Dr.RobertC.Lieb,NortheasternUniversityBrooksA.Bentz,AccentureChicago,September23,2003TheCouncilofLogisticsManagementThirdPartyLogisticsUpdate:AnnualU.S.UserandProviderSurveysNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys1©2003Accenture.Allrightsreserved.The11thAnnualU.S.Fortune500ManufacturerUserSurveyThe10thAnnualU.S.3PLProviderSurveyConcludingObservationsandImplicationsNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys2©2003Accenture.Allrightsreserved.The11thAnnualU.S.Fortune500ManufacturerUserSurveyThe10thAnnualU.S.3PLProviderSurveyConcludingObservationsandImplicationsNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys3©2003Accenture.Allrightsreserved.Fortheseventhyearinarow,morethantwo-thirdsofthosesurveyedindicatedtheyuse3PLservices,andthereportedusageratehasreachedarecordhighof81percent.0%10%20%30%40%50%60%70%80%90%'91'92'93'94'95'96'97'98'99'00'01'02'03Useof3PLServicesPercentofManufacturersReportingUseof3PLServicesSurveyYear38%81%NortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys4©2003Accenture.Allrightsreserved.Manufacturers’currentspendingon3PLservicesandtheirthree-yearprojectionshavereachedrecordlevels.3PLPercentageofUserLogisticsBudgetPercentageofLogisticsOperationsBudget0%10%20%30%40%50%1999200020012002200320042005OperatingYear3-yearprojections33%40%NortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys5©2003Accenture.Allrightsreserved.Freightpayment,shipmentconsolidation,directtransportation,customsbrokerage,warehousemanagement,freightforwarding,carrierselection,andtracking/tracingservicesareusedbymorethanhalfofthemanufacturers,andtheusagerateincreasedinmostcategoriessincelastyear.3PLServicesUsedPercentofuserscitinguse0%10%20%30%40%50%60%70%80%ContractmanufacturingSelectionofsoftwareCustomersparepartsOrderprocessingFleetmanagement/operationsMergeintransitOperationofITsystemsReverselogisticsProductreturnsOrderfulfillmentRe-labeling/repackagingRatenegotiationMeasurementofcarrierperformanceTracking/tracingCarrierselectionFreightforwardingWarehousemanagementCustomsbrokerageDirecttransportationserviceShipmentconsolidationFreightpaymentNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys6©2003Accenture.Allrightsreserved.3PLservicesyieldvaryingdegreesofcostandserviceimprovements.•Usersindicatedthatthefollowing3PLservicesgeneratedthegreatestcostsavings:–Warehousemanagement–Ratenegotiation–Shipmentconsolidation–Freightpayment–Directtransportation•Usersindicatedthatthefollowing3PLservicesgeneratedthegreatestservicebenefits:–Warehousemanagement–Orderfulfillment–Freightpayment–Directtransportation–Fleetmanagement/operationsNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys7©2003Accenture.Allrightsreserved.0%10%20%30%40%50%60%70%80%90%100%LogisticscostsLogisticsservicelevelsCustomerSatisfactionPositiveNoimpactNegative77%Verypositive3PLusehasgenerallyresultedinpositivecost,serviceandcustomersatisfactionimpact,andthepercentageofpositiveresponsesincreasedsubstantiallythisyear.85%65%PositiveNoimpactNegativeVerypositivePositiveNoimpactNegativeVerypositiveNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys8©2003Accenture.Allrightsreserved.Manyvendorsandcustomersofthese3PLusersusethesame3PLprovider,andthispromotessupplychainintegration.ButthoseprovidersplayalimitedroleinprovidingeffectiveITlinkagesbetweenthesupplychainpartners.•Forty-ninepercentofthe3PLuserssaidthattheirmajorvendorswerealsoservedbythesame3PLprovider•Fifty-sevenpercentoftheuserssaidthattheirmajorcustomerswerealsoservedbythesame3PLprovider•Sixty-eightoftheuserssaidthatthiswasveryimportantorimportantinpromotingintegrationoftheircompanies’supplychains•However,lessthanone-thirdoftheuserssaidthattheir3PLproviderplayedaveryimportantorimportantroleinestablishingandmaintainingeffectiveITlinkageswiththeirmajorvendorsorcustomers•Only22%oftheusersrankedtheir3PLprovideras“leadingedge”withrespecttoITexpertiseandcapabilitiesNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys9©2003Accenture.Allrightsreserved.Theeconomicslowdowncontinuedtoaffectthevolumeofbusinessgivento3PLprovidersbyusers,butuser/providerrelationshipsarestillstrong.•Fourteenpercentsaidthattheyhadincreasedthevolumeofbusinessgiventheir3PLprovidersduringtheslowdown,57%saidtheslowdownhadnoeffectonvolume,and29%saidithadledtolowervolume•However,only4%believethattheslowdownhashadanegativeeffectontheirrelationshipwiththeirprimary3PLprovider•Infact,one-quarteroftherespondentsbelievethatitstrengthenedtherelationship,andsaidthattheyarecommittedtothe3PL“partnerships”regardlessofeconomicconditionsNortheasternUniversity/Accenture2003Annual3PLUserandProviderSurveys10©2003Accenture.Allrightsreserved.Withrespectto3PLindustryprofitability,alltheusersidentifiedinthesurveybelievetheindustryisatleastinbreakevencondition.•Fourpercentcategorizedtheindustryasveryprofitable,80%saiditwasmoderatelyprofitable,and16%labeledtheindustryasbreakevenintermsofprofitability•Only16%expre