Do You Need a 3PL or Keep Logistics In-House?

A third-party logistics provider (3PL) is a company that provides outsourced logistics services covering warehousing, fulfillment, distribution, and often value-added services (kitting, labeling, returns handling). 3PLs commonly serve multiple customers from shared warehouses, achieving scale economics individual shippers cannot match independently. The 3PL industry includes large national networks (XPO, GXO, ShipBob, Ryder, DHL), regional providers, and specialty operators (cold storage, hazmat, e-commerce fulfillment).

Armstrong and Associates 3PL Market Research consistently identifies five 3PL adoption signals: multi-region or international distribution that requires geographic infrastructure, aggressive volume growth that exceeds in-house scaling pace, complex value-added service needs (kitting, customization, returns), limited or no in-house logistics capability, or favorable 3PL economics at the shipper volume. Single-region operations with strong in-house capability often retain in-house operations with better unit economics.

3PL pricing varies substantially by service mix and volume. Typical pricing includes per-order pick-and-pack fees ($1-5 per order), per-pallet or per-square-foot storage fees, inbound receiving fees, returns processing fees, and value-added service fees per activity. For e-commerce fulfillment at moderate volume, all-in 3PL cost commonly runs $5-15 per order. Comparing 3PL economics against in-house cost per order requires including the loaded in-house cost (warehouse rent, labor, software, equipment, shrinkage).

Yes, many 3PLs operate international networks covering customs brokerage, international freight, duty management, and local-country fulfillment. International 3PL services are particularly valuable for e-commerce brands expanding internationally without committing to international entity setup, or for manufacturers serving international customers without building international logistics capability. The right 3PL for international depends on the target markets and the service complexity.

No. The tool produces a directional lean based on order volume, geographic reach, warehousing needs, growth plans, in-house capability, cost comparison, and service complexity. The most important variable the tool cannot calculate is the loaded in-house cost per order, which requires accounting for warehouse rent or mortgage, labor fully burdened with benefits, WMS software, equipment depreciation, shrinkage, and management time. Armstrong and Associates 3PL Market Research notes that shippers consistently underestimate in-house cost when comparing against 3PL quotes because they exclude one or more of those line items. Build a side-by-side cost-per-order comparison with your CFO before committing either direction.

Reshoring is returning production to the home country (typically US for US brands). Nearshoring is relocating production to a regional country with proximity advantages (Mexico, Central America, Canada for US brands; Eastern Europe for Western European brands).

Gartner Supply Chain Top 25 research and Council of Supply Chain Management Professionals reports consistently identify five resilience foundations: supplier diversification including qualified backups for critical components, visibility and tracking across the supply chain end-to-end, inventory buffers calibrated to lead-time and demand variability, active risk monitoring with documented contingency plans, and stable predictable supplier lead times measured through on-time-in-full (OTIF).

The main manufacturing software categories are enterprise resource planning (ERP) for business management, manufacturing execution system (MES) for production-floor execution, warehouse and inventory management (WMS), quality management system (QMS), advanced production scheduling (APS), computerized maintenance management (CMMS), supply chain visibility and planning platforms, and manufacturing analytics or IIoT platforms.

Industry 4.0 (also called the Fourth Industrial Revolution or smart manufacturing) refers to the digital transformation of manufacturing through connected machines (IIoT), real-time data, advanced analytics including AI and machine learning, automation, and integration across the supply chain.

Lean Enterprise Institute research and Association for Manufacturing Excellence transformation benchmarks consistently identify five prerequisites: foundational team awareness of the eight wastes, documented standard work and basic visual management, active executive sponsorship willing to model the change, engaged workforce supported by trained supervisors, and daily metrics plus structured problem-solving discipline.