trends and issues in logistics and transportation.
“Companies across all industries are struggling to find the capacity they need while managing escalating costs,” Holcomb and Manrodt said in describing survey responses from 240 shippers and logistics firms in 15 industry sectors.
Holcomb and Manrodt said it’s no longer good enough for firms to improve the efficiency within their enterprises to meet requirements for faster and less costly delivery of goods.
“Working individually will not get the efficiencies needed and expected in this speed-fueled economy,” study authors concluded. “The big question is whether or not we are willing to work together and really compete supply chain to supply chain.”
A second study, conducted by John Langley Jr. at the Center for Supply Chain Research at Penn State University, zeroed in on the challenges of providing final-mile delivery and the explosive growth in the use of data to manage supply chain operations.
“The last mile has been relevant for many years,” Langley said in an executive summary of the 23rd annual study of the state of logistics outsourcing. “However, it has taken on enhanced significance with the growth in e-commerce and omnichannel distribution.”
In fact, Langley argues, the issue for most shippers now is how to address the “last yard,” or what happens to a shipment once it is delivered to a customer.
“Last-yard logistics can be chaotic,” Langley said. “The pain points are driven by the increased package volumes and how these volumes impact the time and space constraints at the final destinations.”
A large majority of shippers and logistics companies surveyed (72% and 71%, respectively) said they recognize the need for capable last-yard logistics services, but just over half of shippers (53%) and only one in three logistics companies (34%) reported satisfaction with the efficiency of the service, the study found.
“There are several last-yard logistics issues that may occur at delivery or drop-off locations, such as delayed, damaged, misplaced and lost deliveries,” Langley reported. “Strategies that may help to eliminate or reduce last-yard problems include shippers improving internal processes ... or relying on third-party logistics companies to take greater responsibility for facilitating and executing shippers’ last-yard services.”
The Penn State study surveyed shippers and logistics executives across a broad spectrum of industries, including manufacturing, retail and consumer products, food and beverage, health care and pharmaceuticals and automotive.
Both reports highlight the growing importance of technology in supporting supply chain initiatives.
More than 40% of respondents in the University of Tennessee/Georgia College survey cited data analytics as the key technology for managing supply chains in the next two years, with technologies like blockchain, artificial intelligence and additive manufacturing mentioned by fewer than 10% of the survey respondents.
A key area for improvement is in how shippers and freight carriers communicate.
“Shippers need real-time transportation data to make effective decisions,” said T.J. Schaefer, head of strategic programs at Project44 Inc. and a sponsor for the survey.
In the Penn State study, workforce issues emerged as a top concern of shippers and logistics companies with 59% of respondents citing the need to attract talent, along with developing leaders, retaining high performers and enhancing employee motivation and engagement.
By 2030, the global supply of skilled labor for transportation and logistics activities is estimated to fall short of demand by 16%, according to a separate report by Korn Ferry, an international human resources firm.
The shortage is already driving up wages and, according to Korn Ferry, organizations may have to pay $2.5 trillion more for workers by 2030 with the global average salary going up by $11,164 per worker on top of inflation.
Nearly half of shippers and logistics companies (44%) reported that they look outside of their organizations for talent, the survey noted.
Source: Transport Topics, by Daniel P. Bearth
The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org
Published October 16, 2018