But then there was some disconnect. 41% of shippers say they are highly prescriptive in their 3PL relationships, while only 14% of 3PLs said most shipper clients are highly prescriptive. I do not how to explain that dichotomy. The right answer should probably be the third choice, a hybrid approach that varies with application and specific 3PL.

Commenting on this topic, one shipper said that "We currently are prescriptive but want to focus only on just the goals. However the 3PL are not showing they are capable of using that best approach."

Meanwhile, one 3PL noted that "Fulfillment and distribution are pretty much prescribed - "Get it out the door accurately and fast." Logistics and transportation management are more open to innovative approaches driven by us." Interesting.

Next, shippers and 3PLs both agree there is a clear trend towards shippers more formally evaluating a logistics services provider's innovation capabilities as part of the selection process.

As seen in the chart below, 65% of shippers say they either always or usually do such a formal evaluation, a trend echoed on the 3PL side. I think there numbers are likely much higher than they would have been a decade ago or maybe even 5 years ago.

The bigger question, perhaps, is how do you really do that evaluation?

One shipper noted the challenge, saying "We do not yet have a strategy but will develop one as we have some upcoming contracts."

Some shippers said they check innovation with the 3PL references, while others said they ask 3PLs to present innovation case studies as part of the selection process. Another added this thoughtful response: "[We] ask for a demonstration of recent innovation and data to support that it is an actual improvement projected savings.You also need to correct for market forces that may inflate or deflate the claimed savings."

Finally for this week, a long-running issue is that 3PLs are generally reluctant - to put it mildly - to invest in distribution center automation (often a form of innovation) because contact periods are too short to ensure a payback. It is impossible to invest in a system with a 4-5 year payback when the length of the contract with a shipper is two years.

If 3PLs were more willing to make such investments, would shippers be willing to extend contractual periods? (Or should I ask that the other way around?) As seen in the chart below, 31% of shippers said they have and/or would sign longer contracts. 26% say they would not consider such a trade-off, while 41% said they would consider doing so.

My guess? 3PLs would say that in their experience the percentage of "have/would" or "might" are exaggerated from the reality.

So there you have it. I keep coming back to the central point that contractual issues - often a reflection of the type of relationship a company wants to have with a 3PL, are huge barriers to innovation, at many levels. As we noted in part 1 of this series, a surprisingly low percentage of shippers and 3PLs are using gainsharing or "vested outsourcing" types of arrangements, without which it makes it tough for the 3PsL to innovate to reduce costs - and hence often revenue.

I've just scratched the surface of the data here. Whether you are a shipper, 3PL, or other, there is some great data and insight in the formal benchmark report or the full survey response data.

What are your thoughts on innovation between shippers and 3PLs? Are contracts a major issue, at multiple levels? Let us know your thoughts at the Feedback button below.