Third Party Logistics
THIRD PARTY LOGISTICS
Introduction
Third party logistics is an important and growing development within the transport industry. It can be viewed from two perspectives viz. operational point and strategic point.
From an operational view, third-party logistics may include all logistics activities that are outsourced to a logistics service provider.
Third party logistics is defined as the use of external companies to perform logistics functions, which have traditionally been performed within an organisation. The functions performed by the third-party firm can encompass the entire logistics process or selective activities within that process.
However, third-party logistics has a strategic dimension, which gains increased importance. The scope of third party logistics is enlarging both in activities and mutual responsibilities.
The third-party logistics as a strategic concept can be defined as a long-term relationship between two parties, which see each other as partners and where logistics solution is worked out in co-operation specifically for each shipper. Generally the goal of the relationship should be to develop into strategic alliances with win-win for both parties.
Characteristics
The main characteristics of third party logistics are as follows:
• A durable relationship
• A partnership between shipper and service provide.
• A customised solution worked out in co-operation and an equitable sharing of benefits and burdens.
Third party logistics relationships are described in various terms like logistics alliances, contract logistics, logistics partnerships, dedicated contract distribution, etc. The dedicated contract distribution has two major variants; namely dedicated capacity and dedicated assets. In dedicated capacity situations, the service provider is obliged to fulfil certain service levels and volume but can use the assets to serve other customers. In contract with dedicated assets, specific resources such as vehicles, terminals
Introduction
Third party logistics is an important and growing development within the transport industry. It can be viewed from two perspectives viz. operational point and strategic point.
From an operational view, third-party logistics may include all logistics activities that are outsourced to a logistics service provider.
Third party logistics is defined as the use of external companies to perform logistics functions, which have traditionally been performed within an organisation. The functions performed by the third-party firm can encompass the entire logistics process or selective activities within that process.
However, third-party logistics has a strategic dimension, which gains increased importance. The scope of third party logistics is enlarging both in activities and mutual responsibilities.
The third-party logistics as a strategic concept can be defined as a long-term relationship between two parties, which see each other as partners and where logistics solution is worked out in co-operation specifically for each shipper. Generally the goal of the relationship should be to develop into strategic alliances with win-win for both parties.
Characteristics
The main characteristics of third party logistics are as follows:
• A durable relationship
• A partnership between shipper and service provide.
• A customised solution worked out in co-operation and an equitable sharing of benefits and burdens.
Third party logistics relationships are described in various terms like logistics alliances, contract logistics, logistics partnerships, dedicated contract distribution, etc. The dedicated contract distribution has two major variants; namely dedicated capacity and dedicated assets. In dedicated capacity situations, the service provider is obliged to fulfil certain service levels and volume but can use the assets to serve other customers. In contract with dedicated assets, specific resources such as vehicles, terminals