Many companies have projected and achieved substantial benefits from outsourcing logistics functions. Until the 1980s most companies operated their own supply chain functions including transportation, warehousing, inventory management and customer service. While companies liked the idea of "controlling" the product pipeline, the management reality was that the function rarely received the attention it deserved. Some enterprising logisticians recognized the untapped potential of effective logistics and thus the third party logistics industry was created. During the past decade 3PLs have grown to serve many of the largest and most successful companies on a global basis.

The value that the 3PLs provides stems from three sources. First, they tap lower cost labor. For many companies, the logistics functions are operated with expensive union workers encumbered with productivity limiting work rules. The 3PLs are largely operate with non-union labor. They have also worked hard to create productivity enhancing incentive systems. Second, the 3PLs business is logistics and only logistics. Thus, they have been able to develop very professional management teams. Third, they have tapped the power of information technology. Logistics software must compete for scare capital at most manufactures. For the 3PLs logistics technology is the foundation for success.

Purchasing’s role in this area is to help identify opportunities for outsoucrincg and to provide a comprehensive process for tapping the potential.