378:. Another point that distinguishes 2PL and 3PL is the specification and customizing of services. A 2PL normally only provides standardized services, whereas 3PLs often provide services that are customized and specialized to the needs of their customer. This is possible due to long-term contracts that are usual in the third-party logistics market. Cost-effectiveness of a third-party logistics provider is only given over long periods of time with stable contract and profits. In contrast to that, second party logistics services can't be customized, concerning to the fluctuating market with hard competition and a price battle on a low level. And there we have another distinguishing point between 2PL and 3PL: Durability of contracts. 3PL contracts are long-term contracts, whereas 2PL contracts are of low durability so that the customer is flexible in responding to market and price changes.
382:
freight quoting, financial settlement, auditing, tracking, customer service and issue resolution. However, they do not employ any truck drivers or warehouse personnel, and they don't own any physical freight distribution assets of their own – no trucks, no storage trailers, no pallets, and no warehousing. A non-assets based provider consists of a team of domain experts with accumulated freight industry expertise and information technology assets. They fill a role similar to freight agents or brokers but maintain a significantly greater degree of “hands-on” involvement in the transportation of products. These providers are 4PL and 5PL services.
362:
mostly placed short term. 2PLs provide own and external logistics resources like trucks, forklifts, warehouses etc. for transport, handling of cargo or warehouse management activities. Second-party logistics arose in the course of the globalization and the uprising trend of lean management when the companies began to outsource their logistics activities to focus on their own core competencies. Examples are courier, express and parcel services; ocean carriers, freight forwarders and transshipment providers.
36:
386:
company
Accenture. Firms are outsourcing their selection of third-party logistics provider and the optimization process of the integration of these to a PL as an intermediary. That reduces costs and the 4PL have to have an overview of the whole logistics market to choose the ideal 3PL for all operative logistic activities. For being able to provide such an ideal solution fourth-party logistics providers need a good knowledge of the logistics branch and a good
41:
31:
340:
to fit to the structures and the requirements of the company. This fit is more important than the pure cost savings, like a survey of 3PL providers shows clearly: The customer orientation in form of adaptability to changing customer needs, reliability and the flexibility of third-party logistics provider were mentioned as much more important than pure cost savings.
258:
services that integrate parts of the supply chain. A provider of such integrated services is referenced as a third-party supply chain management provider (3PSCM), or as a supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.
517:
providers market the benefit of what is known as zone skipping to potential clients, because it shortens the distance between products to be shipped and customers, resulting in lower shipping costs. This also allows businesses to more predictably manage their resources including workforce size, and turn fixed costs into variable costs.
349:
big company size, a good customer base and established network systems. 3PL providers may sacrifice efficiency by preferring their own assets in order to maximize their own efficiency. Lead logistics providers may also be less bureaucratic with shorter decision-making cycles due to the smaller size of the company.
469:
extending common transportation networks, their warehouse infrastructure and the ability to provide more complex service packages by combining resources. On the other hand, LSPs can "access intangible resources, which are not directly exploitable". This includes know-how and information and, in turn, innovation.
