3rd party logistic

1. E.Dhamotharan
RA1852001020105

2. Third-party logistics
Third-party logistics (abbreviated as 3PL, or TPL) in logistics and supply chain
management is an organization's use of third-party businesses to outsource elements of
its distribution, warehousing, and fulfillment services.
Third-party logistics providers typically specialize in integrated operations
of warehousing and transportation services that can be scaled and customized to customers'
needs, based on market conditions, to meet the demands and delivery service requirements
for their products. Services often extend beyond logistics to include value-added services
related to the production or procurement of goods, such as services that integrate parts of
the supply chain. A provider of such integrated services is referenced as a third-party
supply chain management provider (3PSCM), or as a supply chain management service
provider (SCMSP). 3PL targets particular functions within supply management, such as
warehousing, transportation, or raw material provision

3. The Role Of Third Party Logistics
Third-Party Logistics are always present in the four parts of the supply-to-sale cycle, which
is: procurement, transportation, distribution, and growth. The involvement of third-party
logistics makes it easier for sellers and business owners to manage their products every step
of the way. As a seller, you should take note of the following before making decisions that
involve third party logistics:
•Find out and understand all that the company can offer, from the rates up to
the customer benefits.
•Determine your business strategies, weaknesses, and strengths.
•Find out what part of the process 3PL professionals handles better.

4. Types of 3PL Providers
3PLs usually focus on one aspect of the logistics or supply chain process, yet the
bigger firms may handle all of it while integrating seamlessly.
1. Transportation Based
They could handle the inventory shipment between your factory and your
warehouse or between you and your buyer.
2. Warehouse and Distribution Based
This is the most common type of 3PL, as they handle storage, shipment, and
returns. Warehouses come in many shapes and sizes, and the market is active with
innovation thanks to companies like Amazon for firmly establishing a two day,
same day and next day delivery expectations.

5. 3. Financial and Shipping Based
These types of 3PLs help optimize your entire logistics network, owned and via third
parties, freight auditing, cost accounting and control, and tools for monitoring, booking,
tracking, tracing, and managing inventory

6. Current Challenges
• E- commerce sales continue to increase and are a catalyst of consumer demands and
serving as the catalyst for new technologies that are making the supply chain more
relevant. Last mile deliveries are increasingly complicated as customer are now more
specific about delivery demands and expect even faster shipping times.
• With last-mile deliveries, there is no single solution, and many shippers have turned to
3PL providers to fulfil last-mile requirements in ways that meet customer demands.
• At the same time, growth in the economy has contributed, in part, to increasing freight
levels, and new federal regulations surrounding electronic logging devices have tightened
the amount of available capacity in terms of equipment and driver availability, making
securing dedicated transportation space difficult for some shippers

7. Advantages of using 3pl
From an organizational point of view, there are several advantages associated with the
use of these third party logistics companies like:
Time and cost savings:
Since these 3pl companies have logistics as their core competency they:
•Are much more knowledgeable about warehousing, distribution and general
logistics,
•Have greater experience in dealing with problems and hassles that crop up,
•Operate through a global network which ensures greater efficiency of work thus
translating into time and cost savings and keep updating and adapting their
systems to be able to meet the demands of their customers.

8. Lowers the capital requirement:
Outsourcing the logistics to the third party means that the manufacturer or production
company does not have any need for investing capital in maintaining a warehouse or
transportation facilities. This enables the company to invest a lower capital into the
business and fully utilize the invested capital for its core competency which is
manufacturing.
Focus:
Outsourcing to logistics companies like the 3pl Logistics Companies in Mumbai,
enables the manufacturing or producing company to concentrate and focus fully on the
manufacture and sale of their products thereby ensuring effective utilization of both
resource and capital.
.

9. Flexibility:
Third-party logistics companies have greater flexibility in terms of geographic distribution
since they tend to factor in the distance to be covered when they calculate the cost of
shipping. In fact, most 3pl logistics companies have something known as zone skipping
which results in the lowering of the customer’s shipping cost due to the shortening of the
distance between the products to be shipped and the ultimate delivery destinations. With
the logistics being taken care of at lower costs, it becomes possible for the manufacturer or
producer to manage their workforce better and convert fixed costs into variables

10. Disadvantages of 3PL
While there are several reasons for companies to embrace a 3PL, there is also another
side to that coin. Despite the potential rewards, using third-party logistics companies
can come with its own set of risks.
Loss of Control
When choosing a 3PL provider, an organization is giving up a certain amount of
control of the delivery. When a business decides to join forces with a third-party
logistics provider, they are entrusting the 3PL to meet the agreed-upon SLAs, and that
requires a major leap of faith for functions that can directly impact customer
satisfaction. The smooth exchange of critical EDI and non-EDI information can be at
risk if one party is using subpar B2B integration software. Additionally, sharing certain
proprietary information with a third party (sourcing, order information, etc.) could
leave companies feeling vulnerable should there be a data breach

11. Cost
While a 3PL can save a business lots of time and money, external factors (tariffs, over-
regulation, weather, etc.) can lead to escalating costs. A 3PL company might make
financial sense upfront, but you’re at the mercy of this external trading partner and its
own business strategy. Once-standard transaction costs eventually can skyrocket as
your business consumes more services and may be more expensive than an in-house
logistics operation. Additionally, it’s often difficult to establish a cost-effective
partnership between a shipper and a 3PL, and it’s something you’ll have little
influence over.

12. Business Understanding
If you’re in a highly regulated industry or have very specific needs (cold storage,
temperature-controlled delivery, etc.) a run-of-the-mill 3PL may not suit your business.
Additionally, 3PLs often have hundreds or even thousands of customers and may not
give you the attention you’re seeking. How easy are they to contact for support? How
fast can they respond to your requests? It’s critical to choose a 3PL that fully
understands your business, its goals, and how efficient logistics and distribution can
enable those goals.

13. THANK YOU