It simply means that a third party is involved in a companys logistics operations, in addition to the shipperreceiver and the carrier. Areas like transportation and warehousing are growing annually at a rate of. An introduction to 3pl what do third party logistics companies really do. Dec 03, 2018 first party logistics service provider is an entity that goes with an independent system. A third party logistics provider abbreviated 3pl, or sometimes tpl is a firm that provides service to its customers of outsourced or third party logistics services for part, or all of their supply chain management functions. Thus, to cement an agreement with all concerned parties, a 3pl logistics contract is a necessity. Here is an example of how 3pl arrangements operate. Logistics is a one of the common function that companies usually outsourced.
A 4pl is a fourth party logistics provider and it essentially takes third party logistics a step further by managing resources, technology, infrastructure, and even manage external 3pls to design, build and provide supply chain solutions for businesses. Definition thirdparty logistics is simply the use of an outside company to perform all or part of the firms materials management and product distribution function. Effect of logistics outsourcing on the operational. Learning the difference between a third party logistics 3pl and fourth party logistics 4pl as well as 1pl and 2pl, and the rise of even fifth party logistics 5pls is both confusing and highly debated. A 4pl company, on the other hand, arranges the same services and more for a client but does so by employing companies such as 3pl companies. Top 100 third party logistics 3pl providers inbound logistics.
The decision to keep this function inhouse or contract with one or many thirdparty logistics 3pl companies is. Download versacold thirdparty logistics english pdf. Theyre listed alphabetically to make this a solutionsbased resource, rather than to rank one provider over another. Lead logistics providers llps, also referred to as fourthparty logistics 4pl providers, have a broad role within the supply chain. Pdf outsourcing, the strategy in which organizations employ the services of external providers, has attracted growing interest. Its amazing what most consumers take for granted these days. There are four distinct logistics options to consider here. The 2018 22nd annual thirdparty logistics study shows the continuation of positive relationships between shippers and thirdparty logistics providers. It is often more costeffective and quicker to add capabilities through third party logistics than to fund inhouse expansion to provide these same capabilities. Theoretical framework of third party logistics third party logistics plays a significant role in reduction of. This is evident in a linkedin discussion where the debate of 3pl vs 4pl garnished 70 comments.
Fourth party logistics market 2027 by types, application. It runs its own logistics operation and it is not a secret that a company requires logistics to run a business activity. The 2020 24th annual thirdparty logistics 3pl study examines the global outsourced marketplace and leading trends for shippers and 3pls in the logistics industry. First party logistics service provider is an entity that goes with an independent system.
Shoppers expect to find shelves stocked with merchandise from competing brand names each time they walk into a local store. Conceptual study on 3pl4pl new trends for service industry. Pdf in this article, the authors describe the results of a study on strategies of thirdparty logistics tpl providers. As businesses differ in size and scope, so to do their logistics plans and distribution efforts. Third party logistics and fourth party logistics operate the same way but consist of different parts. An introduction to 3pl what do thirdparty logistics. Managing supply chain with third party logistics provider an overview of the integration applies to. Implementation plan for third party logistics providers 3pls since its inception, the customstrade partnership against terrorism ctpat program has sought to enhance supply chain security. Negotiating and drafting thirdparty logistics provider. A 4pl is a fourthparty logistics provider and it essentially takes thirdparty logistics a step further by managing resources, technology, infrastructure, and even manage external 3pls to design, build and. Third party logistics has many definitions and interpretations. Difference between 4pl vs 3pl logistics penske logistics. This evolution in supply chain outsourcing is fourth party logistics or 4pl.
Transportation and logistics companies will need to focus. Third party logistics services explained, the different types of 3pls, and the various levels of outsourcing as a third party logistics services company, cerasis is always speaking to potential shippers as customers who are well, just plain confused about what the heck is a 3pl. Check out tools and resources from tagg logistics, an outsourced logistics partner serving the entire continental united states. Fourth party logistics are generally better suited for mediumtolarge businesses, while third party logistics are more suitable for smalltomedium businesses.
Third party logistics 3pl companies handle outsourced procurement, transportation and distribution functions for client companies. The services include managing warehouses, providing solutions, creating organizational structures, handling the. Jun 08, 2016 negotiating and drafting thirdparty logistics provider agreements historical approaches and the new type of agreement selecting 3pl providers negotiating contracts with 3pl providers measuring performance terminating 3pl provider relationships goal 6. Likewise, thirdparty logistics 3pl providers are also being negatively impacted by the pandemic due to social distancing, uncertain lockdowns, and closed borders. Below is the list of companies featured in the 2019 top 100 3pls. Pdf an analysis of third party logistics performance and. While third party logistics outsourcing is accepted business practice though not without risk, corporations are now looking to outsource to a single partner who will assess, design, build, run and measure integrated comprehensive supply chain solutions on their behalf. Thirdparty logistics 2nd editionchinese edition by liu sheng chun li yan feng deng jan 1, 2000. That is why businesses engage with thirdparty logistics firms to address logistical needs. Role of third party logistics in supply chain management. Pdf the supply chain role of thirdparty logistics providers. Learning the difference between a third party logistics 3pl and fourth party logistics 4pl as well as 1pl and 2pl, and the rise of even fifth party logistics 5pls is both confusing and highly debated among those in the supply chain industry. Thirdparty logistics abbreviated as 3pl, or tpl in logistics and supply chain management is an organizations use of thirdparty businesses to outsource elements of its distribution, warehousing. It runs its own logistics operation and it is not a secret that a company requires logistics to run a.
