Outsourcing and Third Party Logistics
In the last 30 years, globalisation has been a significant factor that has brought about a substantial increase in international trade, both import and export, which in turn has led to a surge in demand for various logistical services including third party logistics (3PL). The objective of this assignment is to explore the following areas:
A look at third party logistics (3PL) in the context of the supply chain
The development of 3PLs over time
Activities and functions outsourced to, and performed by 3PLs
How business add value to their goods and services by outsourcing to 3PLs
The Council of Supply Chain Management Professionals (CSCMP) defines Supply Chain Management as follows:
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies (CSCMP 2013).
3PLs are a subset of third party service providers mentioned above. 3PLs can be defined as companies that are hired to perform logistics functions which have been conventionally performed within an organisation (Gupta et al 2010 cited in Datta et al 2013, p. 538). 3PLs originated in the 1970’s as public warehousing facilities where free warehouse space was sold to businesses in the surrounding. In the 1980’s this expanded into offering physical distribution services to further relations with existing customers. The next decade brought about an amalgamation in both warehousing and transportation services and the inclusion of warehouse management systems (Aghazadeh 2003, p. 51). Moving into the 21st century, traditional logistical services are commonly provided along with a list of new value added services, generally customer
A look at third party logistics (3PL) in the context of the supply chain
The development of 3PLs over time
Activities and functions outsourced to, and performed by 3PLs
How business add value to their goods and services by outsourcing to 3PLs
The Council of Supply Chain Management Professionals (CSCMP) defines Supply Chain Management as follows:
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies (CSCMP 2013).
3PLs are a subset of third party service providers mentioned above. 3PLs can be defined as companies that are hired to perform logistics functions which have been conventionally performed within an organisation (Gupta et al 2010 cited in Datta et al 2013, p. 538). 3PLs originated in the 1970’s as public warehousing facilities where free warehouse space was sold to businesses in the surrounding. In the 1980’s this expanded into offering physical distribution services to further relations with existing customers. The next decade brought about an amalgamation in both warehousing and transportation services and the inclusion of warehouse management systems (Aghazadeh 2003, p. 51). Moving into the 21st century, traditional logistical services are commonly provided along with a list of new value added services, generally customer
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