Putting 3PLs and Software Vendors in a Box

What is a third-party logistics provider (3PL)? What is a transportation management system (TMS)?

I’ve been answering those questions for more than 15 years, and as I get ready to launch some research projects in both of those areas, I’ve come to a realization: the answers don’t fit so neatly in a box any more.

In the past, you had a box for freight forwarder, a box for broker, a box for warehouse operator, and so on.

In the past, you had a box for parcel shipping solution, a box for fleet management application, a box for outbound transportation solution, and so on.

And you could fit (sometimes with a little force) a service provider or software vendor into one of those boxes.

It’s not so easy any more. It’s also not very helpful or useful for customers either.

Over the years, service providers and software vendors have busted out of their boxes — via mergers and acquisitions, new business models, and new product development — to pursue new growth opportunities, and to provide manufacturers and retailers with more complete, “end-to-end” supply chain solutions.

The boxes and labels of yesterday are giving way to a single amorphous category: Providers of supply chain software and services.

Is a logistics service provider that offers its own transportation management system a 3PL or a software vendor? Is a B2B connectivity service that facilitates the exchange of data, documents, and other information with carriers and other trading partners a TMS solution?

Those questions are becoming less important. The only question that still matters is the first question manufacturers and retailers must ask themselves when defining their supply chain strategies and initiatives: What are our desired outcomes?

It’s the answer to that question, the desired outcomes of customers, that’s driving the convergence of business models, and the expansion of solution footprints, in the supply chain market today.

I’m still struggling with how to move forward with my research projects, without the boxes and labels I’ve been using for so long, but I’m also excited by the opportunity to see the supply chain market through a new lens, and by what I will discover and learn in the process.