With more organizations outsourcing some or all of their logistics processes, third-party logistics providers (3PLs) and fourth-party logistics providers (4PLs) have become an important part of the supply chain. These providers offer an increasingly wide range of services that are often customized to the needs of shippers. What remains unclear is the extent to which individual organizations use 3PL/4PL services and how satisfied they are with the services they receive.

To gain insight into these issues, APQC conducted a survey of supply chain professionals. Respondents provided a variety of information, including the types of services they outsource to 3PLs/4PLs and data related to logistics performance. The survey results reveal a surprising gap between the satisfaction of shippers and the logistics performance these organizations achieve. This gap indicates that shippers may not be closely monitoring the performance of their service providers. 3PLs and 4PLs clearly have room to improve service delivery, but shippers should develop closer relationships with providers to facilitate performance improvement.

 

Degree of Outsourcing

For this article, we focus on the extent to which organizations outsource warehousing and/or distribution centers (DCs) and the effect of outsourcing on warehousing performance. According to the survey results, a majority (73%) of participating organizations outsource warehousing and/or DCs to 3PLs or 4PLs to some degree. Of the organizations that outsource, most report some outsourcing to 3PLs or 4PLs, rather than extensive outsourcing.

APQC also asked survey respondents to rate on a three-point scale their satisfaction with logistics functions outsourced to 3PLs/4PLs. It is worth noting that all the responding shippers are at least minimally satisfied with the performance of their 3PLs/4PLs when it comes to operating warehouses and/or DCs. However, the majority of the respondents that outsource warehousing (57%) are only somewhat satisfied with the performance of 3PLs/4PLs for this logistics function. Forty-three percent are very satisfied with how their providers operate warehousing and/or DCs.