Third Party Logistics: The Business Impact Of Third Party Logistics

Over time, new healthcare reform measures were causing fundamental changes in reimbursement for services to hospitals and IDNs. Consequently, healthcare providers had to establish financial stability. This opened the door for third-party logistics providers (3PLs) to establish a strong presence in the healthcare industry. 3PLs? offered solutions to mitigate transportation and supply chain expenses that streamlined the order-to-delivery process and reduced expenses.

The term “3PL” means third party logistics. A 3PL provider does not produce a product, but handles all aspects of supply chain such as transportation, warehousing, inventory control, distribution, financial services, and etc. for another company’s product.

In recent years, Third Party Logistics (3PL) service providers play a very important role in a supply chain of an organization. A brief literature review is given in this section of the paper. Tate (1996) identified seven factors (compatibility, deep understanding of a partner's business needs, open communications, commitment, fairness, flexibility, and trust) that improved long- term relationship between 3PL and their customers. Logan (2000) used agency theory to help in bonding 3PL/customers relationships. It is postulated that, cost reduction and services improvement criteria are most expected by clients to avoid conflicts with their 3PL. Fawcett and Smith (1995) identified five criteria’s to evaluate the 3PL performance,

An organization’s strategy is the overall plan for an entire business that sets out how the organization will use its major resources. In other words, an organization’s strategy is a plan of action aimed at reaching specific goals and remaining in good attitude with clients and vendors. On the other hands, an establishment’s structure is the way the pieces of the organization fit together internally.

Abstract this paper introduces ways and advantages of third-party logistics enterprise servicing manufacturing enterprise, analyses supply-chain of manufacturing enterprise and further studies for the organization structure of third-party logistics enterprise servicing manufacturing enterprise, to seek to the enterprise organization structure which has the best combination in third-party logistics enterprise with manufacturing enterprise. Keywords: Third-party logistics enterprise, Manufacturing enterprise, Organization structure 1. Current Situation of Foreign Funds in China Insurance Industry Following the rapid development of third-party logistics enterprises and industrial structure entering the mid-term of industrialization in our country,

Logistics refers to all the processes involved in storing, moving, transporting or in any other way handling material. Role of logistics in activities before start of material and after completion of manufacture up to transportation to the immediate customer has been well recognized in the past also. But the logistics cost and effectiveness is also affected by, and in turn affect all other activities along the supply chain.

Third party logistics is a provider that gives companies the ability to outsource their logistics services. Logistics services that may include anything throughout an organization that involves management of the way resources are moved to areas where they are required or needed. Some would say the term, third party logistics, come from the military. In the business world, third party logistics con somewhat have a broader meaning. Meaning that it can be associated with service contracts that involve shipping or storing of items. Third party logistics provide services that may be a single service such as warehouse storage or transportation related, but it can also provide a system-wide bundle of services that have the capability of managing a company’s entire supply chain. Photo provided by Robinson (2013).

However, as one looks to the future, technology will play an essential role in enabling the desired changes. Technology will help make feasible the new logistic capabilities needed to support future industrial concepts and the type of efficient, responsive logistic system that business forces will demand”.[1] Traditionally, China is a country with relatively weak formal institutions; more importance is given to informal constraints, e.g. personal relationships. As a result, Chinese companies rely upon a network-based strategy of growth, based on personal trust and informal agreements among managers. These are important considerations for managers when forming business relationships and designing their supply chains in China. “Although customers are spending more on average for logistics outsourcing, the percentage of budget devoted to outsourcing logistics, and the services outsourced, haven’t changed dramatically over the past several years. Companies continue their general tendency to outsource relatively commoditized services”.[2] As a result of the market shift from cost-driven to quality-driven in the near future, the strategies for logistics service providers will include: more flexibility, quicker handling, better price stability, higher transparency and increased professionalism, in order to meet the challenges. “The next five years will see a significant increase in outsourcing activity. 3PLs will be the main beneficiaries of this process and as the

The objective of this paper is to present some benefits and issues in 3PL in general and has been organized as follows; in the following section, a brief background to why third-party logistics services have been adopted including a review of the relevant literature. Subsequently, the benefits that have been associated with use of 3PLs are presented followed by a presentation of the critical issues and requirements necessary in establishing beneficial 3PL relationships. Both sections will be related to the Malawi experience of a 3PL

Areas that third-party logistics specialize in include customized services and logistics matters. Those areas may involve warehousing, transportation, material handling, distribution, packaging and inspection, and inventory control. Sowinski (2005) stated that 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, and reverse logistics and value added services. Of course with any service there are advantages and disadvantages. One of the downsides to third–party logistics is that some form of control can be loss when companies entrust vital documents or information of their business to others. Saying that there is an upside to using third-party logistics. The organization shipping the product can benefit from the expertise and the knowledge of third party logistics companies. Third-party logistics providers allow companies to eliminate the need for warehouse space, transportation, technology, and by not having to staff employees to execute these logistics functions

According to various studies, Berglund et al. (1999) explain that third party logistics has several definitions that are an activities consisting of transportation and management, and warehousing on behalf of the shipper are carried out. Wilding and Juriado (2004) define that a company who solely operates for the provision of logistics-related single or multiple services on a contractual basis, is called Third Party Logistics Company. Especially, the true third party logistics companies provide a solution to the problem in the supply chain by incorporating multiple logistics services that are managed solely or together (Schary and Larsen, 1995). Coltman, Gattorna and Whiting (2010) suggest that third party logistics companies must create a large range of services to meet their distinct needs. A definition by Lieb et al. (1993) explain that 3PL providers can assist the whole processes of supply chain or just only selected activities depending on a company’s preference. It is also conclude the definition of outsourced logistics services that the employ of external firms to provide logistics services for the whole or selected logistics activities within the process that have traditionally been performed within an organization is the outsourced logistics. The roles performed by the 3PL providers can be making especially to customers' requirements (The Client Company) derived from market demands and conditions.

The supply – chain and logistics industry includes companies that move raw materials, finished goods, packages, and documents across the globe. It is one of the main phases in value chain concept in international business. The massive increase in the international trade has increased has increased the complexity of company supply chains. MNEs and other internationalizing firms require speed and efficiency in moving goods via supply chains around the world. To fulfil this need, competent logistic service providers

Blanchard (2006) defined third party logistics as, “A single entity that coordinates all the logistics requirements for a given company/agency.” Today’s world business environment has become so competitive that companies in order to be successful in the market must deal with different resources for satisfying their customer need. In the past decade or so the competitive global market has made a big influence in the growing for external business. Third party logistics providers are more and more employing external companies for inventory management, transportation, warehousing, and other value added activities for customer services. Third party logistics ultimate goal is to provide a competitive advantage to the organization for which they are serving. According to Cardinal Logistics (2012), “Third-Party Logistics is an effective way to reduce operational costs, and allow a company to focus on their core competencies.

Blanchard (2006) defined third party logistics as, “A single entity that coordinates all the logistics requirements for a given company/agency.” Today’s world business environment has become so competitive that companies in order to be successful in the market must deal with different resources for satisfying their customer need. In the past decade or so the competitive global market has made a big influence in the growing for external business. Third party logistics providers are more and more employing external companies for inventory

However, as more services organizations realize that the increasing costs of inventory management and logistics are likely to impact both their bottom lines and their ability to support customers - especially if they are presently running either an outdated or otherwise inefficient operation to begin with - they may have some strong reservations with respect to outsourcing some of these key activities. The greatest fear among most organizations is that outsourcing will almost immediately result in the lessening of customer service performance, either real or perceived, and therefore, loss of control over an historically critical component of their overall customer service and support equation.