Third party logistics companies provide logistics services for their client for part, or all of their supply chain management functions. Most of the providers have combined operation like warehousing and transportation services which can be customized according to their customers’ needs.
Customers’ need and market conditions often set the specialty of the provider. If you think about the entire supply chain operation, starting from manufacturing, to packaging, labeling, transportation, warehousing and distribution, there are a lot of steps, requirements and demands involved. Companies may choose to outsource any of these steps of the supply chain to a third-party logistics provider. Outsourcing services to providers may help cut transportation costs, reduce inventory, improve business processes, technology strategy and integration, manage supply level and improve customer service.
We even see today some experienced import and export companies providing some of their services to other companies because of their well established infrastructure and technology.
There are 4 types of 3PL providers and each of them specializes in different services:
Standard 3PL Providers
Standard 3PL providers perform basic logistics function but don’t practice 3PL as a core function. These 3PL companies provide with the most basic activities like warehousing, pick and pack and also distribution. These 3PL providers neither offers a comprehensive, innovative approach to logistics functions, instead offering a small range of services to companies with particular needs and their service usually comes under low rate.
3PL Service Developers
Service Developers offer their customers logistics support of a standard 3PL along with added infrastructure and management. Service developers 3PL are based on a strong IT infrastructure. They provide the clients with many value added services such as tracking, cross docking, specific packing or unique security system etc. Because of these added infrastructure and expertise, companies that hire service developer 3PL can ensure the safety and reliability of their products. But service developers don’t offer the comprehensive, tailored transportation management solutions.
3PL Customer Adapters
Customer adapters exercise complete control over a company’s logistics activities, making them a wiser choice than standard 3PL providers and service developers for companies that desire comprehensive shipping management. They take care of all the company’s logistic activities on the request of their client. Customer Adapter 3PL in essence entirely runs the logistics at the behest of the hiring company. This type of 3PL inherits the logistical operation from the hiring company but it does not create its own operation. Customer adapters also cost significantly more because of their heavy personnel involvement in the logistics function.
3PL Customer Developers
Customer developers offer a comprehensive approach and specialized innovative logistics solutions. Customer developers take complete control of the company’s logistic functions and integrate themselves into the company and exhibit complete control over the logistics function and develop new logistics solutions or might change the process if needed. Similar to the customer adapter, the customer developer takes over the logistics of the hiring company entirely. But, unlike the customer adapter, the customer developer 3PL integrates itself with the hiring business.