Today, it is an accepted fact that the majority of Original Equipment Manufacturers (OEMs) are enlisting the help of outside companies, usually to a third-party logistics provider (3PL) to manage their supply chain, returns, repairs, and other logistics functions. These companies want to focus on their core competencies and many lack, or choose not to put up, the resources or capital necessary to invest in comprehensive logistics expertise. Hence, we see over the last decade, the rise of 3PLs. Revenue from 3PL companies totalled $45.4 billion in 1999 and is expected to grow 15 percent to 20 percent in 2000. With outsourcing comes the next wave in logistics practice, Logistics Business Process Outsourcing or Logistics BPO.
Logistics business process outsourcing (BPO), although an outcome of the traditional outsourcing of logistics, is a relatively new development. Logistics BPO is an IT-enhanced and integrated outsourcing function that stretches from the vendor to the end customer. This set of activities comprises much more than delivery- and warehousing-related functional activities. Logistics BPO goes beyond merely the physical flow of the products to encompass the process and information necessary to optimise a customer’s logistics activities. What drives the growth of the logistics BPO industry will be the effective integrating and bundling of traditional third-party logistics services with today’s internet-based information technology-based solutions
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