Warehousing and 3PLs: Outsource logistics, but not logistics management?

Patrick Burnson, Executive Editor -- Logistics Management, 5/12/2008

SAN FRANCISCO—Shippers were left with much food for thought on the final day of Warehouse Educational Research Council’s (WERC) annual conference in Chicago last week when some presenters suggested that 3PLs could solve some problems, but certainly not all of them.

“And a still larger question is whether you might want to outsource your logistics functions at all,” declared Andy Dishner, senior director, client solutions with TMSi Logistics. “We realize that a lot of manufacturers realize that it could be professional suicide if the choice doesn’t work out.”

Supporting Dishner in this contention, was Damian Burke, a principal with Conveying Solutions Inc., another major logistics consultancy. In the joint presentation, both men strongly suggested that taking some action to streamline logistics—no matter how minor—was better than taking no action at all.

“In the twentieth century the common business model was a large integrated company that owned, managed, and directly controlled its assets,” said Dishner. “But in this new century we have seen a major cultural shift toward outsourcing many key functions. It really comes down to evaluating whether logistics is your core competency.”

By why of example, he recalled a conversation a jeweler had with a logistics specialist:

“Are you in the jewelry business or the logistics business?” asked the specialist.

“Well both,” replied the jeweler…”but I see your point.”

Dishner also took issue with “business-as-usual” attitudes that can stifle growth. He cited General Colin Powell, who said ‘if it ain’t broke, don’t fix it’ is the slogan of the complacent, arrogant, and scared.”

Burke, too, was adamant about taking chances, if they are informed.

“Relationships and measurements are key,” he said. “We are certainly not advocating reckless investment in systems you don’t trust.”

But according to a recent report (The State of Logistics Outsourcing 2007) reliable metrics indicate that 3PLs are saving companies money, and winning a greater share of their business and confidence.

Dishner concluded the presentation by recommending that shippers should consider finding third-parties to handle their logistics, “but don’t let go of logistics management. That’s your job.”