3pl Providers and Users

Topics: Logistics, Supply chain management, Third-party logistics Pages: 149 (11995 words) Published: March 31, 2013
Dr. S. Samar Ali,
Associate Professor : Operations & Logistics Management *
JK Business School, Damdama Lake Road,Bhondsi, Gurgaon 122102, India Telephone: +91-9971876017, Email address: sadiasamarali@gmail.com

Third party logistics (3PL) has been gaining importance in most places in the world. The implementation of 3PL practices is just beginning and emerging effectively. This paper examines the Indian 3 PL Supply Chain Management and practices with respect to the key success factors and growth strategies . After identifying the critical success factors SERVQUAL is applied to reveal the gap between their achievement and expectation. Respondents to the survey are categorized based on their rating of the key growth strategies on the basis of AHP.

Key Words: 3PL; Third Party Logistics Providers; India; Factor Analysis; SERVQUAL; AHP

1. Introduction
As conditions for doing business in a global setting have changed significantly during the last two decades the importance of logistics and supply chain management (LSCM) has been recognized universally. As companies realized the need to adapt to the ever changing conditions in an environment of globalization, technological innovation, and more sophisticated consumer demand to survive and flourish they began to incorporate into their systems of operations and focus on a strong LSCM component (Rushton & Walker, 2007). Superior logistics and supply chain performance is now a well-recognized strategic dimension for companies to gain competitive advantage. The growth of logistics outsourcing in the USA is attributable to better transportation solutions; greater focus on core businesses; impact on cost reduction; improvements in services; development of necessary technological expertise; availability of computerized systems; and the need for more professional and better prepared logistics services (Sheffi, 1990). The growth of business dynamics has caused outsourcing of the logistics activities to gain increasingly greater importance. Companies have been considering various options to manage their logistics activities including, creating in house dedicated logistics function, setting up logistics subsidiaries or acquiring a logistics firm. (Sahay & Mohan, 2006).

A 3PL provider is a company which supplies and/or co-ordinates logistics functions across multiple links in the supply chain. The company acts as a


“third party” facilitator between seller/manufacturer (the “first party”) and buyer/user (the ‘second party’), Figure 1.
Figure 1. Main components of 3PL.

Source: Research on India – Third Party Logistics – India, November – 2009. www.researchonindia.com

Various authors have provided their version of 3PL definition, which are listed in Table 1.
Table 1 – Definitions of 3PL in the logistics literature.
Lieb (1992)

The use of external companies to perform logistics functions that have traditionally been performed within an organization. The function performed by the third party can encompass the entire logistics process or selected activities within that process.

Murphy and
Poist (1998)

The procurement of an integrated set of logistics services in a longterm relationship between a shipper and a service provider. A relationship between a shipper and third party which, compared with basic services, has more customized offerings, encompasses a broader number of service functions and is characterized by a longer term, more mutually beneficial relationship.


Vab Laarhoven
et al. (1999)


Bask (2001)

Activities carried out by a logistics service provider on behalf of a shipper and consisting of at least management and execution of transportation and warehousing. In addition, other activities can be included, for example inventory management, information related activities, such as tracking and tracing, value added...
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