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Executive Summary

This report presents findings of the 2012 16th Annual Third-Party Logistics Study, based on research conducted in mid-2011.

In addition to documenting the ongoing evolution of the third-party logistics market, this year’s report also takes a close-up look at three special topics:

• The logistics of operating in emerging markets
• The unique challenges facing the electronics supply chain
• For the first time in the study’s history, the report considers the implications of talent in the supply chain and in shipper-3PL relationships

Effective with this report, we are branding each Annual 3PL Study in terms of its first full year of circulation following the report’s annual October release. Therefore, this report constitutes the 2012 3PL Study.

Current State of the 3PL Market
Shippers Reflect Continued Confidence with Use of 3PL Services

Results of the 2012 16th Annual Third-Party Logistics Study once again reaffirmed that third-party logistics providers continue to provide strategic and operational value to many shippers across the globe.

Shippers consider logistics and supply chain management as key contributors to their overall business success, and approximately three-quarters of survey respondents say 3PLs provide new and innovative ways to improve logistics effectiveness.

These results are based on survey responses from 1,561 industry executives and managers representing users and non-users of 3PL services (referred to as shippers or shipper respondents throughout this report), as well as 697 executives and managers representing firms that provide 3PL services (called 3PLs or 3PL respondents). 3PLs were added to the survey group in 2009 in order to capture both sides of the buyer-seller relationship.
The number of usable survey responses continues to rise each year, with a significant increase for the 2012 Study.

Please see About the Study for detailed information about survey responses and the four streams of research used to fully analyze the state of the 3PL market: a web-based survey, desk research, focus interviews, and facilitated workshop sessions at Capgemini Accelerated Solutions Environment® (ASE) locations in Chicago, Illinois, and Utrecht, The Netherlands, and at the 2011 eyefortransport 3PL Summit in Atlanta, Georgia.

Emerging Markets
Opportunities for Driving Corporate Growth

For many companies, doing business in emerging markets is no longer a nice-tohave; it’s a must-have to fuel continued growth.

For example, General Motors sold more cars in China than it did in the United States last year, and PepsiCo captured about half of the Russian juice market through an acquisition, according to a CNNMoney report. As seen in Figure 9, a substantial 80% of shippers in the survey conduct business with or within an emerging market, with the majority (52%) doing so from a mature market and 28% from within emerging markets.

Among 3PL respondents, 77% conduct business with or within an emerging market, 48% from a mature market.

Electronics
Complexity Inside and Out

Electronics products are often the rock stars of the consumer and business products worlds, with buyers eagerly anticipating the next release with the latest and greatest features.

But along with enviable demand comes pressure to make products smaller, faster, cooler and at a lower price point. Some electronics products’ lifecycles closely resemble fashion: What’s in today is out tomorrow. But even everyday devices are feeling the heat. Everyone wants to produce the next iPad.

Hitting these targets demands a fast and nimble supply chain. The challenges of attaining this fall into three major buckets: global manufacturing and sourcing issues, channel and network complexity and the implications of an intricate, high-value product set.

Talent Management
Overcoming the Talent Shortage

A critical shortage going on in the logistics industry today has nothing to do with inventory; it’s the shortage of well-rounded supply chain managers prepared to step into key management positions. According to research by employment services provider Manpower Group, in the US, 52% of employers are experiencing difficulty filling supply chain positions within their organizations, up from 14% in 2010.

For many companies, the supply chain has become a significant contributor to attaining strategic business goals, making well-qualified logistics talent essential. As seen in Figure 19, shippers and 3PLs agree that having the right people and leadership in place is the number one driver of their companies’ success in the next five years, slightly outranking the importance of the right strategy and roadmap itself. 3PLs and shippers are aligned on all of the top drivers to organizational success.

Fortunately, the talent gap can be reduced. Shippers, 3PLs and other organizations active in the supply chain community have the opportunity to both develop and attract the next generation of managers with the diverse skills required to govern ever-more-complex supply chains. They can get there by investing in talent management, leadership skills and succession planning, as well as by defining the skill sets and capabilities these leaders will require and ensuring a satisfying work environment.

Strategic Assessment
In Supply Chain, the One Constant is Change

Static: It’s one word you don’t hear in supply chain circles very often, and for good reason: Logistics is synonymous with movement, both in goods and information, and in the design and evolution of the supply chains that make that movement possible. Constantly changing economic and political dynamics necessitate continual re-evaluation of supply chain decisions. The job is never dull, challenging supply chain professionals to think creatively and strategically.

Inspired by the findings of this year’s study, this strategic assessment examines several trends spurring yet more change and innovation in the supply chain world. First is the overall rise in outsourcing of logistics, followed by the growing use of supply chain control towers – both indicators of the increasingly complexity of managing today’s supply chains.

Emerging markets are a key factor in that complexity, and a trend to nearshoring is another sign of constantly changing global dynamics. Companies have moved production to emerging markets in pursuit of lower costs, but that decision changed conditions in those very markets, challenging companies to reconsider the economics and in some cases turn to nearshoring. Finally, a change impacting every industry is the emergence of social media, and like others, the supply chain industry is in the early stages of working out how to best leverage its power to enhance day-today business functions while minimizing the risks.

About the Study

This report presents findings from the 2012 16th Annual Third-Party Logistics Study, which was conducted in mid-2011.

This is the 16th year that the Annual Third-Party Logistics Study has documented the growth and evolution of the third-party logistics (3PL) industry. The study has evolved and expanded over its history to remain as current as possible while offering additional perspective and enhancing its value to both users and providers of 3PL services. For example, while the study has always looked at 3PL services from the point of view of users of 3PL services (shippers), this is the third year that the study also has included the viewpoints of providers of 3PL services.

Four streams of research make up the 2012 3PL Study methodology: a web-based survey, desk research, focus interviews with industry experts and facilitated shipper workshops, two of which were held at Capgemini Accelerated Solutions Environment® (ASE) locations. Study respondents and participants represent a broad range of industries and are predominantly from North America, Europe, Asia-Pacific and Latin America, in addition to other locations throughout the world such as Australia, South Africa and the Middle East.

Multiple research streams and a broad array of perspectives result in a rich and heterogeneous collection of the attitudes, trends and results experienced by 3PL users, non-users and 3PL providers.

Observant readers will note that last year’s study was the 2010 15th Annual Third-Party Logistics Study. The study team chose to call this year’s report the 2012 Study to better reflect the time frame in which the results enjoy the most active and lively discussion.

About Capgemini Consulting

With more than 115,000 people in 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2010 global revenues of EUR 8.7 billion.
Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.
Capgemini Consulting is the Global Strategy and Transformation Consulting brand of the Capgemini Group, specializing in advising and supporting organizations in transforming their business, from the development of innovative strategy through to execution, with a consistent focus on sustainable results. Capgemini Consulting proposes to leading companies and governments a fresh approach which uses innovative methods, technology and the talents of over 3,600 consultants worldwide.
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