The evolving 3PL market

Third-party logistics providers like Supply Chain Solutions are moving beyond basic warehousing and transportation to complete supply chain management offerings, in the United States and abroad.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 10/25/2007

Each year, Dr. Robert Lieb, a professor of supply chain management at Boston’s Northeastern University, surveys the CEOs of the leading third-party providers of outsourced logistics (3PL). The annual survey, sponsored this year by Penske Logistics, is a snapshot of the areas of growth and trends in the industry according to biggest players. I’ll be talking to Penske to learn more about this year’s survey in the coming days. 

In the meantime, I touched base with Lee Garza, vice president of solutions development, at Supply Chain Solutions Inc., a provider of complex logistics solutions in Grand Rapids, Mich.

When Modern profiled Supply Chain Solutions back in January 2006, the company had recently taken a page from the automotive industry and created a solution to deliver parts and components just-in-time and just-in-sequence to two customers in the office furniture industry. Making that happen involved more than providing warehouse space and lift trucks; it involved a lot of technology to coordinate the receipt of parts at an inbound service center and the delivery of those parts to the manufacturing plant.

What does the ability to provide those kinds of solutions say about the evolution of the 3PL industry today?

“I think it says that the manufacturers and distributors of the world are increasingly looking for a higher level of services from third-party providers,” says Garza. “It’s more than wanting someone else to own their trucks and warehouses. They also want someone to design and manage their business processes.”

The key to being a successful 3PL today, Garza adds is the ability to provide visibility.

“Because of global manufacturing, the whole idea of supply chain visibility is more important as supply chains become more complex,” he says. “Anything we can do to make the supply chain more transparent is important.”

In fact, Garza believes the international supply chain is the next opportunity for the 3PL industry to expand. “We’re starting to do things like provide consolidation services from China into the U.S. for folks who are buying less than container load quantities,” Garza says. “And we’re doing it in response to our customers, who are all increasing the amount of international supply chain activities.”