3PL Provider

Third-party logistics - Types of 3PL providers 1 Hertz and Alfredsson (2003) describe four categories of 3PL providers:

Third-party logistics - Types of 3PL providers 1 * Standard 3PL Provider: this is the most basic form of a 3PL provider. They would perform activities such as, Pick and Pack|pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity.

Third-party logistics - Types of 3PL providers 1 * Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.

Third-party logistics - Types of 3PL providers 1 * The Customer Adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company's logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a new service. The customer base for this type of 3PL provider is typically quite small.

Third-party logistics - Types of 3PL providers 1 * The Customer Developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them. Martin Murray, about.com

Third-party logistics - On-demand transportation 1 On-demand transportation is a relatively new term coined by 3PL providers to describe their brokerage, ad-hoc, and flyer service offerings. On-demand transportation has become a mandatory capability for today's successful 3PL providers in offering client specific solutions to supply chain needs.

Third party logistics - Advantages and disadvantages of third party logistics 1 So in conclusion a 3PL provider can meet the technical requirements in a faster and more cost efficient way than a company could do itself.Simchi-Levi and Kaminsky, Designing and Managing the Supply Chain: Concepts,Strategies and Case Studies, third edition, McGraw-Hill International Edition, page 251

Third party logistics - Advantages and disadvantages of third party logistics 1 Thus the fact that most or all operative functions are outsourced to a 3PL provider there is no need for the client to hold own warehouses or transport assets. There is very less or no tied up logistics capital.

Third party logistics - Possible disadvantage of 3PL 1 The only big disadvantage (if you see it as one) is the loss of control a client has by working with third party logistics. Eminently in outbound logistics when the 3PL provider completely assumes the communication and interacting with a firm's customer or supplier. By having a good and continuous communication with their clients most 3PL’s counter and try to charm away such doubts.

Third party logistics - Important issues to think about, before contracting with a 3PL provider 1 This fit is more important than the pure cost savings, like a survey of 3Pl providers shows clearly: The customer orientation in form of adaptability to changing customer needs, reliability and the flexibility of third party logistics provider were mentioned as much more important than pure cost savings.Leahy, S.; P

Third party logistics - Important issues to think about, before contracting with a 3PL provider 1 Closely entangled together with the point of customer orientation is the point of a 3PL’s specialization. The special requirements of the own company should be flow into the decision which 3PL is the right one to choose. Experts often suggest firms to choose 3Pl providers with roots in the same area of logistics as the department that shall be outsourced.

Third party logistics - Important issues to think about, before contracting with a 3PL provider 1 But 3Pl providers tend to shed clients efficiency consciously by preferring their own assets in order to maximize their own efficiency

Third party logistics - Motivation and aims of 3PL collaborations 1 The 2014 annual Third Party Logistics Study (subtitle: The State of Logistics Outsourcing) of Capgemini investigated, that third party logistics clients have an average logistics cost reduction of 11%, an average inventory cost reduction of 6%, and an average fixed logistics cos reduction of even 23% by outsourcing their logistics to 3PL providers.

Third party logistics - Differentiation of 3PL and 4PL 1 A fourth party logistics provider selects the 3 Pl providers from the market which are most suitable for the logistical issues of his customer. Unlike the allocative function of a 4PL in the supply chain, the core competence of a 3Pl provider is the operative logistics.

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