Disadvantages Of 3PL

Decent Essays

1. Third party logistics 3PL
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.

2. Reasons to employ 3PL instead of using in-house logistics service
i) Companies can focus on their core competencies which should be production. ii) Companies can significantly cut investment on logistics associated assets as well as liability. A customer does not have to use “in-house” and any logistics assets. iii) Companies can reduce shipping costs. By gathering the shipping volume of all of its customers and consolidation, a 3PL can bargain better …show more content…

vi) 3PLs are focused in the fields of logistics and transport management with high economic efficiency. The costs of associated logistics services can be managed efficiently. vii) 3PLs give freight payment as well as freight audit safeguarding the customer’s shipping costs stay within the contracted terms. viii) Customer portal access. Most 3PLs have software enabling their customers to have access to their websites. This lets their customers to see all of their shipments in progress at any time. ix) Supply chain analysis. 3PLs can provide insight to shipping patterns as well as distribution work improving optimal efficiency.
x) 3PLs give distribution centers in different locations which will eventually decrease a company investment. xi) Owing to the Exxon Valdez disaster, oil companies have been withdrawing their ownership of tankers but employing 3PLs to minimize their exposure to lawsuits.

3. Drawbacks to employ 3PL
i) Companies fear of exposing company information. ii) Companies fear of the inability of the 3PL in managing its operation costs, with the result that services quality will be

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