Third party logistics first became popular amongst European and North American
organizations. The use of external providers to perform some or all of a firm’s
logistics functions had a key rationale: with intensified global competition, that
firm could concentrate its energies on core activities that are critical to survival,
and leave the rest to specialists. Fuller et al. (1993) suggest that one important
reason for the growth of 3PL services is that companies compete in a number of
businesses that are logistically distinct, due to varied customer needs. Such distinct
services can be offered more efficiently by the integrated providers that grew
rapidly during the 1990s. These 3PLs offer differentiated service through their
investments in dedicated assets and technologies, and their structured methods.
The nature of such relationships between the manufacturing firms and logistics
service providers encompasses a variety of options, ranging from narrow (limited
to specific activities like transportation) to broad (covering substantive activities in
the entire supply chain).