How 3PLs Have Evolved

Many companies today take third-party logistics providers (3PLs) for granted. But did you know that this industry didn't fully begin until the 1990s? Before that era, businesses largely operated by building relationships with other companies around the world. This traditional approach, however, wasn't completely efficient.

Over the years, 3PLs have changed considerably to meet the needs of the evolving business environment. Although you could divide the industry's history into several stages, the following three periods stand out as some of the most important time frames.

The 3PL Industry Emerges

The 3PL industry began in the mid-1990s. At first, supply chain specialists coordinated services among several companies, such as manufacturers, warehouses, forwarders, and trucking companies, to move products from one place to another.

However, many of these specialists realized that they could make supply chains more efficient by forming strong partnerships with other companies. A few realized that they could improve their results by owning several steps of the supply chain. Instead of continually coordinating efforts with trucking companies and manufacturers, these specialists became the trucking companies and manufacturers.

3PL Mergers and Acquisitions

For many years, independent 3PLs coexisted. Although these 3PL providers competed with one another, geographic limitations were enough to keep them in business.

That work process started to change as more companies expanded into new territories. Instead of simply growing their businesses, they purchased smaller 3PLs. The 3PLs that had enough capital managed to consume other organizations so that they could dominate large geographic areas.

Although these large 3PLs were great for sizeable retail businesses, they often fell short for smaller businesses that needed nimbler supply chains that could adapt at a moment's notice. Amid increased pressure, medium-tier 3PLs found themselves increasingly effective at meeting the needs of companies that didn't fit neatly into existing categories.

3PLs Adopt New Technology

During the 1990s, no one could have anticipated how quickly e-commerce would grow as Internet technology developed. In 2011, U.S. consumers spent more than $308 billion online. By the end of 2016, that amount could reach more than $554 billion, according to Statista projections.

This change in how consumers buy products has encouraged 3PLs to adopt new technologies to improve efficiency. Package tracking, for instance, has become crucial to e-commerce success. By tracking every step of a package's journey, both seller and buyer know exactly what to expect in the process.

The best 3PLs have also started to focus on the needs of small businesses that cater directly to their clientele. These 3PLs no longer focus exclusively on the needs of retail stores; instead, they also offer services that streamline delivery to homes and businesses. With this approach, small businesses can satisfy their customers while staying within budget.

The 3PL industry has changed greatly over the past three decades. If you haven't explored your 3PL options recently, now is a good time to discover what a third-party logistics provider can do for you. Learn more about what 3PLs can offer your business by reaching out to The Apparel Logistics Group (TALG). Get started today by discovering how to maximize your business potential with 3PLs.

Posted: 4/27/2016 3:27:38 PM by Global Administrator | with 0 comments

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