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STAMFORD, Conn., December 12, 2019

Gartner Says 85% of Logistics Leaders Expect Their Outsourcing Budget to Increase in 2020

Cybersecurity One of Top Challenges for Organizations that Outsource Logistics

Eighty-five percent of logistics leaders expect that their outsourcing budget will increase by more than 5% in 2020, according to Gartner, Inc. Already for 2019, 85% reported a similar budget increase.

“Outsourcing one or more logistics service types has become largely mainstream,” said Courtney Rogerson, senior principal analyst with the Gartner Supply Chain Practice. The question no longer is whether to outsource, but what and how much to outsource. Evaluating different outsourcing strategies has become a priority for logistics leaders.”

Based on the Gartner 2019 Logistics Outsourcing Strategy Survey, one reason for the expected budget increase is that logistics outsourcing supports the business. Approximately 70% of respondents stated that functional, end-to-end (E2E) supply chain and overall business objectives have been met or exceeded with the help of logistics outsourcing counterparts, such as third-party-logistics providers (3PLs) (see Figure 1).

Figure 1: Extent to Which Logistics Outsourcing Is Helping the Organization Achieve Objectives

Source: Gartner (December 2019)

Technology, Speed and Visibility are Top Priorities

To be effective, the logistics outsourcing strategy needs to be aligned with the overall logistics priorities. Almost half of surveyed logistics leaders stated that updating their technology systems, increasing speed to customer and improving visibility are their most important goals for next year.

“Those priorities show that we are in the thick of the digital era. New routes to market and technology enabled products and services are rapidly disrupting industries and business models,” Ms. Rogerson explained. “To respond to these accelerated and evocative changes, logistics leaders need not only understand the foundational elements of good overall strategy, but also rethink how their logistics outsourcing strategy is assessed and developed.”

“For example, leaders can increase the iterative frequency of strategic planning across multiple time horizons. Rather than treating the outsourcing strategy solely as an annual process, they should include mechanisms, techniques and open communication channels for continuously capturing issues, ideas and insights that will increase the contribution of logistics outsourcing towards meeting the overall business goals.”

While logistics outsourcing is seen as helpful by a majority of logistics leaders, there are also risks and challenges. The complexity of working with multiple partners is the most mentioned challenge, followed by cybersecurity concerns and the incompatibility of information systems between different 3PLs and the organization.

“Low maturity organizations often outsource logistics with unrealistic expectations regarding ROI and service levels,” Ms. Rogerson said. “Outsourcing can help make your organization more efficient, but it requires a high degree of coordination. Make sure you have the appropriate resources and skills at your disposal.”

Gartner clients can read more in “Logistics Outsourcing Survey and Analysis: A Deeper Look at Strategic Outsourcing Imperatives for 2020”.

For Editors

Gartner’s 2019 Logistics Outsourcing Strategy Survey explores the logistics challenges companies face and how supply chain leaders are adapting their logistics outsourcing strategies and initiatives to support them. The survey was conducted online by an external partner between April and June 2018. In total, 190 respondents were interviewed in native language across North America, Mexico, Western Europe, U.K. and APAC.

About the Gartner Supply Chain Practice

The Gartner Supply Chain Practice brings together the most relevant analysis, peer-based best practices, metrics and data across Gartner and offers supply chain leaders a platform to make the choices that will drive their business forward. Additional information is available at https://www.gartner.com/en/supply-chain. Follow news and update from the Gartner Supply Chain Practice on Twitter and LinkedIn using #GartnerSC.

About Gartner Supply Chain Symposium/Xpo

Gartner Supply Chain Symposium/Xpo is the most important gathering of CSCOs and supply chain executives. Supply chain leaders will gather to gain a strategic view of the trends disrupting their business and the insights and frameworks they can use to build agility and robustness into systems, processes and decision making. Upcoming dates and locations for Gartner Supply Chain Symposium/Xpo include:

May 11-14: Orlando, FL

June 15-18: Barcelona, Spain

About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and an objective resource for more than 15,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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