DC Velocity - January 2015

That will likely sound familiar to many 3PL executives. But others are following the convergence path, not just providing customers with integrated logistics services like transportation management and warehousing, but also offering technology and business management services.

Some 3PLs, for example, provide software applications, trading partner connectivity, and data-quality management services that provide customers with timely, accurate, and complete visibility to supply chain events, information, and intelligence. Others provide thought leadership and advice, giving their customers new ideas that will help them make smarter and faster decisions about their supply chain networks, strategy, and practices. Some have risk management capabilities to help customers minimize or eliminate supply chain risks and, more importantly, to help them recover from supply chain disruptions more quickly and with less impact.

There are 3PLs that provide all of those things, yet most don’t view themselves from those perspectives. But perhaps they should, because all of those services represent opportunities to differentiate themselves from the competition.

FOCUS ON OUTCOMES

What does this all mean for manufacturers and retailers looking for a logistics solution provider?

The first step remains the same: They have to clearly define their desired outcomes. But when it comes to finding the right partner to help them reach those objectives, they need to take a fresh look at the market—beyond the traditional labels of 3PL, software vendor, and consultant. The reality is that manufacturers and retailers have a diversity of options today, and regardless of how it may be labeled, the best outsourcing partner is the one that can provide the right mix of technology, services, and advice to help customers achieve their desired outcomes.

Manufacturers and retailers also have to recognize that the traditional way of managing 3PL relationships— viewing them as suppliers, with short-term agreements that are focused on providing the lowest-cost solution—is also becoming stale and limiting. To reach higher levels of performance and benefits, manufacturers and retailers need to start engaging in true collaboration and exploring vested relationships with their partners. (“Vested,” a business model and methodology developed by the University of Tennessee, refers to outsourcing relationships that reward both partners for achieving mutually beneficial outcomes.)

And that would be the ultimate manifestation of convergence: 3PLs and customers developing a joint business plan and shared vision statement that align with the objectives and desired outcomes of the end customers, which in many cases are consumers like you and me.