Problems Associated with Third Party Logistics

TABLE OF CONTENT

Introduction2

Discussion6

Emergence of logistics7

Functions of Logistics Company11

Challenges of third party logistics15

Warehousing problem24

Other problems26

Conclusion29

Problems Associated with Third Party Logistics

Introduction

In the age of innovation and advancements, the businesses have introduced innovation and modifications in its core functions and activities. Beginning from the product idea and prototype development and continuing up to the development of an original and superior quality product, the organizations apply quality procedures and boosted methods of development. However, one way to reduce the cost of logistics business processes within the logistics strategy of minimizing investment in logistics, logistics outsourcing is the use of the scheme. The third party logistics provider (abbreviated 3PL) companies are external logistics service providers. Their core competence is the acquisition of transport and storage of their customers (Bourgeois, 1986).

Logistics play an important role in the execution of the whole management process. The logistics implies the transportation of materials from one place to another. It is the management of the flow of materials, order and other things involved in business from one point to another so that the demands of the customers can be met. However, the concept of the third-party logistics is different from the logistics. It implies the company to obtain the services of the third party for transporting the goods and services from one place to another (Clinton & Del, 2002).

Third-party logistics provider takes care of themselves but increasingly beyond services. In contrast to fourth-party logistics (4PL) and Application Service Provider (ASP), 3PL providers have their own assets in the field of classical transport processes, handling and storage. 4PL providers do not have their own trucks, warehouses, and other logistics assets, but only provide their expertise available (e.g. fleet management). However, the combination of 3PL and 4PL skills draws the lead logistics provider (LLP). Thus, firms requires their own trucks and warehouses, as well as the necessary expertise to manage complex supply chains and can offer logistics services to customers under one roof in the sense of a one stop shopping.

The third party logistic services are rendered by the companies usually when they are unable to perform the previously performed function due to some reasons. The company can out source any kind of activities related to the logistics which were previously performed by the company itself. If the company hires the external services of logistics for transporting any kind of its goods and services, then it will be considered as the third-party logistics. The business of logistics is one of the emerging operations in the world that is considered to be very profitable (Cloud, 2000).

However, by definition, third-party logistics is the provision of multiple services provided by a firm for its customers. Moreover, there is a huge impact of third-party logistics on the process of supply chain. Bashing (2006) states that retailer are now increasing their service channels through advancement in integrated communication design, thus managing the temporal demands of the customers (Maney, 2003). Moreover, 3PL providers are the companies that provide comprehensive logistics services for the ...