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Third Party Logistics vs. In-House: What's Right for Your Operation?

Linda Grady | 09 October 2019

With every warehouse operation being somewhat unique, several conditions influence the decision-making criteria for third-party logistics (3PL) selection. Whether it is a good fit for your business requires thorough understanding of one’s operating requirements, product mix, and internal distribution & logistics capabilities.


According to Armstrong & Associates, 86 percent of Fortune 500 companies are now relying on 3PL provider. A key factor that comes into play is the shipper’s appetite for advanced automation technologies. Some new technologies within the warehouse have risen out of need and others out of necessity. As with most market changes, the hidden force driving the trends can be traced to consumer demands and economic conditions.

Key Trends:

Speed_icon   Speed | Less than 2-day shipping is the norm
Variety_icon   Variety | Interest in purchasing wider variety of products online
experience_icon   Experience | Great all-around consumer experience 
environment_icon   Environment | Awareness of environmental impact of online shopping    
retail_competition_icon   Competition | The Amazon Effect driving high competition 
economics_icon   Economics | Low unemployment & increasing wages

In response to these trends, several technologies have proliferated within the warehouse:

PUMA_autostore_ASRS OPEX_perfect_pick_ASRS
  • Automated packaging machines and custom sized carton building machines have transformed consumer experience as shippers have flexibility to fully tailor the marketing to the consumer and ensure top-notch presentation. These technologies have also greatly reduced corrugate waste while ensuring optimal dim-weight for the shipper which helps solve the environmental and economics variables of the equation.
automated_packing_machines automated_labelling_machine

The top technologies will always be those that efficiently solve the user experience, are flexible & scalable.

Considerations for determining if outsourcing is the right move:

operational_icon   Operational | Do you have the time & resources to run a DC? Is it a core competency?    
Financial_icon   Financial | What are your growth plans? How quickly can you scale? 
regulatory_icon   Regulatory | Compliance requirements vary  

Many times, the requirements of the operation suggest an advanced automation technology would be a good fit. When selecting a 3PL, their willingness and competence acting as the owner and/or operator of the technology should heavily influence the decision. Some 3PL providers may not have a high comfort level acting as the operator of certain technologies.

As the hidden forces of economic conditions and consumer demands continue to challenge efficient distribution and logistics, capital investments into the four walls will grow. As stated earlier, the best technologies will be those that efficiently solve the user experience and are flexible & scalable.

To learn more on this topic, check out our Parcel Forum session, or learn more at


Author: Linda Grady

Linda Grady is a System Sales Manager with Bastian Solutions. In her role, Linda helps new and existing clients develop solutions for large scale industrial automation systems. Her primary areas of focus are partnership management, process optimization and helping to drive adoption of automation best practices.


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