July 2012 | Commentary | Checking In

3PL Partnerships: From Transactions to Trust

Tags: 3PL, Partnership

Felecia Stratton is the editor of Inbound Logistics magazine.

In business context, transactional relationships are often laden with legal conditions—unlimited liability, implied agency, utmost good faith. Even with assurances that a partner will do the right thing, it all comes down to costs and consequences.

For many years, the supply chain operated in a similar fashion. Third-party logistics providers (3PLs) demonstrated their value by managing functional needs in a transactional way. These types of arrangements still exist. But increasingly, 3PLs and shippers are working much more collaboratively, often sharing pains and gains. In effect, they have traded handshakes for hugs.

The reasons are myriad. Increasing supply chain complexity has created needs beyond traditional warehousing and transportation disciplines. Many companies still lack the logistics talent and/or leadership to orchestrate sophisticated supply chain efforts internally. Even when they have these resources, some still recognize the value of third-party objectivity.

Economic fluctuations have similarly forced shippers and service providers to look beyond the here and now—whether capacity is bought and sold at a premium, or soft conditions tempt price gauging and gouging—and consider longer-term arrangements that focus on qualitative metrics rather than cost. Finally, the rapid emergence of non-asset-based 3PLs created an outsourcing platform entirely contingent on expanding value through technology, domain expertise, process, and innovation. They are pushing collaboration.

So are we, in our annual 3PL issue. From anecdotal testimonies to exclusive industry research, the idea of partnership permeates this issue's editorial content.

Merrill Douglas' Great Partnerships explores three case studies to understand how 3PLs and shippers are collaborating in new ways. The core element in each example is the "utmost good faith"—trust that one or more 3PLs can work together to completely overhaul your distribution operation; trust to know a partner will continue to expand its resources to meet your needs; and trust to share business intelligence and proprietary data in the interest of driving innovation and economy.

More telling, IL's eighth-annual 3PL Perspectives market insight report, provides empirical data that supports a business case for more trustworthy outsourcing partnerships. It's no coincidence that when push comes to shove, 79 percent of surveyed shippers prefer 3PLs that can deliver customer service over cost. That speaks volumes.