Why companies aren't outsourcing to 3PLs

According to an ARC Advisory Group study of 102 logistics and supply chain executives to be released next month, 23 percent of respondents do not work with 3PLs for one of two reasons: 1) Companies think they can do better than a 3PL in terms of cost, quality, and service; or 2) Companies have not explored outsourcing to a 3PL.

As ARC points out, the reasons provide both an opportunity and a threat to 3PLs. The opportunity is there for 3PLs to educate and present their offerings along with a differentiated value proposition. The area of concern is why companies are opting to keep or bring logistics operations in house. Service and specialization rank high on the list with the ambiguous “Other” leading the way.

I’d venture to guess that visibility and collaboration fall somewhere in the “Other” category especially with more than two-thirds of warehouses in North America lacking a WMS. If I’m a logistics company looking to outsource to a 3PL, I better feel comfortable with the accessibility to information and the state of visibility. On the other hand, it becomes a non-starter if a 3PL can’t provide any of this. The bottom line is confidence and whether customers and prospects have any in you.