Third Party Logistics: Logistics Management

Topics: Third-party logistics, Supply chain management Pages: 7 (1132 words) Published: October 2, 2015


By
Hossam El- Deen Mustafa Dawood

Under the supervision of
Dr. Amr Elsaeed

Third Party Logistics ( 3PL )

3PL stands for a third-party logistics provider. This is a company that provides third-party (or outsourced) logistics services for the partial or complete functions of their supply chain management. These types of logistics providers usually specialize in transportation, warehousing or integrated operation services that are able to be customized and scaled to the requirements of the customer. These requirements are commonly based on the delivery service requirements for their materials and products. Market conditions also play a major role in this process. This article will go into further detail about 3PL providers.

In recent years, companies have increasingly embraced one-stop global logistics services. By allowing companies to concentrate on their core competencies, these third-party logistics (3PL) providers can improve customer service and reduce costs. A 3PL provider can act as a lead logistics provider or a fourth-party logistics (4PL) provider aligned with a host of 3PL providers. This article explores the major considerations in searching for a 3PL provider to expedite the movement of goods and information. With the help of established theories in the literature, we use an evaluation criteria framework built around IT to examine a 3PL provider. Third Party Logistics is the activity of outsourcing activities related to Logistics and Distribution. The 3PL industry includes Logistics Solution Providers (LSPs) and the shippers whose business processes they support.

It is the function by which the owner of goods (The Client Company) outsources various elements of the supply chain to one 3PL company that can perform the management function of the clients inbound freight, customs, warehousing, order fulfillment, distribution, and outbound freight to the clients customers.

Third-party logistics providers can include courier companies and freight forwarders. Companies offering subcontracted transportation and logistics services can also be included. 3PL providers generally fall into four basic categories: The Customer Developer: As far as the activities and processes of the company, this is the highest level that is able to be attained by a 3PL provider. This happens when the complete logistics function is taken over by the 3PL provider after it has successfully integrated itself with the customer.

The Customer Adapter: The customer asks for this type of 3PL provider. Once they are contacted, they take over all of the logistics activities of a company. Logistics are improved by a customer adapter, but a new service is not developed. There is generally a small customer base for this type of 3PL provider.

Service Developer: They will provide advanced value-added services to their customers that can include: security systems, specific packaging, cross-docking, tracing and tracking. These types of tasks are able to be performed by a service developer thanks to a focus on economies of scale and an excellent IT foundation.

Standard 3PL Provider: This is the most common type of 3PL provider. They typically perform tasks including pick and pack, distribution and warehousing. 3PL is not the primary activity of many of the companies that provide standard 3PL service.

This new model for 3PL operations has come into existence due in large part to technology advances and the associated increases in inter-company communications and the visibility of the supply chain. Many logistics companies are now doing business internationally. Therefore, there is a need to lower costs, increase velocity, lower risk and increase the visibility of the supply chain, all at the same time. In order to do this, a common technological solution was called for.

Non-asset based providers handle tasks such as issue resolution, customer service, tracking, auditing, financial...
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