Navigating Change: Insights into the Dynamics of Supply Chain Evolution
# The 29th Annual 3PL Study Explores the Impact of Change Management, AI, and Rapid Delivery on Shipper and Service Provider Operations
Author: Jeff Berman October 1, 2024
Rapid adaptation to change management, emerging technologies such as artificial intelligence (AI), and meeting consumer expectations are particularly critical for shippers and third-party logistics providers (3PLs).
This is the core conclusion of the 29th annual Third-Party Logistics Study released today at the CSCMP EDGE Conference in Nashville. The study titled “Navigating Change: Insights into the Evolving Dynamics of Supply Chains” was unveiled.
The research was developed in collaboration with NTT Data, supply chain professor and researcher Dr. C. John Langley Jr., and Penske Logistics.
Findings are based on hundreds of effective responses from shippers (both 3PL service users and non-users) as well as 3PL industry respondents.
As always, the study is filled with interesting data points that highlight different approaches taken by 3PLs and shippers in addressing similar issues.
**Change Management:** In terms of change management, the study found that 61% of shippers and 73% of 3PLs consider supply chain change management to be critical or significant. There are multiple reasons for this, including customer demand, economic factors, and technological advancements. The research also pointed out that supply chain visibility is the area most in need of transformation, with 69% of shippers and 68% of 3PLs confirming this.
In an interview, Tim Brindley, Vice President and Practice Leader for Supply Chain Operations Capability at NTT DATA’s Supply Chain Consulting, explained that from the research results, commitment or how to establish a proper framework to address change is mixed.
“Most respondents do not have a true framework, so we listed some frameworks and found either they don’t have one or they think it’s proprietary within their own organization,” he said. “When it comes to resource allocation for addressing this, change management often gets cut. Without customer or end-user support, it tends to fail or become very difficult.”
The study also revealed that about a quarter of shippers and 3PLs indicated they are highly receptive to change, while 45% of shippers and 53% of 3PLs said their organizations have a moderate acceptance toward change.
**Impact of AI:** A common theme in the research is that both shippers and 3PLs believe AI can enhance efficiency, accuracy, and resilience through various means such as automating data analysis, identifying patterns or solving problems, and serving as tools for automating repetitive and tedious tasks.
Key findings related to AI indicate that 33% of shippers are seeking AI implementation in supply planning and demand forecasting, while 19% of 3PLs plan to consider this. Additionally, 27% of shipers require transportation and route optimization, whereas 22% of 3PLs plan to implement AI capabilities.
However, it’s noted that AI adoption also faces challenges; 28% of 3PLs pointed out integration with existing systems, 25% mentioned a lack of skilled talent, and 14% cited high initial investment costs. From a competitive standpoint, the study found that “most shippers” believe 3PL use of AI will impact their choice of 3PL partners, with 13% saying it is very likely or 32% indicating they would switch to some extent.
Brindley said these percentages are expected to rise if AI can reduce costs and help shippers make better decisions.
“The biggest opportunity lies in supply and demand planning,” he said. “Demand planning is crucial. If you can minimize inventory turnover capital and make better decisions through demand forecasting, this will be very beneficial. This is where AI can have an impact. The transportation aspect makes sense too.”
From an integration perspective, he noted that supply chain practitioners see challenges related to AI because the existing IT platforms across the supply chain are described as point solutions along the supply chain for manufacturing, transportation, and distribution.
“The biggest challenge is how to integrate all these different data sets and many different points in the supply chain,” Brindley said. “There won’t be a silver bullet for AI to do everything. But you need to find the right places where it can make an impact, whether through automating processes or improving decision-making capabilities within the supply chain.”
**E-commerce:** The consumer expectation of rapid delivery of online orders is evident, with 48% of shippers and 53% of 3PLs indicating customer expectations for two-day or faster deliveries, while 27% of shippers and 26% of 3PLs emphasize three-day or shorter delivery expectations. The study also found that 44% of shippers and 38% of 3PLs are willing to bear a small portion of the costs associated with speed of transport, with the overarching theme being that delivery speed and further visibility are strong differentiators.
“Three days or less for delivery is a basic requirement,” Brindley said. “You don’t want to pay indirectly for this. You should be paying it through setting thresholds. So if orders are at least $100, this is one way to cover some costs from the package perspective. I see this becoming more common—we’re seeing it with our customers—consumer commitments also heavily weigh on returns and customer convenience from a return standpoint because we buy more online and how to provide more options for customers.”
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Source: Logistics Management
