Lean Logistics

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A recent article in Logistics Viewpoints got us thinking about lean 3PL providers.  In the early years of third party logistics most providers started out as subcontractors to major asset-based companies who were looking to improve their balance sheets by outsourcing their supply chain management and transportation needs to third parties.
Ideally, a 3PL’s #1 offering should be service – creating flexibility for the client by adapting to markets and rapidly changing its service structure and offerings to meet demands of clients. Thus, it is not very favorable for a 3PL to “grow roots” by acquiring significant assets, which can lead to inflexibility. But, this “industry standard” can change dramatically based on the services offered by 3PLs. Some 3PLs chose to specialize in a particular area.  For example, there are many 3PLs who specialize in storage and own millions of square feet of warehouse space.  Some 3PLs operate with just a phone and a desk and minimal office space. Also there is a new name for 3PL’s who own assets or engage in services to become stakeholders in the process, either buying or owning the goods or assets. These companies are known as 4PL’s.
OCI believes in the minimal asset model for 3PLs, but there are certain types of committed operations that can be acquired if the opportunity exists – for example, technology.  But be wary of being too rigid in you business plan – to succeed in the world of 3PLs’ it is crucial to have an open mind and jump at the opportunity to relieve the customer off its headaches.   At OCI, our software differentiates us from other 3PLs because our clients can use smartphone technology to get the latest information. Most 3PLs rely on licensing other products to get the job done but our path allows us flexibility and technological advantage over others for a price.