Integrated Logistics Outsourcing – The Expanding Role of 3PLs (PART 1)

As companies continue to seek out new ways to ensure optimal logistics performance, many are finding value in tapping their primary third-party providers for a greater variety of services.

A recent industry study sponsored by Saddle Creek Logistics Services examines the broader role that 3PLs are being asked to play in today’s marketplace. The report is based upon online survey responses from respondents who have influence over logistics functions at their companies and outsource some or all of their logistics services.

Increased consolidation. Currently, the majority of respondents (60.4 percent) have chosen to outsource to a select group of two to four providers, while 16.5 percent of respondents outsource to a single third-party provider for all of their logistics services. These figures reflect a growing trend toward consolidation of providers in order to leverage their capabilities, resources and purchasing power.

In the past 12 to 18 months, 19.8 percent of respondents say they have reduced the number of third-party providers they utilize. This trend will continue as 28.6 percent of respondents say they will consolidate providers in the next 12 to 18 months.

Expanded service. While companies seem to be cutting back on the number of providers they use, they are asking existing partners to take on greater responsibility – expecting them to provide a broader array of logistics services to support a seamless, integrated supply chain. The vast majority of respondents (73.6 percent) outsource to providers who offer two or more logistics services. Transportation and warehousing are the most common, but a variety of other capabilities are being tapped as well – product customization, cross-docking, e-fulfillment, etc.

Greater value. Respondents definitely find value in outsourcing to a provider with the ability to offer a variety of logistics services. More than half (52.3 percent) rate the importance of integration as 4 or 5 on a scale of 1-5.

Learn what’s driving companies to seek out integrated services in the next edition of the WT100 Blog.

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