Abstract – Supply chain management has played a
significant role in global market. The role of logistics in supply chain
management is to provide plenty of significant improvements in industrial
development. However, Third-party logistics activities such as transportation,
warehousing, material handling and other value-added enable companies to get
customized logistical support while manufacturers focus on the core
organizational activities to achieve excellence. Third party logistics assists
to supply right product in right time with right quantity to right consumers.
The objective of this study is to statement the role of third party
logistics in supply chain management and to understand the relationship between
supply chain management and Third party logistics.
Many international companies have to
establish integrated supply chain network to support their international
business activities and enhance organizational competitiveness (Christopher,
2005). Logistics is one of the key functions for global business. one
the best way to lower their logistics cost is to contract their logistics
services to some third-party logistics service. Third-party logistics have
brought together materials, equipment and systems to handle many operational
such as high throughput, picking efficiency, rapid order processing, and
efficient use of space and efficient processing of value-added services.
Third-party logistics TPL often uses the customized activities as
entry into the distribution channel, warehouses and transportation systems for
manufacturers. Third party logistics have carved out a position in distribution
channel operations (Van Hoek 2000).
Prepared this paper, a study of the
logistics literature has been conducted together with several case studies.
Different aspects of collaboration between organizations in logistics setups
have been studied where the services and the activities have been analyzed to
understand the Third Party Logistics and Supply Chain Management
3.What is Third party logistics.
Global supply chains are at the heart of business strategy,
and often the difference between profit and loss in industries that operate
with slim margins even during expanding economic conditions. But they are also
fraught with risks, which add complexity to supply chains. Supply chain disruptions
can move a company from leader to laggard in short order: risks that include volatile
energy costs, product quality issues, and even natural disasters. Successful
companies develop risk mitigation strategies and use resilience as a
competitive advantage. Third-party logistics help companies develop and
implement these strategies although the industry is increasingly vital to the
domestic and world economies, there is no single, legal definition of TPL,
sometimes called logistics outsourcing. Generally speaking, though, TPL is the
business of managing various elements of the supply chain via contract or
outsourcing. TPL provider manages all or part of a client’s logistical
requirements, which may include transportation, inventory optimization,
warehousing, order fulfillment, or the integration of these and other functions.
Definition. According to
Council of Logistics Management.
Logistics: is that part of the supply chain
process that plans, implements, and controls the efficient, effective flow and
storage of goods, services, and related information from the point-of-origin to
the point-of consumption in order to meet customer requirements”.
Third-party logistics: as “Outsourcing all or much of a company’s logistics operations to
a specialized company”. Third-party logistics involves the use of external
companies to perform logistics functions that have traditionally been performed
within an organization. Third party logistics provider is a firm which provides
multiple logistics services for use by customers. Preferably, these services
are integrated, or “bundled” together by the provider.
Integration between Third party logistics and SCM. Lambert et al. (1998) and
Simchi-Levi et al. (2003) state that the goal of SCM is to create value for
customers, stakeholders and all supply chain members. According to
Council of Supply Chain Management Professionals (2007) integration is about
“linking major business functions and business processes.
Integration concept Definition as
the structured and measured set of activities designed to produce a specific
output for a particular customer or market.
The framework for the business process integration consists of three elements.
1) Supply chain network structure. The key supply chain members who are vital to a supply chain that creates value
for the customers.
2) Supply chain management components .The components supporting the cooperation between the participants in
the supply chain and the integration processes.
3) Supply chain management processes
party logistic and SCM customization
A. Logistics. can play an important role in achieving mass customization In
fact, most often postponed manufacturing is applied in the distribution
channel, in order to be close to the customer and allow for rapid delivery of
B. Third party logistics. Consider these as a viable
extension of their service offerings by operating warehouses and transportation
systems for manufacturers, to earned a position in the distribution channel
operations. by offering these services, TPL can penetrate segments of the
supply chain with higher value-added operations, such as final manufacturing,
than the commonly offered transport and warehousing based services. These services
are rapidly becoming a commodity with low involvement from clients, low margins
and stability of relations. Offering customization and postponement services,
supplementary to existing services, can give services a
specialty/differentiation edge. While raising added value for customers,
improved margins, as well as customer relations are attained.