Kenco Partners with University of Tennessee on study of key shortfalls in the management of 3PLs

Executives report the biggest mistake was not doing a thorough needs assessment before hiring a 3PL.

By ·

More than 80% of domestic Fortune 500 companies outsource their logistics operations, and most expect to use third party logistics (3PL) providers more in the coming years, according to the University of Tennessee (UT) study sponsored by Kenco.

The study—Selecting and Managing a Third Party Logistics Provider—finds that companies are still struggling to optimize their use of 3PLs despite growth in every sector of the supply chain over the last quarter century.

“Today’s 3PL is not your grandfather’s 3PL,” said Paul Dittmann, executive director of the Global Supply Chain Institute (GSCI) at the University of Tennessee’s Haslam College of Business. “The scope of third party logistics has widely increased and expectations of them accelerated, but that does not mean firms are using 3PLs to their full advantage.”

Dittmann partnered with Kate Vitasek, author of “The Vested Way,” to find the best practices for creating competitive advantages through use of a 3PL. Their research resulted in the GSCI’s latest white paper. 

More than 60 executives interviewed for the study said the biggest mistake they made was not doing a thorough needs assessment before hiring a 3PL. The report also found that many, if not most, bids for third party logistics providers contained unrealistic data on company operations. Omitting business leaders from the selection process was another common pitfall, leading to a lack of business-wide strategy for the partnership.

Selecting and Managing a Third Party Logistics Provider is the second in UT’s Innovations in Supply Chain Series. Kenco a Chattanooga-based provider of integrated logistics solutions and technology, sponsored the report.

“Communication is key to helping our clients succeed,” said David Caines, chief operating officer at Kenco. “The companies that connect us with the right people and have clear strategies in place are the ones we can help the most. This paper reflects that and gives insight into how 3PLs can be better partners as well.”

The study emphasizes clarity of expectations and a balance between accountability and independence for best management of 3PLs. The most successful 3PL partnerships employ elements of Vested methodologies, focusing on outcomes instead of processes, and implementing contracts that provide incentives for 3PLs.

The full report is available online.


Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Latest Whitepaper
Your Guide to Voice for the Warehouse
Is voice a good fit for my operation? How would voice work in my warehouse? With the help of the Vitech Guide to Voice, you can find all the answers to your voice questions in one place.
Download Today!
From the October 2017 Modern Materials Handling Issue
An early adopter, Rochester Drug Cooperative is using robotic piece-picking technology to complement picking of slow-moving items. System report for Rochester Drug Cooperative, Robotic picking and inventory management, Innovative distribution center robotics solutions , IAM Robotics case study
Injecting agility into WMS implementation
The Big Picture: Business as Unusual
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
The State of the DC Voice Market
A lot has changed in the last 10 years, especially in voice technology. This webinar will cover the state of the voice market, review two leading voice solutions and help you gain a better understanding of the options and capabilities available today.
Register Today!
EDITORS' PICKS
Rochester Drug Cooperative: Robots ready for work
It’s still early stages, but Rochester Drug Cooperative is proving that mobile robotic piece...
Manufacturing Day: 2,716 events from Hawaii to Alaska to Puerto Rico
Events to be scheduled throughout the month, so the remaining 249,185 manufacturing firms in the...

System Report: Pouch sorter powers Stage’s fulfillment needs
How a hometown department store chain transformed its e-fulfillment processes with pouch sortation...
Cubing and Weighing Equipment: Measure Up
The use of cubing and weighing equipment is growing beyond dimensional weight applications.