Third-Party Logistics (3PL’s) play an important role in supply chain management, exclusively in the developed and developing nations, and the logistics industry has seen a huge growth in the past few decades. The larger companies currently demand a single vendor for their global supplies and support their operations. There are advantages and disadvantages of 3PL’s and depending on the advantages the companies choose their vendors for the logistics. The decision to retain the 3PL services in a company is decided by the higher management, the corporate level and sometimes by the logistics managers and managers from functional areas. There have been signs of dissatisfaction among shippers that use third party logistics and this has been a critical factor for the decline in the growth of 3PL’s.
The services of third party services are provided on three levels that include basic service providers, value added service providers, and logistics integrators. Companies outsource to improve the company focus, speed up the reengineering benefits, minimize the operating costs, and eliminate problems. Companies that outsource are also aware about the risks involved in outsourcing. Few risks are leakage of sensitive data and information, co-ordination costs, and damage of in-house logistics management capability. The growth of 3PL’s mainly depends on the customer satisfaction and the new clients, and maintaining a healthy relationship with these clients can accelerate growth for these logistics companies.
3PL’s are also in business of inventory trading information. Private Fleets and Warehousing are some specific areas of outsourcing. With the increase in World Wide Web, many 3PL companies have found their presence on Internet. The information provided on these websites is useful for the companies looking for a 3PL, and even to the companies that need an advice on 3PL. A few examples of such companies are Cranfield Center for Logistics and Transport, Georgia Tech's Logistics Institute and many more that can be obtained from the April 1996 issue of Distribution magazine.