Adoption and Utilization of ICT in the Chinese Third-Party Logistics Industry

This paper reports the findings of a questionnaire survey on the adoption and utilization of information and communication technology (ICT) – an important tool to enhance efficiency and responsiveness in modern-day supply chains – in the Chinese third-party logistics (3PL) industry. As a global manufacturing base, China has a burgeoning 3PL industry serving a large number of domestic firms as well as multinational corporations. With more and more organizations outsourcing their logistics function to 3PL firms, the latter have to make use of ICT for efficient communication with clients and coordination of activities in order to work hand-in-hand with customers to meet their day-to-day logistics needs. To investigate the status quo of ICT utilization in China, a questionnaire survey was conducted in 2009 to investigate the level of ICT adoption by the 3PL firms. For comparison, the findings of the Annual Third-Party Logistics Studies from 2007 to 2013 in this regard were also analyzed. The questionnaire survey results reveal that ICT is being widely adopted in the Chinese 3PL industry suggesting a high level of awareness of its significance and benefits to both the service providers and the clients. The ICT used ranges from low-tech telephone, facsimile, Internet access, to more advanced and sophisticated radio frequency identification technology and enterprise resource planning system. While small 3PL companies are using less expensive ICT at a tactical level mainly to cut costs and reduce errors in the day-to-day logistics operations, medium-sized and large firms have evolved to make use of more expensive ICT for planning and strategic purposes, such as business control, customer integration, and service differentiation. Transportation management system is regarded as the most important IT for business to most 3PL firms surveyed whereas the significance of other systems for warehouse management, order management, and inventory management, etc. varies depending on the services provided and the resources available. A follow-up review of the recent literature suggests that ICT adoption in the 3PL industry of China has not significantly increased since the 2009 survey but the general awareness of the importance of ICT capabilities is growing.