Page 107 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes Types of 3PL Providers

Types of 3PL providers are discussed as below:
1. Transportation-Based: Here, the Services extend beyond transportation to offer a
comprehensive set of logistics offerings. There can be two types of Transportation-based
service providers – leveraged and non-leveraged. Leveraged 3PLs use assets of other
firms whereas Non-leveraged 3PLs use assets belonging solely to the parent firm.

Example: Ryder, Schneider Logistics, FedEx Logistics, and UPS Logistics are examples
of 3PLs.
2. Warehouse/Distribution-Based: Many, but not all, have former warehouse and/or
distribution experience. Transition to integrated logistics has been less complex than for
the transportation-based providers.

Example: DSC Logistics, USCO, Excel, Caterpillar Logistics, and IBM are examples of
warehouse/distribution-based 3PLs.

3. Forwarder-Based: These service providers are fundamentally very independent
middlemen extending forwarder roles. These are Non-asset owners that capably provide
a wide range of logistics services.

Example: AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, and the Hub Group are
examples of forwarder-based 3PLs.
4. Financial-Based: These Service providers offer freight payment and auditing, cost
accounting and control, and tools for monitoring, booking, tracking, tracing, and managing
inventory.

Example: Cass Information Systems, CTC, GE Information Services, and Fleet Boston
are examples of financial-based 3PLs.

5. Information-Based: Noteworthy growth and development in this alternative category of
Internet-based, business-to-business, electronic markets for transportation and logistics
services.

Example: Transplace and Nistevo are examples of information-based 3PLs.

Advantages of Outsourcing to 3PL

The normal advantages are: Reduction in workforce, Flexibility in operations, Reduction in
Cycle Time, Improved Responsiveness, Reduction in Logistics Operations Cost, Reduction in
Investment on Infrastructure facilities and Hiring of the expertise at a reasonable cost.

Disadvantages

The disadvantages are loss of control and a negative impact on in-house workforce.

1. Service level commitments are not realized.
2. Strategic management skills are lacking at the Service Provider’s firm.

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