Change Still Dominates the 3PL Market

Change Management – A Critical Factor for Shippers and 3PLs

Change and the ability to adapt to it continue to be the greatest challenges faced by shippers and third-party logistics providers (3PLs), according to the findings of the 29th Annual Third-Party Logistics Study. The report, titled "Navigating Change: Insights Into Evolving Dynamics in the Supply Chain," was released at the Council of Supply Chain Management Professionals (CSCMP) EDGE Conference in Nashville. It underscores that change management is increasingly becoming a vital factor in maintaining competitiveness in the market.

The survey, conducted by NTT Data, Penske Logistics, and supply chain professor and researcher Dr. C. John Langley, gathered feedback from shippers, users, non-users of 3PL services, and service providers in the logistics field. One key finding is that 61% of shippers and 73% of 3PLs view change management in the supply chain as either critical or significantly impacting their operations. Factors such as customer demands, economic conditions, and technological advancements are seen as the primary drivers of these changes.

Tim Brindley, Vice President and Head of Supply Chain Operations at NTT Data, further explained that while many companies recognize the importance of change management, most still lack a clear and effective framework to implement it. According to Brindley, most businesses either have no clear change management process or rely on temporary, often "in-house proprietary" solutions that lack standardization.

Brindley also emphasized that a lack of resources or commitment from customers and end-users often leads to the failure of change management initiatives. For logistics companies, not having a clear framework to address the challenges of change will cause significant difficulties in adapting to market fluctuations.

AI in the Supply Chain and Workforce Challenges

One of the standout aspects of this year's study is the growing trend of applying artificial intelligence (AI) in the supply chain. According to the report, 33% of shippers are seeking AI solutions related to supply planning and demand forecasting. These companies aim to harness AI's capabilities to optimize demand forecasts, thereby reducing working capital in inventories and improving operational efficiency.

Another notable point is that 27% of shippers are demanding AI-driven solutions for transportation and route optimization, reflecting the increasing need for improved speed and efficiency in transportation operations—an essential factor as fast shipping services become the standard in the logistics industry.

However, integrating AI into existing systems remains a significant challenge. The study reveals that 28% of 3PLs are concerned about AI integration with current logistics systems, while 25% point to a lack of skilled personnel to operate these new technologies. This highlights the reality that while AI offers substantial potential for improving supply chain operations, businesses still face hurdles related to workforce and technology.

Brindley stated that "the biggest opportunity lies in supply and demand planning." He noted that if companies can leverage AI to improve demand forecasting, they can achieve considerable gains in working capital and operational efficiency. However, he also stressed that implementing AI is not just about technology but also requires consensus and commitment from all stakeholders".

Change Management Is the Key to Success

The research conducted by Penske, NTT Data, and CSCMP has made it clear that change continues to dominate the logistics market, and effective change management is essential for businesses to survive and thrive. In a world where customer demands are increasingly complex and technology is rapidly evolving, adaptability not only helps companies overcome challenges but also provides a long-term competitive advantage.

However, it is concerning that many businesses still lack a clear framework for managing change. A shortage of resources and commitment from customers also presents significant barriers. For 3PL companies, this is especially crucial as they face growing pressures related to delivery speed and operational optimization. The emergence of AI presents numerous opportunities, but it also requires businesses to have clear strategies for investing in technology and training personnel.

Overall, the report paints a picture of a logistics market filled with both challenges and promise. If companies can overcome current obstacles and fully leverage new technologies, they will have the opportunity not only to adapt but to lead in an ever-changing market.