3PL Logistics
Content
Name: Shreshth Roll number: 83 Section B
Third Party Logistics
An Overvie
Companies have different options to consider in handling their logistics activities effectively and efficiently. They can A. provide the functions in-house B. own logistics subsidiaries C. outsource the function and buy the service Traditionally, logistics activities like distribution, inventory management, order processing, or materials management were handled internally by firms as support functions and were given low priority compared to other business functions. But now companies are moving towards third-party logistics. A third!"arty logistics firm is a firm that provides outsourced or “third party logistics services to companies for some portion or all of their supply chain management functions. Typically, a core company providing services or products is considered the first party! the customer "or customers# the second party. A thirdparty, then, is a firm hired to do that which neither the first or second party desires to do. $%& typically speciali'es in integrated warehousing and transportation services that can be scaled and customi'ed to customer needs based on market conditions and the demand and delivery service re(uirements for their products and materials. $%& is evolving from a predominately transactional role to one that is more strategic in nature.
#haracteristics
)ome of the characteristics of $%&*s are that they perform a variety of outsourced logistics matters, provide customi'ed services, and handle multiple activities. These may involve transportation, distribution, warehousing, material handling, inventory control, packaging and inspection. )ome of the services offered by $%&*s in the current market are+ • ,edicated contract transportation and transportation procurement. • -nventory management • &ogistics management and consulting • .reight audit and consulting • )hipment tracking and tracing • /everse logistics and value added services
Need o$ 3PL Logistics
On!demand trans"ortation is a relatively new term coined by $%& providers to describe their brokerage, ad-hoc, and 0flyer0 service offerings. 1n-demand transportation has become a mandatory capability for today2s successful $%& providers in offering client specific solutions to supply chain needs. These shipments do not usually move under the 0lowest rate wins0 scenario and can be very profitable to the $%& that wins the business. The cost (uoted to customers for on-demand services are based on specific circumstances and availability and can differ greatly from normal 0published0 rates. 1n-demand transportation is a niche that continues to grow and evolve within the $%& industry. 3lobali'ation increases the comple4ity of supply chains, given that “the best supplier may be found halfway around the world, and customer needs are often as diverse as the countries in which they live . &ead time reductions, incorporating the shift to 5ust-in-time production schemes, add to the increasing comple4ity and cause inventory and logistics control to be crucial to manufacturing and distribution operations. As a conse(uence of these trends, the tasks of logistics providers are increasing in content and comple4ity. 6ith the increasing focus of business e4pansion into the global market, companies need to have an e4tremely lean, efficient supply chain to achieve successful integration into new markets. -n the end, the need for developing a sustainable competitive advantage resulted in increased outsourcing and the evolution of contract logistics or third-party logistics. $%& providers can help provide services to these companies, but also assist the more locali'ed companies looking to cut operational costs or focus on core competencies. There are many advantages to outsourcing logistics services to third parties. The amount of services being offered by these logistics providers continues to grow each year. Today, $%&*s are more than 5ust transportation providers! they are becoming involved in the longterm strategic direction of their client companies. The key to successful outsourcing of logistics services lies in finding a $%& provider that has the most strategic fit with the company*s goals.
Advantages
• • • • • • • • Cost reduction -mproved efficiency, service and fle4ibility .ocus on core competency .reeing up resources 7limination of infrastructure resources /isk- sharing Better cash flow Access to resources not available at one*s own organi'ation
Third Party Logistics
An Overvie
Companies have different options to consider in handling their logistics activities effectively and efficiently. They can A. provide the functions in-house B. own logistics subsidiaries C. outsource the function and buy the service Traditionally, logistics activities like distribution, inventory management, order processing, or materials management were handled internally by firms as support functions and were given low priority compared to other business functions. But now companies are moving towards third-party logistics. A third!"arty logistics firm is a firm that provides outsourced or “third party logistics services to companies for some portion or all of their supply chain management functions. Typically, a core company providing services or products is considered the first party! the customer "or customers# the second party. A thirdparty, then, is a firm hired to do that which neither the first or second party desires to do. $%& typically speciali'es in integrated warehousing and transportation services that can be scaled and customi'ed to customer needs based on market conditions and the demand and delivery service re(uirements for their products and materials. $%& is evolving from a predominately transactional role to one that is more strategic in nature.
#haracteristics
)ome of the characteristics of $%&*s are that they perform a variety of outsourced logistics matters, provide customi'ed services, and handle multiple activities. These may involve transportation, distribution, warehousing, material handling, inventory control, packaging and inspection. )ome of the services offered by $%&*s in the current market are+ • ,edicated contract transportation and transportation procurement. • -nventory management • &ogistics management and consulting • .reight audit and consulting • )hipment tracking and tracing • /everse logistics and value added services
Need o$ 3PL Logistics
On!demand trans"ortation is a relatively new term coined by $%& providers to describe their brokerage, ad-hoc, and 0flyer0 service offerings. 1n-demand transportation has become a mandatory capability for today2s successful $%& providers in offering client specific solutions to supply chain needs. These shipments do not usually move under the 0lowest rate wins0 scenario and can be very profitable to the $%& that wins the business. The cost (uoted to customers for on-demand services are based on specific circumstances and availability and can differ greatly from normal 0published0 rates. 1n-demand transportation is a niche that continues to grow and evolve within the $%& industry. 3lobali'ation increases the comple4ity of supply chains, given that “the best supplier may be found halfway around the world, and customer needs are often as diverse as the countries in which they live . &ead time reductions, incorporating the shift to 5ust-in-time production schemes, add to the increasing comple4ity and cause inventory and logistics control to be crucial to manufacturing and distribution operations. As a conse(uence of these trends, the tasks of logistics providers are increasing in content and comple4ity. 6ith the increasing focus of business e4pansion into the global market, companies need to have an e4tremely lean, efficient supply chain to achieve successful integration into new markets. -n the end, the need for developing a sustainable competitive advantage resulted in increased outsourcing and the evolution of contract logistics or third-party logistics. $%& providers can help provide services to these companies, but also assist the more locali'ed companies looking to cut operational costs or focus on core competencies. There are many advantages to outsourcing logistics services to third parties. The amount of services being offered by these logistics providers continues to grow each year. Today, $%&*s are more than 5ust transportation providers! they are becoming involved in the longterm strategic direction of their client companies. The key to successful outsourcing of logistics services lies in finding a $%& provider that has the most strategic fit with the company*s goals.
Advantages
• • • • • • • • Cost reduction -mproved efficiency, service and fle4ibility .ocus on core competency .reeing up resources 7limination of infrastructure resources /isk- sharing Better cash flow Access to resources not available at one*s own organi'ation
