The question….What is an integrated service provider? How does the concept of an integrated service provider differ from traditional service providers, such as for-hire transportation and warehousing?
An integrated service provider (known in the industry as simply: ISP) is a multi-functional, value-added service which provides- at the minimum- warehousing, distribution, and warehousing services. More often than not, an ISP also performs other essential services, including but not limited to: order processing, receipt of payments, inspection, packing and product delivery.
ISPs are classified in two ways. Either as third-party or fourth-party. Third-party providers are asset-based. They own and operate their own warehouses, truck brigades and equipment. Fourth-party providers are non-asset-based. They specialize in information technology services and provide facilitation between all the functions of the third-party services. Together they provide one valuable supply-chain link that integrates many operations into one service.
No longer do you need to either hire individual transportation and warehousing services or need to invest in your own company trucks or warehouse space, as you did traditionally. In the past, customers had to independently book, oversee and pay for those services separately. That led to lengthy turn-around times and, more importantly, there was no mindset existing of “we are all in this together”. Traditionally the service providers were disjointed, and not interconnected. But this all changed with the deregulation of transportation. It was revolutionary for the industry. Suddenly for-rent warehouses could provide transportation, and for-hire transportation services were providing warehousing…. And they continued to add and add more value-added services, to help the customer and collectively work together to deliver one excellent, timely, and extremely efficient service, now known an as ISP!
References: Bowersox, Closs, Cooper, and Bowersox (2013). “Supply Chain Logistics Mgmt-Fourth Edition.”
Learn Along with…. LOGISTICS 101… actually the class is Logistics Managment at LIM College, in their MPS Program, taught by Dr. Ayata!