Supply Chain Management and Third Party Logistics
Supply Chain Management and Third Party Logistics
Supply chain management and third party logistics are gaining huge importance in this modern era. These days logistics is considered to be an integral part of any given business around the globe these days.
What is Supply Chain?
Supply chain includes all the activities of a business process including all vendors, search providers and customers. It involves all the movement of fund, material and all the related information about the business through the full logistics process. It includes the buying of raw material to delivery of the final product.
What is Logistics?
Official Definition: "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 customers' requirements." Council of Logistics Management
Logistics is basically the process of moving of the products or goods to the destination at the least possible cost. Logistics involves the responsibility of exercising efficiency and accuracy in the process, selection of medium and their proper execution is the biggest concern of the logistics process.
Supply Chain Management (SCM)
The process of supply chain management includes the control of all the funds, information of the products, and materials, throughout the whole process of product creation.
Business Collaboration:
In this kind of collaboration the company basically hires another organization who has some expertise in that relevant field. This method does bring a lot of benefits and peace of mind but it also creates some problems for the company. The most common issue that has been noticed is the clash of environmental behavior and culture of the two organizations. Also acquiring a company that has the required experience and resources may be a little expensive for a medium sized company.
Arms Length Collaboration
This is a very commonly used way of doing business transactions. They are basically short term contracts and are made only for some small transaction or deal.
Strategic Alliances
In the modern era, strategic alliances are the best mode of partnerships that are available for any business. This method solves a lot of problems that companies face in arms-length or acquisition methods. These kind of sharing alliances happen between two companies that actually share all the risks. This kind of alliance can lead to a very long term relationship between two companies with the mutual understanding of both the companies.
Reasons why companies would want to move into a long term partnership may include:
To achieve the strategy.
Benefit from each other`s strategies.
Reduction of risk.
Increase return on investment.
Providing more affordable service to beat the competitors.
What is Third Party Logistics?
It basically includes the transportation and other third party logistics services that are provided by some in order to accomplish tasks that were previously being done in-house by the company itself. Third party logistic services allow companies to assemble a very efficient and customer oriented distribution network. 3PL's industry has really increased the real world technologies being designed by the companies. The advanced techniques of 3pl logistic services provide a long term prospect of high quality service and fulfill the tight delivery time frames.
While selecting a 3PL provider you must make sure that the service provider provide the following.
Increase the value of the products; it should be beneficial for the products of both their and your company.
It should increase the market access of your products. In real world companies that are using 3pl services tend to reach customer more easily.
Should strengthen your operations
Should provide you with cutting edge technology it includes the sharing of technology to benefit both the companies.
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