New business models are revolutionising the role of 3PLs in the Logistics industry

April 8, 2014

3PLs (third party logistics partners) have been a vital part of the supply chain for years, but the role they play in the supply chain continues to shift as economic conditions change. They now handle everything from raw materials to finished products, packaging, and order fulfilment. Experts tell us that the evolving business models of these 3PLs are a major force behind the growth expected for the consumer products industry in coming years.  

What type of services does a Third Party Logistics Provider offer?

Most of the work 3PLs do remains transportation, pick and pack and fulfilment services, but many are adding supplementary services that make operations more efficient, and more profitable for their clients

Examples include:

  • supply chain management,
  • specialised ecommerce fulfilment, including multichannel software integration
  • response handling,
  • reworking of products,
  • distribution of the goods by courier,
  • hand finishing, and
  • enclosing
Consumer goods manufacturers and retailers alike are moving from a model where 3PLs are treated as purely tactical partners to one where they are considered full strategic partners. As these logistics providers add capacity and capabilities, especially automation and software resources, they are becoming much more adept, and efficient, at managing supply chains than the companies they typically work with. Shippers, retailers, and ecommerce sellers alike need to think about how they can use, and profit by, these new capabilities.

Leveraging a 3PL’s capabilities

Bring your 3PL into your core team. Include them in strategic planning and assessment. One of the largest losses in efficiency when outsourcing aspects of the supply chain is in poor communication and lack of understanding between partners. Working closely with a 3PL can have great benefits for both of you.

Seek out ways to reduce the number of separate providers in your supply chain

This will serve both to reduce cycle time and to improve overall efficiency. 3PLs offer a lot more services now than they used to, and fully utilising these services can take a lot of smaller providers out of the chain entirely. Many 3PLs offer supply chain management services themselves, and can take care of this kind of analysis for you.

What can we expect from 3PLs in the future?

We are on the verge of a third era in the relationship between 3PLs and their clients. Once a client approached a logistics outsourcer with a simple job to do. Today, they need 3PLs to do a job, but to add expertise and innovation to do it faster and more efficiently. Soon, organisations, SMEs and individual e-tailers will ask 3PLs to help them plot the best and most effective course forward with a set of related business challenges.

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