Third Party Logistics (3PL) provider handles all or most of freight of the organizations including the management of information by the third party, freeing the company from day to day interaction with carriers, and having to oversee hundreds or thousands of shipment. New and cheaper information flow resulting from internet enabled solutions, will lead not only achieving immediate cost reductions in operations but also to enormous productivity gains over the next few years.
The tracking and control of movement of goods drive freight optimization and asset utilization. The options are : increased trailer utilisation, combining full truckload shipments, consolidation, aggregation of smaller buyers. Purchase asset based transportation is becoming increasingly a commodity.To put simply, 3PL refers to the outsourcing of a logistics function. It could be the use of a transportation carrier, a warehouse, or a third party freight manager to perform all or part of a company’s production distribution functions.
The principle reasons of for this function are as under:
• Globalization of sourcing, manufacturing and distribution leading to an increase in the complexity of material movement
• Competition that has forced companies towards more responsiveness and a reduction in inventories. An increased need for small but frequent shipments with 100 percent reliability, requiring core competence in logistics management.
• Resource constraints that require companies to concentrate only on their core manufacturing or new product development activities.
• Globalization of sourcing, manufacturing and distribution leading to an increase in the complexity of material movement
• Competition that has forced companies towards more responsiveness and a reduction in inventories. An increased need for small but frequent shipments with 100 percent reliability, requiring core competence in logistics management.
• Resource constraints that require companies to concentrate only on their core manufacturing or new product development activities.
4PL
Fourth Party Logistics is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, supply chain solutions of their supply chain management function. A 4PL uses a 3PL to supply service to customers, owning only computer systems and intellectual.
It has been argued that a 4PL is the same thing as a "Non Asset-Based 3PL".
Functions
• Freight Negotiations with 3PLs
• Freight Contract Management
• Transport Billing
• Continuous Improvement Programs
• Management of Service Providers
• IT Solutions
• Risk Management and Insurance
• Cash-flow Management.
• Freight Contract Management
• Transport Billing
• Continuous Improvement Programs
• Management of Service Providers
• IT Solutions
• Risk Management and Insurance
• Cash-flow Management.
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