James Spillane
If you’ve decided that outsourcing your logistics makes business sense, then naturally you expect your outsourcer to organize the necessary freight handling and shipping for you.
However, that doesn’t necessarily mean that your outsourced logistics provider will own all of the resources to do that. In fact, there are good reasons why your logistics provider shouldn’t own those resources. These are just a few reasons working with a non-asset based logistics provider might be right for you.
Flexibility in Facilities Provided
Asset based logistics providers will simply mold your logistics to fit into their established infrastructure; a non-asset based provider will design its infrastructure around you.
A non-asset based logistics provider or 3PL works with a network of partners, selecting services from them that best meet the requirements of its customers. The bigger the network, the more flexibility in mixing and matching for optimal effect.
Staying up to date and even ahead of developments in logistics solutions is another advantage. By comparison, while an assets-based 3PL may have complete control over its equipment, fleet and infrastructure, it may not be able to guarantee either flexibility or leading edge logistics solutions.
Protection of Your Interests as a Customer
Being decoupled from logistics asset ownership means independence and objectivity in the choice of the logistics solution. The solution put in place for you by your 3PL with a non-assets based approach can be determined purely by what makes the best sense for your business; rather than by any need to amortize a specific resource or piece of equipment.
A non-asset based 3PL is therefore free from vested interests that necessarily influence an asset-based 3PL. The advantage for you as a customer goes further still. A non-asset based logistics provider can also avoid any bias when acting to protect you in case of a claim for damages (for instance).
Dovetailing with What You’ve Already Got
Optimal selection of the different components for your logistics (mix and match) can also include infrastructure assets you already have.
Even if you’ve decided to outsource, you may already have made logistics investments. Non-asset 3PLs have no axe to grind in this case: they can complete the solution taking into account your existing logistics infrastructure. An assets-based 3PL on the other hand would have to manage different entry points into its fixed logistics configuration, which may or may not be a realistic undertaking.
Providing Knowledge and Expertise, Rather than Hardware
Non-asset based logistics providers are focused on bringing one, overarching value-add to the table: knowhow.
By analyzing your supply chain requirements with you, your non-asset based provider is in a position to identify how it can be improved and to propose correctly adapted solutions. Custom-built, outsourced logistics operation become a reality as each stage in the supply chain is designed and provisioned on the basis of what works best for you. Modular solutions make it possible to swap out highly specific solutions that will be higher-performing or more cost-effective without rebuilding from the ground up.
The Hidden Downside
The truth is, in this situation, there is simply no catch. A non-asset based logistics provider will pay special attention to aspects such as end to end transparency, security and confidentiality. Its partners will be selected on the basis of their ability to respect high levels of performance for all these criteria, and logistics systems and processes will be designed to ensure this is the case.
Any decision to outsource your logistics, whether using an assets-based or non-asset based solution, involves a degree of risk. A non-asset based logistics provider handles and mitigates this risk for you by providing information to pre-vetted partners on a ‘need to know’ basis and backing off service level agreements to further logistics partners who can also demonstrate a solid track record of reliability, confidentiality and performance.
This article was written for Business 2 Community by James Spillane.
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I would have to disagree with your thought process. We are what the industry would call a Light asset based 3PL. Our assets represent less then 25% of our overall business. The statement that you make that we will only mold your needs into ours is totally false. Our assets are used in conjunction with other assets to provide more flexibility in service as well as provide additional capacity during restraints. We are also better positioned to balance equipment timely which reduces our costs which in turn helps reduce or sustain costs to our clients.Non asset based 3PL’s are totally at the mercy of Providers abilitites, as well as potential drastic price swings. Yes you can change your providers all day long, yet that really doesnt provide consistant reliable service, nor dioes it provide stability for sustainment. Many people may have different opinions, however I believe each customer has to weigh in if they would like their 3PL to have assets or not. Our “Light” Growth in assets has allowed us to provide a far better service then our Non asset based counterparts for some of our customer needs. As well as, more reliability and better overall solutions, while minimising cost for our clients.
There is a market for both types of providers based on each shippers needs.In the end, the best decision should be made on your particular needs long term or short.But to flatly say one is better then the other would be very bold and limiting