VEKA, a leading provider of innovative window, door, deck, and other solutions, had been working with another 3PL, but wasn’t able to get consistency among its carriers, and experienced more delivery challenges, says Dyan McCall, director of customer supply chain for North America. That changed when VEKA moved to Sunset, she adds (see sidebar). Flexibility and Scalability Given the unpredictable nature of supply chain operations, exibility is key. For example, strong 3PL partners should be able to shift lane coverage when a shipper needs to change or diversify its supply and shipping routes, says Paul Bellamy, logistics leader at Genpact, a global consultancy. Leading 3PLs can also recommend alternative suppliers, drawing on their knowledge and experience, he adds. One reason Sunset Transportation is a strong partner is its ability to grow as VEKA grows, McCall says. In part, this is a result of Sunset’s purchase by Armada Supply Chain Solutions, as it enhances the 3PL’s ability to scale. Partnering with one 3PL that can meet a range of logistics needs can offer a shipper a single point of contact, which chain practice with Bain. Many insurgent consumer product brands rely almost entirely on third parties for manufacturing and distribution. “They simply don't have the capital and wherewithal to build ahead of the growth that they're aspiring to,” he says. Even as small companies scale up, 3PLs can provide value by bringing new ideas to the table, says Bob Brown, senior vice president with LynnCo. Logistics providers also can be a critical resource when companies expand to new markets and lack local logistics knowledge and infrastructure, says Sri Sripada, managing director, operations excellence, West Monroe.
Choosing a third-party logistics provider (3PL) can mean assessing a large number of options. In 2023, the United States was home to nearly 69,000 3PLs, reports IBISWorld. The global logistics market will grow from about U.S. $3.8 trillion in 2023 to more than $5 trillion by 2030, according to Grandview Research. One reason for the industry’s growth is advances in IT systems, which enable more transparency, visibility, and seamless connections. “As technology gets better, outsourcing becomes less painful and more productive,” says Jon Gilbert, senior consultant and
project manager with PLG Consulting. While the logistics provider sector has seen consolidation, many small entrants remain, so shippers often can seek out the specic skills they need. For example, some 3PLs focus on providing less-than-truckload services. They can aggregate large numbers of small shippers and then leverage their cumulative transportation spend to capture better rates than many shippers could get on their own. Logistics providers’ continued investments in technology allows them to boost efciency and provide more value-add services, such as analytics, says Adam Borchert, global lead of the supply
Look for These Green Flags
Whatever the reason that prompts an organization to engage a 3PL, identifying the best t is critical, given the importance of this partnership. The following attributes are key: A Match in Services, Geography, and Expertise Before partnering, assess the 3PL’s overall capabilities, Sripada recommends. What services does it offer and how do they match your needs? How well does the company’s industry expertise, as well as its distribution and transportation networks, align with your needs?
Brewer also considers the locations of potential 3PLs’ distribution centers (DCs). Ideally, these will be within about 250 miles of his internal customers. “Deliveries start to get inef cient the farther away you get from the DC,” he adds. Effective Processes and Operations Evaluate how effectively the 3PL handles warehouse assignments and space utilization, Sripada says. For instance, are they employing inventory management best practices? What compliance and safety checks are in place? Check how late the provider can receive orders and still ship them out that day. A later cut-off generally means customers receive their orders more quickly, says Jeff Haushalter, partner with Chicago Consulting. Also, assess the provider’s relationship with the carriers it uses. “We prioritize our carrier relationships,” says Tracy Meetre, chief commercial of cer with Sunset Transportation. Among other practices, Sunset pays quickly, which enables carriers to invest in their equipment. Sunset also employs stringent carrier vetting processes. Shippers bene t from this approach.
CKE Restaurant Holding, the company behind Carl’s Jr. and Hardees, uses third-party distribution partners to handle nal-mile delivery to its restaurants. Given that these shipments are of food items, they “require close to white glove service,” says John Brewer, director of distribution and logistics.
134 Inbound Logistics • January 2025
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