Global Logistics and Supply Chain Strategies - April 2008 - (Page 6)

3PLs—at Your Service. What Will You Have? services that set third-party logistics providers apart from mere transportation companies or warehousers. And as competition has ramped up among them, 3PLs have sought to distinguish themselves by offering a menu as full of services as they could. You need cross-docking, kitting, even light assembly, we’ve got that. How about supply chain network analysis and design? Or somebody to run your call center and fulfillment operations? No problem. Would you like regional strength or global reach with that? They’re at your service. Our cover story this month stems from a report by Armstrong & Associates, which specializes in supply chain management and 3PL market research. Based on more than 3,300 partnerships between 3PLs and their customers, the study analyzed how companies use logistics services providers, and to what extent. The research specifically delves into such major categories as automotive, retailing and technology to determine the trends in each. It’s in these three areas that supply chain management and lead logistics provider relationships are most likely to develop. They are also likely to involve larger accounts than those found in other verticals. It’s no surprise, then, that company size is a good predictor of 3PL use; the larger the company, the more likely it will have at least one relationship with a 3PL. Conversely, the larger the provider, the more likely it will concentrate on selling its services to the Fortune 250 or so. I t became quite clear a number of years ago that it was value-added Smaller providers are often the best match for smaller enterprises, and most of those 3PLs target that level of account. Some stats: Logistics providers are developing business opportunities at three to four times the rate of growth in the U.S. GDP. Armstrong & Associates estimates that the overall U.S. 3PL market will expand 7.5 percent this year, give or take 1.5 percent. Evan Armstrong, company president and the author of our article, writes: “We estimate 3PL penetration of the total potential U.S. 3PL market is 16 percent, up from 10 percent in 2002. Consistent with this figure is A&A’s estimate of total U.S. 3PL revenues increasing from $65.3bn in 2001 to $122bn in 2007. A&A’s estimate of the 2006 3PL revenues from the Global Fortune 500 is $162.4bn. These companies account for 38.9 percent of the $417.1bn global 3PL market.” Not only are sales growing, but so are the number of services per contract. That’s especially true in automotive and technology, says Armstrong, “indicating the higher degree of differentiated, mature supply chains in these verticals.” The number of services rendered per each customer relationship has risen since 2004 to an average of three. Clearly, spinning off non-core functions has been the order of the day for years. But it seems that companies are finding more and more of that kind of thing that they want their 3PLs to do. And it’s just as certain that service providers are ready and waiting to take your order. They’re at your service. Russell W. Goodman rgoodman@glscs.com 6 APRIL 2008

Table of Contents Feed for the Digital Edition of Global Logistics and Supply Chain Strategies - April 2008

Global Logistics and Supply Chain Strategies - April 2008 Contents Editorial GL & SCS Exclusive Fast Forward Up Front Cover Story: Continuing to Add Ever More to Their Offerings, 3PLs Are - At Your Service Over the Long Haul Opinion: Freight Audit Bill Can't Show All Mistakes that Hurt the Bottom Line Opinion: The ‘Good-Freight’ and ‘Bad-Freight’ Trucking Customers Industry Voices

Global Logistics and Supply Chain Strategies - April 2008

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