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Introduction To 3rd Party Logistics

Third party logistics (3PL) involves outsourcing logistics functions like transportation, warehousing, and order fulfillment to a third party provider. There are different types of 3PL providers, including warehouse/distribution based providers that offer warehousing and distribution services, transportation based providers that specialize in transportation with either owned or leased assets, and non-asset based providers that offer consulting services without owning physical assets. When selecting a 3PL provider, companies should find one that fits with their supply chain needs and can optimize operations, demand accountability, master forecasts, set clear expectations, know demand levels, and measure business impact.

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318 views

Introduction To 3rd Party Logistics

Third party logistics (3PL) involves outsourcing logistics functions like transportation, warehousing, and order fulfillment to a third party provider. There are different types of 3PL providers, including warehouse/distribution based providers that offer warehousing and distribution services, transportation based providers that specialize in transportation with either owned or leased assets, and non-asset based providers that offer consulting services without owning physical assets. When selecting a 3PL provider, companies should find one that fits with their supply chain needs and can optimize operations, demand accountability, master forecasts, set clear expectations, know demand levels, and measure business impact.

Uploaded by

Pratham Walia
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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INTRODUCTION TO 3rd PARTY LOGISTICS What is third party logistics?

3rd party logistics is the supply chain practice where one or more functions of a firm are outsourced to a 3PL provider. Typically, the logistics functions consist of: Inbound Freight Customers and Freight Consolidation Public Warehousing Contract Warehousing Order Fulfillment Distribution Management of outbound freight to the clients customers

Besides that, value added services can be provided. 3PL consists of: 1. Repackaging 2. Assembling 3. and Return Logistics The 3PL provider manages and executes these particular logistics functions using its own assets and resources, on behalf of the client company. The thoughts and rational behind these are to keep the firm competitive by keeping it lean without owning many assets and allowing the 3PL companies to focus on niche area and to reduce operational costs. 3PL is also referred as Contract Logistics.

TYPES OF THIRD PARTY LOGISTICS PROVIDERS

Warehouse/Distribution based: In this type, the 3PL provides warehousing facilities along with its distribution facilities. Not all firms have former warehousing and distribution experience. Thus the transition to integrated logistics has been less complex than for the transportation based providers. Examples of this type would be DSC Logistics, USCO, Exel, Caterpillar Logistics, and IBM. Transportation based: In this type, the third party logistics provider goes on to provide the transportation services. They also provide a comprehensive set of other services such as tracking and tracing of consignments, cross-docking, specific packaging, or providing a unique security system. They are of two types. Leveraged or non-leveraged. Leveraged 3PLs use the assets of other firms. Non-Leveraged 3PLs use the assets belonging solely to the parent firm. Examples of this would be Ryder, Schneider Logistics, FedEx Logistics, UPS Logistics etc.

Non Asset Based Service Providers: This class of 3PL performs functions such as

consultation on packaging and transportation, freight quoting, financial settlement, auditing, tracking, customer service and issue resolution. However, they dont employ any truck drivers or warehouse personnel, and they dont own any physical freight distribution assets of their own no trucks, no storage trailers, no pallets, and no warehousing. A non-assets based provider consists of a team of domain experts with accumulated freight industry expertise and information technology assets. They fill a role similar to freight agents or brokers, but maintain a significantly greater degree of hands on involvement in the transportation of products.

HOW TO SELECT A THIRD PARTY LOGISTICS SERVICE PROVIDER? One should always look for a company that fits into the client organisation scheme of things, and can optimize the formers supply chain. DEMAND ACCOUNTABILITY

MASTER (and own) THE FORECAST SELECTION OF 3PL

SET CLEAR AND FAIR EXPECTATIONS

KNOW YOUR DEMAND

MEASURE BUSINESS IMPACT

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