(Bill Jozefowicz is Vice President of Client Solutions at Weber Logistics)

As products become commoditized and consumer loyalty to brands weakens, supply chains have become the linchpin of competitive advantage. To deliver, companies must make sure they partner with a 3pl that not only can offer efficient tactical execution, but can also collaborate and innovate to achieve truly breakthrough results.  Traditional outsourcing relationships, as we know them, are coming to an end.  Collaboration and innovation will be the future value drivers in 3PL outsourcing. 

On the surface, things look fine.  Recent studies show the 3PL industry is growing and that the vast majority of shippers regard their outsourcing relationships as successful.  But this success is based on a 3PL’s ability to execute tasks more efficiently.  There is value there, certainly, but nothing close to the value that can be created if 3PLs had the mandate and the compensation model to innovate to drive breakthrough business results. 
I guess it’s a change in perspective from “how?” to “how much?”

In traditional 3PL relationships, the provider determines HOW to execute a particular task and presents a cost for those services.  A better model is for shipper and 3PL to collaborate in evaluating the current supply chain to determine HOW MUCH time and cost can be taken out and HOW MUCH incremental revenue can be added with the right kinds of changes.

Traditional outsourcing relationships are about the “how” – the execution.  Most contracts are simply not structured to support or encourage disruptive innovation.  But that’s changing.  Large shippers have started implementing vested outsourcing relationships, with compensation models where both parties share the risk and the gains of supply chain performance.  Early indications are that these models have quickly improved business results.  It’s only a matter of time before others will join in on the savings.

The race is on…