Warehouse outsourcing keeps growing

By Staff -- Modern Materials Handling, 12/1/2004

For the second year in a row, at least 80% of the large manufacturers who responded to Accenture's survey of third-party logistics (3PL) services indicated that they use 3PL providers extensively (617-454-4708). Sixty percent of those users reported using multiple 3PLs to meet all of their needs.

What's more, they are long-time users of 3PLs. More than two-thirds have used 3PL services for more than five years. These figures represent the tremendous growth of the 3PL industry.

"In 1991, when our initial survey was conducted, the percentage of Fortune 500 manufacturers reporting the use of 3PL services was just 38%," says Brook A. Bentz, an Accenture associate partner who conducted the survey along with Dr. Robert Lieb, professor of supply chain management, Northeastern University (617-373-4813).

The survey also suggested that growth is likely to continue in the future, especially as business continues to expand with contract manufacturers in China, India and Eastern Europe. "According to the survey, companies are giving a steadily increasing percentage of their logistics operating budgets to 3PL providers," says Bentz.

Companies told Accenture they are spending 40% of their logistics budgets on 3PLs today, and expect to increase that to 46% over the next three years. "Much of this growth is going to occur outside the United States, with 80% indicating they use 3PL services outside the United States," Bentz adds.

For the first time, most respondents reported that their major vendors and customers were also served by their primary 3PL service provider. That may explain why nearly half of the respondents (42%) indicated that the value delivered by their 3PL providers continues to increase over time.

Along with the positive sentiments, the study also uncovered some emerging concerns.

"The percentage of users who indicated that the use of 3PL services had a negative impact on their companies increased in every category," says Bentz. "This may signal problems that need to be aggressively addressed by the provider community."