Pressures of the current economic cycle have increased customers' focus on lowering inventory carrying costs in particular and overall supply chain costs in general, says Griffith.

Thinning inventory in the supply chain means there is less of a buffer when the unexpected happens, Griffith says. "More than ever, customers are looking for the nimbleness and flexibility that allows them to adjust, in terms of infrastructure, transport mode and equipment, so they can absorb unforeseen events."

This often means finding alternative means to get products to market or the ability to re-direct products to different destinations, he says.

To meet these flexibility needs, "A provider should work very closely with customers to understand their planning and forecasting, and we translate that into our operating model in terms of labor and support services," Griffith says. "We collaborate with our customers, sometimes on an hourly basis, so we can adjust to meet their needs."

Everyone would like to have a rubber warehouse, but that just doesn't exist, Griffith says. However, he says, a 3PL must be able to help companies manage peak seasons, such as the holiday rush for the retail sector. "Customers need to be able to surge their supply chains so that they can get to market with precision and timing; then, when the peak season is over, they need to flex back down and not have those carrying costs in their supply chain," Griffith says. In that sense, a 3PL is able to be that shock absorber.

To ensure that it is meeting client expectations, the provider should establish a balanced scorecard based on metrics it develops in consultation with the customer. "We also use those metrics when working with the service providers that we use to execute the supply chain, so our internal operations, the operations we outsource and the customer's planning all hang together," he says.

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Keywords: transportation management, 3PL, third party logistics, logistics management, logistics services