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Third Party Logistics Providers (3PL). Kyle Sera Amy Irvine Scott Andrew Carrie Schmidt Ryan Lancaster . Overview. What are 3PL’s Why use them Tips for implementation of 3PL’s 4PL’s. Types of 3PL Providers. Transportation Based

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third party logistics providers 3pl

Third Party Logistics Providers (3PL)

Kyle Sera

Amy Irvine

Scott Andrew

Carrie Schmidt

Ryan Lancaster

  • What are 3PL’s
  • Why use them
  • Tips for implementation of 3PL’s
  • 4PL’s
types of 3pl providers
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
types of 3pl providers4
Types of 3PL Providers
  • Warehouse/Distribution Based
    • Many have former warehouse and/or distribution experience.
    • Examples: DSC Logistics, USCO, Exel, Caterpillar Logistics, IBM
types of 3pl providers5
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
types of 3pl providers6
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

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
  • Logistics: Managing the flow of information and goods inbound from suppliers and outbound to customers.
  • Why be good at this?
  • Core competency?
why use 3pl s
Why Use 3PL’s?
  • Save time
    • Don’t need to invest in:
      • Trucks
      • Training
      • Development
  • Help expand
    • New markets
    • International
      • No roads
why use cont
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
management focus
Management Focus
  • Furthering your company
  • Consider potential benefits and drawbacks
  • 3pl’s can increase profitability
  • Can you be a 3PL to someone else?
levels of outsourcing
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.
3pl defined
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
as a manager which 3pl provider do i choose
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
how is a 3pl differentiated from a transportation provider
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
successful implementation of 3pl
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.
tips for successful implementation
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.
tips continued
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?”
tips continued19
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.
4pl providers
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
transways express 4pl
Transways Express 4PL
  • One stop transport and logistics supplier
  • Work with suppliers and customers
  • 3PL definition:

  • Top 10 3PL providers:

  • Successful 3PL implementation:

  • Sangam, VK. (2006). Implementing Third Party Logistics. Retrieved May 5th, 2006. From Massey University, About Business and Finance website:

  • Red Prairie:

  • Class lecture slides: