Third Party Logistics
Third Party Logistics – An Overview
A third-party 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 third-party, then, is a firm hired to do that which neither the first or second party desires to do. 3PL typically specializes in integrated warehousing and transportation services that can be scaled and customized to customer needs based on market conditions and the demand and delivery service requirements for their products and materials. 3PL is evolving from a predominately transactional role to one that is more strategic in nature.
Characteristics
Some of the characteristics of 3PL’s are that they perform a variety of outsourced logistics matters, provide customized services, and handle multiple activities. These may involve transportation, distribution, warehousing, material handling, inventory control, packaging and inspection. Some of the services offered by 3PL’s in the current market are:
Dedicated contract transportation and transportation procurement.
Inventory management
Logistics management and consulting
Freight audit and consulting
Shipment tracking and tracing
Reverse logistics and value added services
Advantages
Cost reduction
Improved efficiency, service and flexibility
Focus on core competency
Freeing up resources
Elimination of infrastructure resources
Risk- sharing
Better cash flow
Access to resources not available at one’s own organization
Disadvantages
Loss of control over the logistics function
Impact on in-house workforce
More distance from clients- loss of personal touch
Discontinuity of services of a 3PL provider
Differences of opinion or perception of the service level of the 3PL provider
Why Companies go for it??
Companies have different options to
A third-party 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 third-party, then, is a firm hired to do that which neither the first or second party desires to do. 3PL typically specializes in integrated warehousing and transportation services that can be scaled and customized to customer needs based on market conditions and the demand and delivery service requirements for their products and materials. 3PL is evolving from a predominately transactional role to one that is more strategic in nature.
Characteristics
Some of the characteristics of 3PL’s are that they perform a variety of outsourced logistics matters, provide customized services, and handle multiple activities. These may involve transportation, distribution, warehousing, material handling, inventory control, packaging and inspection. Some of the services offered by 3PL’s in the current market are:
Dedicated contract transportation and transportation procurement.
Inventory management
Logistics management and consulting
Freight audit and consulting
Shipment tracking and tracing
Reverse logistics and value added services
Advantages
Cost reduction
Improved efficiency, service and flexibility
Focus on core competency
Freeing up resources
Elimination of infrastructure resources
Risk- sharing
Better cash flow
Access to resources not available at one’s own organization
Disadvantages
Loss of control over the logistics function
Impact on in-house workforce
More distance from clients- loss of personal touch
Discontinuity of services of a 3PL provider
Differences of opinion or perception of the service level of the 3PL provider
Why Companies go for it??
Companies have different options to