Business Environment : Supply Chain Integration

Outsourcing is one of the approach to offshoot the responsibility and decision criteria to other companies which can take care of the several components of the supply-chain. The inventory management process can reduce the cost of operating firm’s own

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Supply chain management is a practice that involves the planning, supervision, and implementation of strategies and controls to direct the movement of goods and services provided to customers. The intent of this essay is to incorporate a synopsis of existing literature and to provide the reader with a general understanding of how supply chain management correlates with the organizational design and structure of modern firms. The essay comprehensively reviews the components of supply chain management and their integration with functional areas within an organization. The information presented in this essay

Third-Party Logistics (3PL) is a logistics program that has been outsourced to a company that specializes in logistics management. These 3PL organizations hire experienced logisticians, supply chain managers, statisticians, and other specialized professionals to handle some or all aspects of a business’ logistics program. Organizations are opting to outsource their logistics management for a variety of reasons; “Some companies choose to let third-party providers handle only transportation or warehousing; others opt to outsource everything from packaging and assembly to inbound transportation and freight consolidation” (Feeley & Driscoll Certified Public Accountants). The following paper addresses some of the reasons why companies around the world are outsourcing their logistics management instead of keeping it in-house.

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.

Supply Chain Management : The vertical integration in the supply chain led them to achieve shorter time frame of release and also helped them to

Overall, 1 in 4 respondents outsources less than 20% of their logistics operations to 3PLs. Is this is a sign that shippers are hesitant to allow too much ownership of their supply chain to outside companies, or that they prefer to bring the expertise into their own logistics division? Concerns over integrating the two businesses into a successful working relationship and ensuring mutually viable contract terms could also be factors in the decision against outsourcing a large percentage of key business operations.

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.

Supply Chain coordination has become a critical success factor for Supply Chain management (SCM) and effectively improving the performance of organizations in various industries. Companies are increasingly located at the intersection of one or more corporate networks which are designated by “Supply Chain”. Managing this chain is mainly based on an 'information sharing ' and redeployment activities between the various links that comprise it. Several attempts have been made by industrialists and

In the article, “Best Practices for Transporters and 3PL Service Provider”, it talks about the advantages and disadvantages of third-party logistics. It also talks about how the industry is growing now and in the future. Third-party logistics primary focus is on global expansion. Expansion in the marketplace that can have a greater impact in a company’s supply chain management function. Most businesses today choose to outsource a portion if not all of its logistics functions to third parties in the hope of achieving operational efficiencies within the supply chain area of operations. By doing this companies are able to place more focus on core business activities. Third-party logistics providers has the capability of taking

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

Customers are becoming more cost-conscious and this is resulting in changes in our supply chain process in order to reduce production costs and remain competitive in our market. Outsourcing has become a necessary measure in order to cut costs and increase competitive advantage. Outsourcing certain aspects of the supply chain, while having both advantages and disadvantages, can be very beneficial to the company. When analyzing whether outsourcing will be good for the company, one must look at the advantages and disadvantages of outsourcing, how it will decrease costs and increase competitive advantage, and what changes will take place with a newly developed global workforce.

The first paper develops its idea based on previous research that was carried out by Frohlich and Westbrook that distinguishes the influence being played by supply chain integration on the performance of certain firms. This paper provides an overview of how manufacturing firms arbitrate the relationship their supply chain integration and its respective business performance. This paper discovered through vigorous research and improved work on previous studies that the proper application of a supply chain integration would lead to a significant improvement in business performance. The second paper confirms the relationship that exists

Since the globalization developing quickly, customers become prefer manufactures and suppliers who provide faster logistics and better services, which cause big issue for suppliers to increase their ability to meet the customers’ expectations. However, they need to enhance their core competence at the same time, in order to focus on one aspect, they turn to outsourcing. According to Blanchard (2010), those well-known brand makers, product-centric companies, and companies that used do rely on their own supply chains are now tending to rely on 3PLs (Third Party Logistics) to do the transportation and similar logistics tasks.

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,