July 2004 | Commentary | Checking In

Traveling the 3PL Continuum

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Grab your Star Trek mug and take another look at this magazine's cover. Then come back because I want to talk to you about parallel 3PL continuums.

Yikes! Back? What did you see? Don't worry, the cover is not a Rorschachian intrusion into your childhood. Rather it is meant to represent the continuing evolution—from infancy to maturation—of an important segment of the transportation industry, third-party logistics.

In the past decade, the contribution of 3PLs to logistics practice has grown. One way to understand this contribution is to think of it in terms of a continuum.

Two important 3PL continuums are the growth continuum and the progressive continuum. The growth continuum includes the increased usage of 3PLs and growth in 3PL market size (revenue).

The most important step on this continuum is the growth in the number of companies using 3PLs and why that trend occurs. Economic growth, the increasing acceptance of demand-driven logistics practices (SCM), global sourcing, and customer demands for visibility create logistics complexities that drive more business logistics practitioners to turn to 3PLs for help.

In the parallel, progressive 3PL continuum, 3PL customers progress from tactical solutions to enterprise-impacting strategic solutions.

In the feature article, From Tactical to Strategic: The 3PL Continuum, you'll see a 3PL partnership moving from the transactional, pallet-in/pallet out, to the holistic—helping to design a lean manufacturing system. The article illustrates how customers and their 3PL partners move along the progressive continuum, going from tactical to holistic impact on the enterprise.

Why does this macro view matter? Because, like with most things in transportation and logistics, you have to know where you are to know where you are headed and understand how to get there.

There's another reason—many observers look at revenue alone when examining the outsourced logistics segment. This reference point is flawed for a couple of reasons.*

Our abstract, continuum approach sheds new light on the 3PL phenomenon and may help you understand how a 3PL might serve your needs in deeper or different ways.

We hope this annual 3PL issue offers you some guideposts as you travel along your own logistics continuum.

* Space does not allow here but if you email me: publisher@inboundlogistics.com, I will give you my take on this.

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