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Contract changes could stop 3PL 'savings leakage'

from DC Velocity

They may not know it by name, but most users of third-party logistics services are familiar with the concept of "savings leakage." In the outsourcing world, the term refers to the phenomenon in which a customer sees dazzling returns in the first or second year of its contract only to see the savings slow to a trickle later on, according to Kate Vitasek, a consultant with Bellevue, Wash.-based Supply Chain Visions. The reason is pretty obvious. The biggest savings come in year one as the service provider assumes labor and asset costs, and focuses on the projects that will deliver the greatest returns. more

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