This document discusses third-party logistics providers (3PLs). It defines 3PLs as businesses that provide logistics services like transportation, warehousing, and distribution management. The document outlines the main types of 3PL providers and why companies use 3PLs, such as to save time and focus on core competencies. It provides tips for selecting a 3PL provider, including doing research, creating a selection process, measuring performance, and nurturing the relationship. The document also briefly introduces 4PL providers, which manage and direct multiple 3PLs.

1. Third Party Logistics
Providers (3PL)
Kyle Sera
Amy Irvine
Scott Andrew
Carrie Schmidt
Ryan Lancaster

2. Overview
 What are 3PL’s
 Why use them
 Tips for implementation of 3PL’s
 4PL’s

3. Types of 3PL Providers
 Transportation Based
 Services extend beyond transportation to offer a
comprehensive set of logistics offerings.
 Leveraged 3PLs use assets of other firms.
 Non-leveraged 3PLs use assets belonging solely
to the parent firm.
 Examples: Ryder, Schneider Logistics, FedEx
Logistics, UPS Logistics

4. Types of 3PL Providers
 Warehouse/Distribution Based
 Many have former warehouse and/or distribution
experience.
 Examples: DSC Logistics, USCO, Exel,
Caterpillar Logistics, IBM

5. Types of 3PL Providers
 Forwarder Based
 Very independent middlemen with forwarder
roles.
 Non-asset owners that provide a wide range of
logistics services.
 Examples: AEI, Kuehne & Nagle, Fritz, Circle, C.
H. Robinson, Hub Group

6. Types of 3PL Providers
 Financial Based
 Provide freight payment and auditing, cost
accounting and control, and tools for monitoring,
booking, tracking, tracing, and managing
inventory.
 Examples: Cass Information Systems, CTC, GE
Information Services, FleetBoston

7. Types of 3PL Providers
 Information Based
 Significant growth and development in this
category of Internet-based, business-to-
business, electronic markets for transportation
and logistics services.
 Examples: Transplace, Nistevo

8. Logistics?
 Logistics:Managing the flow of information
and goods inbound from suppliers and
outbound to customers.
 Why be good at this?
 Core competency?

9. Why Use 3PL’s?
 Save time
 Don’t need to invest in:
 Trucks
 Training
 Development
 Help expand
 New markets
 International
 No roads

10. Why Use Cont.
 Narrow your focus
 Allows you to focus on your strengths
 Don’t get spread too thin
 Reach more customers more effectively
 Can ensure delivery times
 can help a company run leaner

11. Management Focus
 Furthering your company
 Consider potential benefits and drawbacks
 3pl’s can increase profitability
 Can you be a 3PL to someone else?

12. Levels of Outsourcing
 Transactional Outsourcing: Based on transactions, with no
long term contracts and no bonding between the 3PL and the
outsourcing company.
 Tactical Outsourcing: Outsourcing on a long term basis with
negotiated contacts and integrated IT systems to facilitate free
information flow and create supply chain visibility.
 Strategic Outsourcing: Based on long-term relationships with
successful outcomes, 3PL companies become partners in supply
chain management and establish transactional transparency.

13. 3PL Defined
 Can be ambiguous as there are many definitions
 Some say “all or a significant part”
 Some say “at least one part”
 Best definition is probably a combination:
 Businesses that provide one or many of the following
logistics services:
 Transportation Management
 Public/Contract Warehousing
 Distribution Management
 Freight Consolidation

14. As a Manager…
Which 3PL Provider Do I Choose?
 Inbound Logistics recognizes top 10
 Uses its readers to conduct vote
 Over 300 companies nominated with 3,000+
votes
 Top 3 this year:
 1) UPS Supply Chain Solutions
 2) Schneider Logistics
 3) C.H. Robinson

15. How is a 3PL Differentiated From a
Transportation Provider?
 Transportation provider gets product from
point A to point B
 Could be considered a 3PL
 Just one function of logistics
 3PL provider assists in multiple functions

16. Successful Implementation of 3PL
 Why you want to select the right provider the first time
 Only about 65% of companies believe their provider is doing a
“good” job.
 55% of logistics outsourcing contracts end in 3-5 years
 The source had a list of 14 key tips for success, but we are going
to focus on the 5 most important issues.

17. Tips for Successful Implementation
1) Have an outsourcing strategy.
 Know what your outsourcing strategy is. It needs to be well thought
out and measured against in house solutions and capabilities.
 SWOT analysis. As a company you should understand the strengths,
weaknesses, opportunities and threats of outsourcing logistics, rather
than keeping them in house.
2) Do your homework.
 Do a comprehensive study
 Clearly document advantages, challenges, costs and benefits.
 Document expectations
 Set down expectations in clear terms and include current costs.

18. Tips Continued…
 Create a robust selection process.
 Invite companies in to give a formal presentation without giving
requirements. This can help document their strengths and weaknesses.
 Make a site visit to the 3PL, and talk with its existing customer.
3) Measure and review performance
 Have a efficient and accurate measurement system.
 Qualitative measures that focus on effectiveness and quantitative
measures that focus on efficient utilization.
 Have an efficient costing system
 This will help you to understand the costs involved in outsourcing.
 “Are we making money doing this?”

19. Tips Continued…
4) Create an Implementation Strategy
 Create a project plan road map
 Be clear who does what, create a project management team with
members from both organizations and review progress vs. planned
milestones.
5) Nurture the Relationship
 Both Parties must nurture the relationship to make outsourcing
successful.
 Create mutual trust, respect and a sense of integrity.

20. 4PL Providers
 Manage and direct the activities of multiple
3PLs, serving as an integrator
 Refinement on the idea of 3PLs
 4PLs are not asset based like 3PLs
 Assembles and manages the resources,
capabilities, and technology of its own
organization and other organizations to
design, build and run comprehensive supply
chain solutions

21. Transways Express 4PL
 One stop transport and logistics supplier
 Work with suppliers and customers

22. Questions?

23. Sources
 3PL definition:
http://accuracybook.com/glossary.htm
 Top 10 3PL providers:
http://www.inboundlogistics.com/3pl/awards.shtml
 Successful 3PL implementation:
http://logistics.about.com/od/thirdparty/a/uc041805a.htm
 Sangam, VK. (2006). Implementing Third Party Logistics. Retrieved
May 5th, 2006. From Massey University, About Business and Finance
website:
http://logistics.about.com/od/thirdparty/a/uc041805a.htm
 Red Prairie:
http://www.redprairie.com/Industry%20Solutions/Third%20Party
%20Logistics.aspx
 Class lecture slides:
http://logistics.about.com/od/thirdparty/a/uc041805.htm