STUDY FINDS THAT COMPANIES NEED HELP ON eLOGISTICS
Study by Cap Gemini Ernst & Young, University of Tennessee Shows that Service Providers Must Drive Technology Change for Customers
14 November 2000
Despite the surge in online trading exchanges and B2B marketplaces, the Internet and other information technologies have yet to permeate traditional supply chains, according to a new study announced today by Cap Gemini Ernst & Young, the University of Tennessee and Exel, a provider of logistics solutions.
The study reveals that users and providers of logistics services attest to the importance of information technology in their day-to-day operations but have yet to fully implement them. Most important, service providers are being seen as the drivers of that change.
According to the survey, 73 percent of 163 respondents indicated their companies currently use or are considering the use of third-party logistics services. Very few companies, however, indicated that service providers are offering the technology capabilities they need. While approximately 90 percent of third-party logistics users recognize the need for Web-enabled supply chains, only 15 percent felt that providers were assisting fully to accomplish this objective.
Service providers have a wide capability gap to address. Less than 50 percent of companies surveyed even have a Web site.
“Customers are increasingly looking for providers to act as supply chain strategists and, in certain instances, orchestrators, to help them Web-enable their supply chains,” said Gary Allen, senior manager of Cap Gemini Ernst & Young’s supply chain solutions team. “As Internet technology continues to evolve at a rapid pace, companies need to form strong relationships with providers to adopt new technologies and keep up with the marketplace.”
The survey also indicates that 80 percent of users of logistics services said that the integration of transportation and distribution systems was important to their overall business strategy.
“The lack of technology integration in supply chains is choking the flow of information, from the manufacturing floor to the retail shelf, and that hurts efficiency and cost-effectiveness,” said Allen. “Companies need to better integrate their IT systems if they want to optimize their supply chain. Having an automated central warehouse and automated distribution centers will not significantly improve inventory if the two systems cannot exchange data.”
“Creating more efficient ways to exchange data will remain a front-burner issue for service providers as they continue to improve their range of capabilities and offerings,” added Allen.
About the Study
“Third Party Logistics Services: Views from the Customers” was created by Cap Gemini Ernst & Young, University of Tennessee and Exel, a provider of logistics solutions. It is in its fifth year and polled 163 companies out of 1,056 potential candidates. The survey was sent to chief logistics executives at prominent companies in the automotive, chemical, computers and peripherals, consumer products, medical supplies and devices and retail industries. These industries were chosen because they view logistics as strategically important and are making purposeful moves toward integrated supply chain management. Electronic copies of the study can be downloaded by visiting http://www.us.capgemini.com/.
About Cap Gemini Ernst & Young
Cap Gemini Ernst & Young is one of the largest management and IT consulting firms in the world. The company offers management and IT consulting services, systems integration, and technology development, design and outsourcing capabilities on a global scale to help traditional businesses and “dot companies” continue to implement growth strategies and leverage technology in the new economy. The organization employs more than 56,000 people worldwide and reports global revenues of about 7.7 billion euros (1999 pro forma).
More information about individual service lines, offices and research is available at www.capgemini.com
