3rd Party Logistics (3PL) is the supply chain practice where one
or more logistics functions of a firm are outsourced to a 3PL provider. Typical
outsourced logistics functions are: inbound freight, customs and freight consolidation,
public warehousing, contract warehousing, order fulfillment, distribution,
and management of outbound freight to the client's customers.
On top of this, also Value Added Services can be provided, such as: repackaging,
assembling and return logistics. The 3PL Provider manages and executes
these particular logistics functions using its own assets and resources, on
behalf of the client company.
The thoughts behind this are to keep the firm competitive by keeping it
lean without owning much assets, allowing it to focus on niche areas and to
reduce operational costs. Third Party Logistics is also referred to as
3PL is evolving from predominately transactional-based to more strategic
in nature. At the same time 3PL is gradually evolving into 4PL. A Fourth
Party Logistics provider is a supply chain services provider that searches
the best logistical solutions for its client, typically without using own
assets and resources. Relatively new is the term 5PL or even 7PL, indicating
Total Supply Chain Management Outsourcing.
Origin of 3rd Party Logistics (3PL). History
In the 80s, there was increased globalization and an increased use of IT.
These trends resulted in increased demands on firms and possibilities for
companies to operate more competitive and lean. Some successful 3PL companies
emerged, such as DHL/Exel, Kuehne + Nagel, Schenker , UPS, Panalpina, C.H.
Robinson, TNT Logistics, Schneider, and NYK Logistics.
Usage of 3rd Party Logistics (3PL). Applications
Firms with a wide and/or complex distribution network. Example: IBM.
Firms that do not focus on logistics as one of their core competencies.
Example: Chevron Corp or British Petroleum.
Forum discussions about 3rd Party Logistics. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
New Trends in Transport and Logistics
What are the new developments in the transport and logistics industry with special emphasis on the following: growth of 3PLs, 4PLs, increased bulk carriage, increased use of unit loads, air freight an...
Looking for Reliable 3PL Vendor in India
I recently signed on a new 3PL vendor in India to provide us with gift suggestions and services. When the orders were placed, I asked several times for ETA's and tracking information and he bailed out...
3PL in Third World Countries
The reading on this well summarised 3pl has really assisted me understand on what it is. However I doubt its effectiveness and efficiency in the third world countries. Could someone comment please....
End to End 3rd Party Logistic Provider (3PL)
In Saudi Arabia, there is an emergenging trend of going for 3PL (outsource) and a number of petrochemical producers have started this practice. The area, however, is concentrated in cargo movements. ...