560:
Numerous studies have shown that selling products online, rather than in a brick and retail environment, adds extra costs when it comes to handling returns (i.e., reverse logistics). The reliance upon third-party logistics providers to handle aspects of the e-commerce supply chain such as warehousing
539:
One disadvantage is the loss of control a client has by using third-party logistics. With outbound logistics, the 3PL provider usually assumes communication and interactions with a firm's customer or supplier. To mitigate this, some 3PL's attempt to brand themselves as their clients, such as applying
393:
Fifth party logistics providers (5PL) provide supply chain management and offer system-oriented consulting and supply chain management services to their customers. Advancements in technology and the associated increases in supply chain visibility and inter-company communications have given rise to a
365:
The most significant difference between a second party logistics provider and a third-party logistics provider is the fact that a 3PL provider is always integrated into the customer's system. The 2PL is not integrated; in contrast to the 3PL, it is only an outsourced logistics provider with no system
339:
Outsourcing may involve a subset of an operation's logistics, leaving some products or operating steps untouched because the in-house logistics is able to do the work better or cheaper than an external provider. Another important point is the customer orientation of the 3PL provider. The provider has
334:
this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed
361:
Second-party logistics providers (2PL) are service providers which provide their specialized logistics services in a larger (national) geographical area than the 1PL do. Often there are frame contracts between the 2PL and the customer, which regulate the conditions for the transport duties that are
348:
3PL providers without their own assets are called lead logistics providers. Lead logistics providers have the advantage that they have specialized industry expertise combined with low overhead costs, but lower negotiating power and fewer resources than a third-party provider has based on a normally
327:
this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company's logistics activities. The 3PL provider improves the logistics dramatically, but does not develop a new service. The customer base for this type of 3PL provider is typically
584:
Unlike in-house logistics, 3PL provider often unable to address the concerns of the clients to reach the goal of cost optimization with the trade of convenience, capacity, and scale. This results in increasing the cost of operation for the company once the service user grows in size. Therefore, in
402:
On-demand transportation is a relatively new term coined by 3PL providers to describe their brokerage, ad-hoc, and "flyer" service offerings. On-demand transportation has become a mandatory capability for today's successful 3PL providers in offering client specific solutions to supply chain needs.
357:
First party logistics providers (1PL) are single service providers in a specific geographic area that specialize in certain goods or shipping methods. Examples are: carrying companies, port operators, depot companies. The logistics department of a producing firm can also be a first party logistics
385:
A fourth party logistics provider has no owned transport assets or warehouse capacity. They have an allocative and integration function within a supply chain with the aim of increasing the efficiency of it. The concept of a fourth-party logistics provider was born in the 1970s by the consulting
381:
With companies operating globally, the need to increase supply chain visibility and reduce risk, improve velocity and reduce costs – all at the same time – requires a common technological solution. Non-asset based providers perform functions such as consultation on packaging and transportation,
257:
services that can be scaled and customized to customers' needs, based on market conditions, to meet the demands and delivery service requirements for their products. Services often extend beyond logistics to include value-added services related to the production or procurement of goods, such as
406:
These shipments do not usually move under the "lowest rate wins" scenario and can be very profitable to the 3PL that wins the business. The cost quoted to customers for on-demand services are based on specific circumstances and availability and can differ greatly from normal "published" rates.
516:
Third-party logistics providers can provide higher flexibility for geographic distribution and may offer a larger variety of services than clients could provide for themselves. Postal services and private couriers typically factor in distance when they calculate the cost of shipping; many 3PL
486:
The equipment and the IT systems of 3PL providers are constantly updated and adapted to match the requirements of their customers and their customer's suppliers. Producing or selling companies often do not have the time, resources, or expertise to adapt their equipment and systems as quickly.
468:
between logistics service providers, i.e., the cooperation between two or more logistics companies that are potentially competing. Logistics companies can benefit twofold from such an alliance. On the one hand, they can "access tangible resources which are directly exploitable". This includes
451:
New brokers tend to use what has become known as "smile and dial" brokering that essentially work as telemarketing call centers. Brokers have no obligation to successfully ship all loads (as opposed to contract logistics providers) and almost all sales representatives are heavily (and 100%)
495:
If most or all operative functions are outsourced to a 3PL provider, there is usually no need for the client to own its own warehouse or transport facilities, lowering the amount of capital required for the client's business. This is particularly beneficial if a company's warehouse has high
525:
3PL Providers typically have a large network of carriers (air, ground, and ocean) which are located all throughout the state, country, or region of the globe. This allows them to connect the dots and service their customers no matter where they are trying to transport their commodities.
390:. A fourth party logistics provider selects the 3PL providers from the market which are most suitable for the logistical issues of their customer. Unlike the allocative function of a 4PL in the supply chain, the core competence of a 3PL provider is the operative logistics.
482:
Logistics is the core competence of third-party logistics providers. Providers may have better related knowledge and greater expertise than the producing or selling company, and may also have more global networks enabling greater time and cost efficiencies.
