Third Party Logistics: Past, Present, and Future

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The University of Memphis|
Third Party Logistics|
Past, Present, and Future|
|

Joseph Fox
Kelly Gray
David Henry
Corin Love

MKTG 3620
24 April 2012
Dr. Feng Table of Contents
1. General Information 2
ISP’s2
3PL’s3
Decision Making 4
2. History of 3PL’s4
Trucking Regulations5
Railroad Regulations6
Rise of 3PL’s7
Merger Into Present Day7
3. Current Issues7
Case Study: USPS8
Case Study: Shoe Carnival9
3PL Options 10

1. General Information
The way business is conducted in today’s modern, global economy and technological infrastructure is a distant relative to the business practices of past generations. The mode in which business has evolved and changed has opened the door to hundreds of services and products to assist in contending in highly competitive markets. Today, the difference between two cents a unit and four cents a unit can often times mean the difference between making it big, or closing your doors to the competitor. It is in this way that integrated service providers have found a foothold in helping businesses with managing logistics services. 1.1 ISP’s

Integrated service providers (ISP’s) are businesses that provide warehousing, transportation, order entry, product delivery and a wide range of logistical value-added services to many other businesses, typically in a contractual relationship. This business, practically irrelevant in the past, has taken over in the age of giant companies and multi-national corporations that service millions of end consumers and even smaller corporations in their day-to-day business. Most integrated service providers are stand-alone companies, operating for the use of other businesses that utilize a supply chain but are not directly linked within the logistics area. If a company is large enough, however, and has a wide enough product, service or customer span, it can be advantageous for that company to have an internal department that deals directly and solely with managing its supply chain. This can also happen if a company is so small that its warehousing or logistics information needs can be accomplished or accommodated by a single person or location. ISPs are most commonly in the form of third-party or fourth-party logistics providers. Fourth-party logistics (4PL) firm’s deal in non-asset based products. These ISPs have the ability to provide broad information services that abstractly aid in logistics or supply chain planning. They also service large companies by advising them based on an internal audit of its logistics and of its supply chain. The 4PL hired by a business can determine the most cost-effective ways of getting its products to and from its customers based solely on interpreting data information from that business. 1.2 3PL’s

Third-party logistics (3PL) firms, on the other hand, deal in concrete, asset-based products. These companies will physically store product, transport product, manage additional supply chain providers, receive returned goods, and/or perform any function a company deems necessary to aid in the management of its supply chain. 3PLs typically service many businesses simultaneously. They are appealing because, instead of a single company having to pay for warehousing, transportation and personnel cost of maintaining such an operation essentially many companies share this cost, which is minimal by comparison, by employing a 3PL provider firm.

3PL companies fulfill a wide variety of tasks in the business world of today. Not only do they serve as the middle man between two companies, but they also can fill the role of middle man between business and end consumer. In fact, a 3PL company’s role in the business world can be so vague, just as the role of logistics in...
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