Among the 1pl 2pl 3pl 4pl and 5pl, the 4th party logistics is a new concept which is coming into the market, and it involves employing an overseer for managing an. Customer expectations continue to increase, and, as a result, shippers have greater expectations of what those within the supply chain industry should deliver. Aug 22, 2018 the term third party logistics provider, or 3pl, has been around since the 1970s. That is why businesses engage with third party logistics firms to address logistical needs. Greater availability of data and the ability to make realtime decisions are driving both parties towards more meaningful partnerships, which is leading to innovative solutions that can provide a. Keywords third party logistics, outsource, logistics, supply chain management, warehousing, transportation. The 2020 annual third party logistics study continues the tradition of exploring trends in shippers use of outsourced logistics services and tracking the dynamics of 3plshipper. Third party logistics 3pl is the function by which the owner of goods the client company outsources various elements of the supply chain to one 3pl company that can perform the. In order to implement lean supply chain and achieve operational.
Infosys consulting, penske logistics and penn state university. Third party logistics, outsource, logistics, supply chain. Lead logistics providers llps, also referred to as fourth party logistics 4pl providers, have a broad role within the supply chain. A 3rd party logistics is a supply chain that primarily concerns the transportation and delivery of different products but also includes various types of additional services as well. Managing supply chain with third party logistics provider. A book publisher hires writers, editors and graphic designers to produce publications, but it may not want to handle the. Some 3pl services focus on specific segments, like. Fourth party logistics functions at the optimization and integration level while third party logistics focuses more on daily operations. This permit authorizes a facility outside the state to provide or otherwise coordinate warehousing, or other logistics services, of drugs. A 3pl company arranges freight carriers and warehousing by dealing directly with the service providers.
Implementation plan for third party logistics providers 3pls. Pdf an analysis of third party logistics performance. In order to select the most suitable third party logistics providers, choosing the evaluation methods is essential. Free your organization to focus on your core business. Oct 03, 2017 the 2018 22nd annual third party logistics study shows the continuation of positive relationships between shippers and third party logistics providers. Role of third party logistics in supply chain management irjet. The globalization of business and the consequent competitive pressures have placed demand on logistics operations and thus the use of thirdparty logistics.
Supply chain management summary businesses have to manage their supply chain effectively to provide rapid response to the customers while being costeffective and competitive. Third party logistics abbreviated as 3pl, or tpl in logistics and supply chain management is an organizations use of third party businesses to outsource elements of its distribution, warehousing, and fulfillment services. What is the difference between 1pl, 2pl, 3pl, 4pl, and 5pl. It simply means that a third party is involved in a companys logistics. Supply chain management summary businesses have to manage their supply chain effectively to. First party logistics 1pl definition tera logistics. In addition, as we discuss commoditization, there is a large market opportunity for 3pls that is not tapped yet. The 2020 third party logistics study explores how both 3pls and shippers can collaborate to improve and enhance their businesses and supply chains. The services include managing warehouses, providing solutions, creating organizational structures, handling the transportation process flow, and many more. The 20202025 world outlook for third party logistics 3pl by parker ph. Top 100 third party logistics 3pl providers inbound. However, it is at a very nascent stage in india, though some domestic and multinational companies are trying to establish themselves in this sector.
The term thirdparty logistics provider, or 3pl, has been around since the 1970s. They assume many of the same roles as third party logistics 3pl providers, but have much broader responsibility and accountability in helping the customer reach its strategic goals. The 2018 22nd annual third party logistics study shows the continuation of positive relationships between shippers and third party logistics providers. Third party logistics providers typically specialize in integrated operations of warehousing and transportation services. A thirdparty logistics provider abbreviated 3pl, or sometimes tpl is a firm that provides service to its customers of outsourced or third party logistics services for part, or all of their supply. The functions of 3pl include warehousing, terminal operations, customs brokerage, supply chain management and many more. A book publisher hires writers, editors and graphic designers to produce publications, but it may not want to handle the consumer ordering process or transportation of book shipments. While thirdparty logistics outsourcing is accepted business practice though not without risk, corporations are now looking to outsource to a single partner who will assess, design, build, run and. The 2019 23rd annual thirdparty logistics study shows that shippers and their 3pl providers are increasingly moving toward meaningful partnerships and. The decision to keep this function inhouse or contract with one or many third party logistics 3pl companies is.
A steady increase in the need to meet growing ecommerce penetration continues to act as one of the key drivers. Small companies must make extensive investments to expand its logistic capabilities. Results and findings of the 24th annual thirdparty logistics study. Implementation plan for third party logistics providers 3pls since its inception, the customstrade partnership against terrorism ctpat program has sought to enhance supply chain security throughout the international supply chain, from point of stuffing, up to the first u. Third party logistics3pl kuldeep uttam iit roorkee 2. Third party logistics presented by vikram kumar september 19, 20 2. The top 100 3pl providers include wellknown companies, a smattering of 3pl niche providers, and newer companies offering specialized logistics services. Advantages and disadvantages of third party logistics bizfluent.