Third Party Logistics: Benefits and Issues

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.

Review of related literature gives a basis for any research. Unfortunately, there are not much studies conducted in this field of Logistics Management. Following are the available related studies undergone in the area of Logistics Management.

One of the major features of globalization has been the mergence and increased importance of third party logistics providers and support industries for shipping and transport operations. As businesses become more global in their scope and supply chains grow ever wider in scope and more globally integrated, the complexities and considerations of achieving efficient and cost-effective transport and support services grows more difficult, and most manufacturing and distribution companies outsource these services to a variety of different companies specializing in specific aspects of supply chain management and operational assistance. Achieving success as such a specialized company can be easy if the company maintains proper and accurate analyses of capabilities and environments and has appropriate internal controls, however failure to ensure these components and processes are in place can be disastrous, especially when combined with an emphasis on rampant growth.

(Bowersox, D.J., Closs, D.J., and Cooper, M.B. (2010). Supply Chain Logistics Management. (3rd Edition) New York, NY: McGraw-Hill/Irwin.

The Fast Moving Consumer Goods industry ( FMCG ) is one of the most top industries served by the third party logistics. The FMCG firms utilize the services that are provided by 3PL. The impact of Third Party Logistics on FMCG firms are on customer satisfaction, logistics system performance, the impact of 3PL also reduce the capital investment in facilities, reduction in investment in information technology, reduction in man power cost. The third party logistics also impact on the improvement of specific logistics function parameters, and improvement in inventory turnover rates. The 3PL has a positive and negative impact on FMCG

Coyle, J. J., Bardi, E. J. & Langley, C. J. (2003).Management of business logistics: a supply chain p

Mentzer (2004) argues that no matter how large a firm is, in a globalised world, it lacks the total resources and requisites for success. Supply chain management is a complicated process which is enhanced by globalisation and communications technology (Coyle et al. 2008). Many businesses have no experience or expertise in logistics operations (Baxter, 2006). Managing the transition from a 3PL to an in-house operation is a long and challenging process, with little or no external support, and the penalties for mistakes could be extremely high and damaging to the performance of the firm (Baxter, 2006).

Minor Logistics Operations Presentatie titel MIRBSLM114OP N.J. Osentoski-Monsma & A. Nielsen-de Vries Lecturers Logistics Room D2.173 osenj@hr.nl / vriad@hr.nl Rotterdam, 00 januari 2007 6-1 Corporate strategy Business strategy Operations Strategy Mission Objectives (cost, quality, flexibility, delivery) Functional strategies in marketing, finance, engineering, human resources, and information systems Strategic Decisions (process, quality system, capacity, and inventory)

During last two decades, the importance of logistics has been noticed around the world. In global markets, the effects and further developments of logistics and supply chain management for corporate success has increased significantly that result in a large amount of companies have taken actual benefits in logistics, such as reducing costs, enhancing customers ' satisfaction and increasing sales. However, some people are confused with the relationship between logistics and supply chain management, what logistics or logistics management is and what supply chain management is, weather or not that they are the same meaning in operations. Therefore, this essay will argue that logistics management and supply chain management are not exactly the same in operations because of the scope where utilized and some specific activities are similar, but some are different. In the end, this essay will also talk about the reasons for logistics management is a important strategy to manufacturing or service companies.

Until the Council of Logistics Management modified the definition of logistics to specify it as a subsection of supply chain management, many considered the two terms as one in the same. New learnings in the arena of supply chain management demonstrate the supply chain’s ability to support organizational business strategies. A supply chain in its entirely encompasses a wide range of activities from basic commodities, to selling finished goods to consumers, to recycling products (Harrison & van Hoek, 2011). This includes the process of planning and controlling procurement, transportation, conversion, and distribution across the entire supply chain. Collaboration between partners such as suppliers, third-party logistics (3PL) providers, intermediaries, customers, etc., is inclusive in supply chain management. Simply stated, supply chain management is the method in which business gets done.

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.

Third-party logistics involves the utilization of external organizations to execute logistics activities that have traditionally been performed within an organization itself. According to this definition, third party logistics includes any form of outsourcing of logistics activities previously performed in-house. If, for example, a company with its own transport facilities decides to employ external warehouse specialist, this would be an example of third party logistics.

Introduction to Logistics and its interface with production and Marketing; Measures of Logistics; Physical distribution and logistics.

Most of the global companies are outsourcing the logistics services because of the numerous factors (Mitra, S. 2006). The most important factor is globalization, firms all over the world are rapidly increases their sourcing, distributing as well manufacturing the goods or service with a global scale by creating very difficult supply chains network. Yet, all these activities can outsource with the help of the capable 3PL service providers who having ability to serve in the global operations and they also offer detailed supply chain analysis with their expertise IT abilities and with the modern mode of transportation, material handling tools and warehousing facilities (Hwang, H. 2005). 3PL services are used to balance the various logistics processes with the businesses that do not have any capability and also to increase the geographical reach (Mothilal, S et al). When the organization or firm expands their business to overseas market, they are not aware of the various customs duties, tax system of the host country, rules and regulations, import and export policies of the government, political nature for the growth of business and culture of the overseas country. A 3PL provider, who had thorough knowledge about the countries operation system, will able to carry the operation at the domestic level than the logistic service provider. 3PL may not be the core activity of an organization. 3PL providers offering a number of services to their

It is widely known that logistics plays a major role in the product and service production. Logistics is described as: ‘’the part of Supply Chain Management that