366:
integration. A 2PL works often on call (e.g. express parcel services) whereas a 3PL is almost every time informed about the workload of the near future. As technology progresses, the methodology for notifying a 3PL of inbound workload usually falls on
504:
Logistics outsourcing allows companies with limited logistics expertise to focus on their core business. Increasing complexity in business suggests that companies benefit from not devoting resources to areas in which they are not skilled.
456:(the difference between what the shipper pays the brokerage and what the brokerage pays the carrier), and the commission compensation scheme means that the turnover of personnel in the call centers approaches 100% per year.
261:
The global 3PL market reached $ 75 billion in 2014, and grew to $ 157 billion in the US; demand growth for 3PL services in the US (7.4% YoY) outpaced the growth of the US economy in 2014. As of 2014, 80 percent of all
548:
The IT systems of the provider and the client must be interoperable. Technology helps increase visibility for the client by way of continuous status updates via
Dispatch Management Software and
573:
in China come with an influx of returned products, which can slow down warehouse operations and in turn delay the issuing of refunds or other methods for mitigating dissatisfied customers.
824:
508:
3PLs often specialize in specific industries. Their experience can help clients scale their business quickly through levering the logistics providers knowledge across their industry.
292:
companies, and other companies integrating and offering subcontracted logistics and transportation services. Hertz and
Alfredsson (2003) describe four categories of 3PL providers:
303:, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not quite their main activity.
668:
585:
order to resolve this issue, a proper transition needs to be executed to ensure the operation scaling can be maintained optimally while also minimizing the cost.
850:
552:(EDI) which does involve a cost, but it can help avoid penalties for delays and subsequent financial losses such as from not unloading freight in time.
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Various industries have found ways to capitalize on reverse logistics by recycling materials such as metal and electrical goods recycling.
207:
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commissioned, and much of the workers' day is spent cold-calling sales leads. Smile-and-dial brokerages typically require a 15% gross
749:
Leahy, S.; P. Murphy; and R. Poist (1995). "Determinants of
Successful Logistics Relationships: A third Party Provider Perspective".
996:
Aldebert, Lucie; Hudziak, Jeremy (2012). "Addressing quality problems in 3PL processes - a case study in 3PL Company".
413:
Specific modes of transport that may be subject to the on-demand model include (but are not limited to) the following:
629:
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200:
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variations in capacity utilization, leading to overpurchasing of warehouse capacity and reducing profitability.
693:
Hertz, Susanne; Monica
Alfredsson (February 2003). "Strategic development of third party logistics providers".
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and pick-and-pack also means these companies must be relied on to handle reverse logistics. Artificially
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relatively new model for third-party logistics operations – the "non-asset based logistics provider."
85:
317:, specific packaging, or providing a unique security system. A solid IT foundation and a focus on
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On-demand transportation is a niche that continues to grow and evolve within the 3PL industry.
118:
1022:
762:
669:"Want a Better Supply Chain? Here Are 4 Reasons to Outsource Your Transportation Management"
435:
Expedited services: (direct, exclusive courier) Immediate delivery or "just-in-time" (JIT)
432:
Next Flight Out, sometimes also referred to as Best Flight Out (commercial airline shipping)
309:
this type of 3PL provider will offer their customers advanced value-added services such as:
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clients' logos on their assets and dressing their employees like their clients' employees.
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this is the most basic form of a 3PL provider. They would perform activities such as,
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Third-party logistics providers typically specialize in integrated operations of
153:
652:"Outsourcing Transport and Warehousing: Pricing, Honesty and Contentious Issues"
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and scope will enable this type of 3PL provider to perform these types of tasks.
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254:
171:
984:
Designing and
Managing the Supply Chain: Concepts, Strategies and Case Studies
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Designing and
Managing the Supply Chain: Concepts, Strategies and Case Studies
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Designing and
Managing the Supply Chain: Concepts, Strategies and Case Studies
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Designing and
Managing the Supply Chain: Concepts, Strategies and Case Studies
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927:"The interplay of different types of governance in horizontal cooperations"
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882:"Fourth Party Logistics (4PLP); what this means for your Supply Chain"
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30:
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289:
810:
N. Schröter, I. Schröter, Supply Chain
Management und Logistik,
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Ghiani, Gianpaolo; Laporte, Gilbert; Musmanno, Roberto (2004).
