July 2014 | Commentary | Checking In

3PL Evolution Continues

Tags: 3PL, Supply Chain Management, Partnership

Felecia Stratton is the editor of Inbound Logistics magazine.

For better or for worse, I have been the editor of Inbound Logistics for nearly 25 years—before the term third-party logistics, or 3PL, even existed. That means I spent about two decades (gulp!) watching the evolution of the third-party logistics sector, and all the different types of companies providing value-added logistics solutions. It has been a fascinating evolution—made even more fascinating by the demands you placed on your providers, driven by your changing needs.

In the early days of outsourced logistics, proto-3PLs arose from the ranks of truck lease companies, warehouse companies, transport brokers, forwarders, and integrators that did not want to say no to customers. Because "he who is closest to the customer wins," these providers introduced value-added services to cement—and build on—existing relationships.

The next evolutionary step was truckers and intermodal marketing companies that added brokerage, and even warehousing services. Railroads also jumped in, answering their customers' call for logistics solutions.

The most interesting group of 3PLs grew from shippers who honed logistics skills in-house, then offered that expertise to other shippers. Prime examples include Caterpillar, Owens & Minor, Pepsi, Cardinal Health, Ingram Micro, Leggett & Platt, and numerous others.

Add to all this the growing diversity of logistics technology solutions that brought corollary complexity, making 3PLs that specialized in masterfully applying that technology even more attractive enterprise partners.

A fervent need to find logistics efficiencies, cut overall logistics spend, reduce inventory-to-sales ratios, and expand to unfamiliar markets—all while exceeding the service levels increasingly impatient customers were demanding—motivated many companies to seek outside logistics assistance to navigate this perfect storm of complexity. Today, many early 3PL entrants are flourishing by helping shippers better connect supply to demand, providing integrated transportation and logistics solutions, and acting as change agents—improving operations across the enterprise.

The 3PL segment will continue to evolve, and I hope I will be right here tracking it with you for another 25 years. But for now, we packed our annual 3PL issue with all the information, resources, and decision support—Top 100 3PL Providers, exclusive market research, Top 10 3PL Excellence Awards—you need to manage your outsourced logistics operations.

Through it all, you are the spark igniting the 3PL sector. As your logistics needs continue to change, 3PLs will morph to match them, and apply their transformative supply chain expertise. And the evolution continues...