platforms to attract and secure long- term customer contracts. But for a growing number of 3PLs, “value-added service” is the value prop-
interest of all market parties to act profes- sionally in these situations because we’re likely to meet again,” he advises. Others are less optimistic that 3PLs
LLPs/4PLs will come from,” says Craig. “Large consulting firms do not always possess real-world operating experi- ence managing global supply chains;
osition; these providers have to look elsewhere to create opportuni- ties for shippers to grow their businesses and streamline their supply chains. “Moving forward, I hope to see continued focus on the shipper rather than the 4PL,” says Ritchie. “We have to continually cre- ate economic value for shippers. If that means introducing other ser- vice providers into the mix, then that’s what we need to do.” If Ritchie’s forecast is accurate, then customer expectations of 3PL capabilities may very well fill the 4PL niche in the future –a reality that is certainly true in some cases today. But companies have also voiced con- cern about conflicting interests between 3PLs acting as LLPs among their own competitors and logistics service providers opting to leverage their own assets and connections to serve a customer’s needs. Some of these doubts have opened the door for non-asset-based consulting firms to cap- italize on this market. But Tap doesn’t see this as a major impediment down the road. “Mechanisms exist to protect the interest
many 3PLs do not offer the breadth of e-SCM experience from the buyer’s side. It is uncer- tain where shippers will turn–to the ‘usual sus- pects’ or by building relationships with a new type of provider.” Craig’s critique and prediction may be par- tial. But it does raise the question of whether the 4PL niche holds poten- tial for a special type of non-asset-based service provider, or whether market growth creates a schism between 4PL and LLP expectations – and perhaps new definitions and roles for each. “4PL providers need to add a lot of value to justify the extra costs,” notes Tap. “Companies that carefully select one or a few lead providers and make the right con- tractual arrangements to protect their inter- ests – including gain share programs and continuous benchmark- ing – will get the best value for their money.” While these ques- tions are probing, their answers lie in the deci- sions global companies make as they push their supply chains to new extremes. “Most companies
ultimately define rela- tionships with their LLPs on their business models and what they want to accomplish with their supply chain strategies,” says Hegewald. In other words, observes Ritchie, “it’s not about the 4PL.” ■
of customers. Also, providers are often faced with situations where they act as a main contractor, as well as subcontrac- tor on certain projects. It is in the best
and consultants have the objectivity or resources necessary to handle compa- nies’ evolving LLP demands. “It is not clear where the new
July 2007 • Inbound Logistics 89
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