3PL COMPANIES (Essay Sample)

3PL COMPANIES

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The growth of 3pl companies began back in the 1980,s when business began to look for new ways in which they could outsource logistics functions and concentrate on their core business, one company that has been associated with 3pl revolution is FedEx Company. The company’s overnight delivery services changed the way in which business to business and business to customer transactions operated. This offered business opportunity of using just in time techniques led to smaller and more efficient shipment sizes, which in turn further reduced costs. There was also increased globalization and increased use of information technology. These trends resulted in increased demand on firm’s products and possibilities for companies to operate more competitively and leanly. Furthermore as companies saw the benefits of outsourcing delivery and warehousing functions, the number of third party logistics companies began to rise offering an ever increasing number of services .The increasing number of 3pl inevitably led to increased competition between the firms which led to greater savings for companies that employed them. The last decades has seen 3pl provider transition from a local or regional business to one that offers national or global coverage. A 3PL company is a private firm that provides logistics services under a contract to a primary manufacturer, vendor, or user of a product or service. It is called third-party because the logistics provider does not own the products but participates in the supply chain at points between the manufacturer and the user of a given product. The 3PL can perform logistics functions of their customer either completely or only in part. Initially, the 3PL were carriers, storage companies or forwarding agents. Currently, they diversified by offering various services and by ensuring various activities. The principal 3PL have their own warehouses, transport fleets and their credits are often deployed throughout the world. Most 3PL have specialized their services through differentiation, with the scope of services encompassing a variety of options ranging from limited services to broad activities covering the supply chain.