Third party logistics

1. THIRD PARTY
LOGISTICS
BY VIGNESH B
RA1852001020070

2. ABOUT LOGISTICS
Logistics is generally the detailed organization and implementation of a complex operation. In a
general business sense, logistics is the management of the flow of things between the point of origin
and the point of consumption to meet requirements of customers or corporations. The resources
managed in logistics may include tangible goods such as materials, equipment, and supplies, as well
as food and other consumable items. The logistics of physical items usually involves the integration
of information flow, materials handling, production, packaging, inventory, transportation,
warehousing, and often security.

3. INTRODUCTION TO 3PL
• 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.

4. INTRODUCTION TO 3PL
• 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

5. DEFINITION OF 3PL
A 3PL (third-party logistics) provider offers outsourced logistics services, which encompass
anything that involves management of one or more facets of procurement and fulfillment
activities. In business, 3PL has a broad meaning that applies to any service contract that
involves storing or shipping items. A 3PL service may be a single provider, such as
transportation or warehouse storage, or it can be a systemwide bundle of services capable of
handling supply chain management.

6. TYPES OF 3PL PROVIDERS
Standard 3PL Providers
At this level, the 3PL company provides only basic logistics. This involves the storing and
transporting of your products, and some distribution in accordance with your company’s
requests.
Service Developer 3PL
In addition to the basic logistics services offered at the standard level, the service developer
3PL offers support in IT, security, and product tracking. This means they can further ensure
the delivery of your package is safe and on time.

7. TYPES OF 3PL PROVIDERS
Customer Adapter 3PL
Customer adapter 3PL’s are different in that they take over and run the existing logistics
operation from the partner company rather than creating their own.
Customer Developer 3PL
At this level, the customer developer 3PL will not only inherit the logistics operation of their
partner company, but they will also adapt their own systems. That means that the 3PL in
essence becomes the entire logistics department as opposed to simply offering services.

8. TYPES OF 3PL PROVIDERS
Characteristics of the Different 3PL Services
Transportation
At this phase, a 3PL can leverage other transportation firms in order to fulfil the duties of its
partner. If they are non-leveraged, the assets they use will be strictly those of the parent
company.
Warehouse/Distribution
3PL who specialize in managing the storing and distribution of product.

9. TYPES OF 3PL PROVIDERS
Forwarder
Middle men with extended roles in managing logistics.
Shipper/Management
Provides the resources to manage the logistics operation from start to finish. This includes
preparing reports and establishing carrier relations.
Financial
This includes accounting, auditing, freight payment, and tracking services, along with
inventory management.

10. ADVANTAGES OF 3PL
Specialization : 3PL companies are highly specialized because they are created with one and
only one purpose - to provide logistics support to various businesses. Specialization
naturally increases the efficiency of such organizations, which in turn benefits the courier
companies that hire them.
Access to advanced new technology: Due to high specialization, 3PL companies usually
have access to better technology than in-house logistics departments. The new technology
helps both reducing the time spent on a task and cutting costs.

11. ADVANTAGES OF 3PL
Access to required facilities: It is challenging for a company to have access to warehouses
and transportation required for the shipment of items of huge volume or size. On the other
hand, 3PL companies almost always have access to such facilities.
Ability to handle large number of clients at a time : Hiring 3PLs helps courier companies to
handle a large number of clients at the same time. It is possible because such logistics
companies usually have a large capacity along with a very high amount of efficiency.

12. DISADVANTAGES OF 3PL
Irregularities on the part of Third-party company may lead to problems: Once a courier company
hires a 3PL company for its logistics distribution, it allows some of the control of the entire
shipping process to slip away. When there is complete lack of control over a particular process,
there is always a chance that a problem may crop up. And if it does, it may cause harm to the
reputation of the company.
Communication problems :Two completely different companies are working towards achieving
the same goal, and in a scenario such as this, communication is of very high importance. But,
since the message must travel from one company to another, complications may arise, which in
turn could lead to misinterpretation of facts or complete miscommunication. When this happens,
most often than not, the delivery becomes a failure.