3PLs Flourish As Manufacturers Stick To What They Do Best

The idea behind third-party logistics providers (3PLs) is as basic as wanting to have somebody else do the work for you. Rather than employing and managing a staff of transportation or distribution workers, many manufacturers turn at least a portion of their key logistics tasks to an outside firm that specializes in logistics services. It's all a part of the "core competency" strategy that has manufacturers concentrating on developing and making their products, and then letting an outside firm direct exactly how those products will get to the customer.

Going the 3PL route has become an increasingly popular strategy, as the domestic market for 3PLs has more than doubled since 2000, from $56.6 billion in 2000 to $113.6 billion in 2006, according to supply chain consulting firm Armstrong & Associates Inc. Of that amount, fully one-third is spent by the automotive industry; in fact, General Motors and DaimlerChrysler both employ at least 30 3PLs.

U.S. 3PL Market 1996 To 2006 ($ Billions)