Supply Chain Relationships SCM-I
Introduction • Logistics is basically the concept of how to deal with the movement and storage of materials with highest consumer satisfaction • Most developed countries, the costs of logisitcs management are steadily growing • Logistics costs have become an important part of the value of products • Logistics management is regarded as an important role in the international competitive market
Introduction • Logistics outsourcing is one of the issues that a firm has to consider about the efficiency and benefit outsourcing brings to the company • The decision to outsource logistics activities are use of other companies to handle logistics affairs such as transportation and warehousing • The role of logistics providers is changing both in content and in complexity and brings about the development of new logistics providers who offer various services to their customers • Logistics outsourcing is not a new trend.
History of Outsourcing • In the 1950s and 1960s, transportation and warehousing were commonly outsourced. • By the 1970s, as companies began to emphasize cost reduction and improved productivity, they started to look for multicompetency providers for outsourcing. • In the early 1980s, companies began to emphasize supply chain optimization, but it was mostly restricted to isolated operations within their own organizations. • In the 1990s, by the advent of Internet and the emergence of global sourcing, logistics industry introduced a new generation of LSPs.
Types of Logistics Parties
3PLs • Third-party logistics are activities carried out by a logistics service provider performing at least management and execution of transportation and warehousing. • Logistics outsourcing, logistics alliances, third-party logistics, contract logistics, and contract distribution have been used to describe the same meaning . • Other activities like inventory management, information related activities, value added activities, or supply chain management can be managed by the logistics service provider. • The length of the cooperation should be at least one year.
3PLs • The total logistics market in 2013 in the United States was $910 billion and the 3PL market was around $65 billion. • A survey of 221 US companies reported that 78% of them are using 3PLs for logistics services and spending 49% of their logistics expenditure on outsourcing. • The 3PL business is developing as a result of the increasing demand of advanced logistics services, including globalization, lead-time reductions, customer orientation, and outsourcing.
Activities of 3PLs • transportation • warehousing • freight consolidation and distribution • product marking • labeling and packaging • inventory management • carrier selection •
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