973:, third edition, McGraw-Hill International Edition, page 251.
986:, third edition, McGraw-Hill International Edition, page 250
785:, third edition, McGraw-Hill International Edition, page 253
739:, third edition, McGraw-Hill International Edition, page 252
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provider if they have own transport assets and warehouses.
367:
692:
621:
Introduction to Logistics Systems Planning and Control
617:
464:Raue & Wieland (2015) describe the example of
934:The International Journal of Logistics Management
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855:ControlPay — Global Processing of Transport Data
825:"Supply Chain Visibility Is Ranked Top Priority"
721:Selecting a Third Party Logistics (3PL) Provider
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851:"11 Ways to Gain Global Transport Cost Control"
231:) is an organization's long term commitment of
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767:: CS1 maint: multiple names: authors list (
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284:Third-party logistics providers include
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673:Talking Logistics with Adrian Gonzalez
656:Australian Freight Logistics Magazine
624:. John Wiley & Sons. p. 5.
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429:Hotshot (direct, exclusive courier)
13:
904:"Fifth Party Logistic Model (5PL)"
534:
14:
1063:
880:Jordan, Dave (7 September 2010).
701:(2). Elsevier Science: 139–149.
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276:used some form of 3PL services.
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695:Industrial Marketing Management
827:. 22 July 2013. Archived from
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441:(Inbounding & Outbounding)
370:that connect, for example, an
96:Distribution resource planning
1:
707:10.1016/S0019-8501(02)00228-6
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269:companies and 96 percent of
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798:, Springer Verlag pp. 47+48
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550:Electronic Data Interchange
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124:Warehouse management system
10:
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982:Simchi-Levi and Kaminsky,
969:Simchi-Levi and Kaminsky,
814:, Stuttgart 2010, Seite 15
781:Simchi-Levi and Kaminsky,
735:Simchi-Levi and Kaminsky,
139:Field inventory management
946:10.1108/IJLM-08-2012-0083
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569:in the United States or
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398:On-demand transportation
344:Lead logistics providers
279:
86:Sustainable distribution
1047:Supply chain management
447:International Expedited
163:Industry classification
796:Strategische Allianzen
658:. Retrieved 2014-3-25.
491:Low capital commitment
331:The Customer Developer
119:Packaging and labeling
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478:Cost and time savings
444:White-glove transport
296:Standard 3PL Provider
221:Third-party logistics
101:Third-party logistics
466:horizontal alliances
460:Horizontal alliances
324:The Customer Adapter
311:tracking and tracing
61:Digital distribution
56:Distribution centers
48:Distribution methods
16:Concept in logistics
906:. LogisticsGlossary
861:on 24 February 2019
425:Less-than Truckload
182:Commercial aviation
134:Delivery (commerce)
831:on 18 October 2014
319:economies of scale
286:freight forwarders
177:Maritime transport
149:Stock keeping unit
144:Inventory turnover
110:Management systems
91:Commercial vehicle
23:Business logistics
1017:Missing or empty
812:Kohlhammer Verlag
751:Transport Journal
580:Poor Optimization
556:Reverse logistics
388:IT infrastructure
376:fulfilment center
306:Service Developer
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76:Order fulfillment
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129:Supply chain
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794:Arno Heck,
512:Flexibility
439:Warehousing
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233:outsourcing
1036:Categories
1019:|url=
884:. Exchange
865:21 January
835:21 January
679:2015-12-06
606:References
473:Advantages
1052:Logistics
954:166497725
637:8 January
244:logistics
1010:cite web
1002:53127758
600:Shipping
589:See also
521:Capacity
423:LTL, or
417:FTL, or
757:: 5–13.
595:Freight
374:with a
290:courier
272:Fortune
265:Fortune
1000:
952:
628:
353:Layers
227:, or
998:S2CID
950:S2CID
930:(PDF)
500:Focus
280:Types
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