The Need for 3PL Logistics Services in Shipping Industry

Evolution of Logistics and the Terms

In the 1970’s, deregulation (the act or process of removing or reducing state regulations) saw the introduction of Intermodal Marketing Companies (IMC’s) many of these companies didn’t own their own trucks or trains (non-asset based transportation firms). IMC’s would buy space off carriers and sell them to clients at rates cheaper than they could negotiate independently. In this context the carriers became 3rd party to the contract and thus the term 3PL was coined.

Contracting freight out (outsourcing) to third parties soon extended to contracting out the warehousing/fulfilment functions. 3PL’s today "A firm that provides multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together, by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding."

In 1996 Accenture (formally Anderson Consulting – one of the BIG 5) introduced the term 4PL as "A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution."

Supply Chain terms and capabilities

At SCS our view of the future is that market leaders will have extensive Supply Chain capability.

Historically products competed, increasingly today and in the future it is Supply Chains that compete and are proving to define market leaders.

At SCS we see the ‘logistics’ industry will split into following key providers over the next 20 years.

1. Traditional large scale asset based logistics providers (freight and warehousing) who will supply services directly to
1. Large enterprises, who can afford internal Supply Chain resource, have extensive systems capability and the customers are large enough to have scale with which to negotiate competitive transport rates.
2. Niche logistics providers
3. Supply Chain Management companies
2. Niche logistics providers who operate hybrid 2/3 PL asset and non-asset based solutions for low technology customers across all company sizes.
3. Supply Chain Management companies who have evolved from traditional logistics providers into full scale operations/SC partners that deliver mass customisation solutions and provide Supply Chain expertise, systems capability and control large freight networks. They add the highest value to SME because they act in both a strategic and a tactical capacity.

The model for the successful companies of tomorrow will lie in their adoption of Supply Chain strategies today in conjunction with their core sales, sourcing and marketing skills.

Supply Chain Solutions is a Supply Chain Management company.

The services from Supply Chain Solutions have the assurance of guarantee, competitive advantage, the lowest TCO and future proofing. To read more about Supply Chain Solutions and our services, kindly visit us at http://portal.supplycs.com.