Earlier this week, I received an email from a Logistics Viewpoints reader asking if I had any information about 3PLs in Mexico that I could share. I sent back a quick response: What type of information are you looking for? Are there specific 3PL capabilities or services you’re interested in? If I understood his response back to me correctly (we were communicating in Spanish), I believe he was interested in 3PLs that specialize in performance-based outsourcing (PBO), a topic I wrote about last week (“Performance-based Outsourcing in Logistics“).
His question, however, underscored a general problem in the industry: the lack of in-depth, high-quality information about the true strengths and capabilities of logistics service providers. Every year, most of the trade publications publish “Top 25 3PLs” lists, but the rankings are based on revenues, a meaningless metric in my opinion because it tells you nothing about what differentiates one service provider from another.
A few years ago, we developed a “Logistics Service Provider Maturity and Performance Model” to help manufacturers and retailers evaluate different logistics service providers. As the graphic below shows, the model focused on several “success factors,” including service diversification, client diversification, information technology, and operational performance. We also developed key metrics and assessment questions for each success factor.
ARC's Logistics Service Provider Performance and Maturity Model
The model wasn’t perfect (we’re actually in the process of refining it), but at least it provided companies with a better starting point and framework for evaluating logistics service providers than a list of 3PLs ranked by revenue.
Who is the best logistics service provider? The answer is different for every company and it depends on many factors, including vertical industry, type of service, and geography. I’m also reminded of a couple of comments made in a think tank I conducted several years ago with logistics executives on “Outsourcing Logistics: Are 3PLs Living Up to Expectations?”:
- I haven’t found [a 3PL] that can do a good job across the board, from rail to truck to everything in between. You go to [a leading 3PL] and they do a great job on trucks, but they don’t know a railroad train from a submarine.
- We have about 30 partners. That sounds like a lot, but from a worldwide perspective, what we find is that [3PL A] is good in the United States, but they stink in Europe. [3PL B] is pretty strong in Europe, but they don’t have any presence in the U.S. And can anybody name me somebody who does 2-hour delivery in China? Yea, there isn’t anybody.
The report was published in 2002, but many of the findings are still true today. If you’re interested in a copy, send me an email. Also, I’m sure many of you work with 3PLs. What attributes do you look for in a logistics service provider to narrow your list of choices and make a selection? I’d love to get your thoughts. Send me an email, or better yet, post your feedback on Logistics Viewpoints to kick off a conversation.
Hi Adrian, I just joined as a Member and was reading your post from Feb 09, about who is the best logistics provider. I’ve found your article very interesting and would like to get a copy of your 2002 published report.
B.Rgds
Mariana Bock-Losada