The Ongoing Convergence of 3PL and TMS Business Models

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

For more than 20 years, I’ve been exploring those questions, and over the years, the answers have continued to evolve.

As I wrote last year in “Putting Community In TMS: Enabling The Network Effect In Transportation Management,” and in a follow-up post a few weeks go, transportation management systems are transitioning from being “inside the four walls” applications to becoming operating systems that power transportation communities and enable network effects.

Similarly, as I argued six years ago in “3PLs, What Business Are You In?”, the traditional definitions of third-party logistics providers are becoming stale and limited. Here’s an excerpt of what I wrote:

Yes, 3PLs provide customers with “multiple logistics services” like transportation management and warehousing, but they are also in the business of providing (among other things)…

Software applications, trading partner connectivity, and data quality management services that provide customers with timely, accurate, and complete visibility to supply chain events, information, and intelligence.

Thought leadership and advice — “Tell me something I don’t already know” — so that customers can make smarter and faster decisions about their supply chain networks, strategy, and practices.

Risk management capabilities to help customers minimize or eliminate supply chain risks, and more importantly, to help them recover from supply chain disruptions faster and with less impact.

What do you call a company that provides shippers with transportation benchmarking data and insights, control tower visibility, and network collaboration services? 

A 3PL? A network-based TMS provider? Something else?

The fact is that the convergence of business models continues, specifically the business models of service providers, technology companies, and consulting firms.

Transplace (a Talking Logistics sponsor) is a prime example. Last Friday, the company introduced Transplace Platform Services (TPS), a cloud-based suite that “provides shippers unprecedented access to Transplace’s technology, intelligence, and visibility platform to optimize supply chain operations in concert with their current Transportation Management System (TMS) infrastructure.” Here are some excerpts from the press release:

Through a standard Application Programing Interface (API) [into existing ERP or TMS systems], shippers provide Transplace platform shipping-level data in the frequency they desire – from weekly to real-time – depending on the services they plan to use. TPS harmonizes the shipping data and compares it to the Transplace network, benchmarking the shipper against other shippers on the platform and in their industry vertical. TPS guides shipper action, through advanced technology and collaboration tools and enables full network visibility in real time, automating manual shipment tracking activities and proactively managing exceptions.

Transplace Platform Services provides three service offerings: TPS Data Insights, which allows benchmarking across the major key performance indicators of any transportation management program (cost, speed, and service); TPS Command Center, which includes full utilization of the Transplace Control Tower that provides real-time visibility, AI-powered service prediction, and proactive transportation event monitoring; and TPS Marketplace that enables shippers to partner with other Transplace shippers and a broad carrier network to capture carrier capacity through real-time freight auctions, long-term opportunistic continuous moves, collaborative dedicated fleet opportunities, or consolidation of less-than-truckload sized shipments through multi-stop truckloads and collaborative crossdocking.

What is a 3PL? What is a TMS?

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.