Logistics Outsourcing and 3pl Challenges

Due to the large quantity of freight and the long distance that it must travel to arrive to its destination exporters and importers alike have found logistic service providers essential to engage in international trade (Rodriguez, Comtois, Slack, 2013). While some Logistics service providers focus only on the area of transportation others specialize in freight consolidation, distribution management, and warehousing (Robinson, 2014). They have enough market knowledge, information and communication systems to offer supply chain solutions tailored to the specific needs of any company be it small or large (Rodriguez, Comtois, Slack,

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.

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 ISOL + Group produces and sells a series of insulating products for the construction industry, sheathing for pipes, and rigid boards blanket insulation. The firm’s subsidiary has its own production plant and increases its own production capacity through buying from another of the Group’s plants those products it cannot manufacture due to technical reasons or in situations when it is operating at full capacity. The company’s production department is in charge of logistics in addition to other functions such as end-product distribution. The subsidiary, ISOL + FRANCE has initiated an extensive rethinking of logistics matters in the Group. This process was geared towards evaluating the situation

The selected business functions that outsource to a third party has become a common practice in the corporate world. The function of logistics is often to outsourced and providing logistics service companies have evolved into providing a vast range of logistics functions including inventory management, transportation services and warehousing services. The companies which provides logistics services on contract to other companies are known as Third Party Logistics Providers ( 3PLs).

Despite the third- party logistics was an improvement studies area in a recent business market, the studies of this area still existed some arguments and limitation (Marasco, 2008). The literature review in TPL studies based on a comprehensive literature review, which including some relevant research paper and journal paper published within the period 1990 to recent years (Selviaridis and spring, 2007). Some existing studies focus on the benefits and limitation of TPL services for company management. Leahy (1995) and other scholars were defined as the TPL is usually associated with the providing of multiple services rather than just isolation transport functions (Leahy et al., 1995). Therefore, some other research believes that the TPL services can reduce the total

During 1980s, most global firms focused on quality management in product design and internal process improvement in order to achieve competitive advantage. Today, the spotlight shines on transferring value to customers instead (Mentzer & Williams 2001). Therefore, logistics has turned to be the primary marketing instrument for increasing and sustaining competitive excellence. While comparing to the past, logistics was only taken as a function regarding the higher productivity objective (Hutt & Speh 2011).

Given that 4 out of 5 companies are using 3PL services, what are the key reasons behind using a 3PL? The survey aimed to uncover some of the common drivers for outsourcing logistics.

To survive and being success in modern business environment, focusing on supply chain management has become one of the popular ways to increase competitiveness among organizations. According to Lambert and Cooper (2000, as cited in Flynn, Huo and Zhao, 2008), organization has started to rethink the importance of cooperative, mutually, and beneficial supply chain partnerships due to the fierce competition among organization nowadays. In order to increase the efficiency and effectiveness, outsourcing has been commonly used among business, which means companies will allocate part of their production process to a third-party logistics and fourth party logistics (3PL&4PL) rather than finishing the

It is known to us, “in each industry, the customer is god, is operator's food and clothing parents.” This tells us that customers are important to organizations. With the current intense competition in logistics nowadays, most companies can provide high quality goods, even are willing to cut down prices if reasonable. However, how can suppliers gain a competitive advantage when high quality is expected and price must be maintained at a level to generate a reasonable return? In our views, it is no doubt that how various supplier service activities are valued by customers, more specifically, that is, the ability of logistics

There are many benefits of understanding the international context of business trade and logistics. To achieve competitive advantage, even within small firms, it is necessary to gain expertise in the international logistics activities which are much more complex than what domestic trade involves. The world’s economy is increasingly global, and the logistics sector designates a significant fraction of that economic activity, the estimated total stands at $7. 4 trillion dollars (David, 2013, p. 53). Technology and electronic communication have facilitated customer demand fulfillment and the movement of products. For someone in business it is critical to understand the continued growth in international trade, drivers of international trade, and the possible barriers in the international infrastructure.

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.

Following the paradigm shift on the role of logistics management in the recent decades, there has been a wide recognition of this as a very important aspect a business strategy in general. However due to the numerous factors promoting complexity of logistics management companies have adopted the idea of outsourcing their logistic activities to Third Party Logistics (3PL) providers. Hence, 3PLs have taken a critical role towards supply chains of heir customers.

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

The variability of logistics performance is quite relevant. ALP has not been able to guarantee a reliable service to its customers in the last years. There seems to be a lack of organization when providing the service to the customers, in the sense of establishing priorities and