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Should The Warehousing Function Be Outsourced To 3rd Party Logistics

2559 words - 11 pages

Should the warehousing function be outsourced to 3rd party logistics? Justify your decision.

Contents

Introduction 3

1. Industry Trends
1.1 Global Business Communication 4
1.2 Just In Time 4
1.3 Technology Innovation 4

2. 3PL Concept. Why the Need for Outsourcing
2.1 Focus on Core Competency 5 2.2 Proven Track Record? 5

3. Solutions Offered
3.1 Warehousing 5
3.2 Inventory Control 6
3.3 Transportation 6
3.4 Customer Service 6
3.5 Technology Flexibility 7
3.6 Information Systems 7 ...view middle of the document...

The ease and accessibility of the collaborative economy has created new demands where virtually anyone can “plug and play” in the logistics space.

Whether a company is climbing to the peak or enjoying the view from the top of its industry, it would be wise to examine third party logistics. Companies understand broadly the necessity and purpose of specialization in today’s world. They do not let their sales representatives run their manufacturing processes. Production foremen aren’t in charge of the corporate tax return. Companies have an idea about how to use specialists to maximize their manufacturing capabilities. However, how many have the know-how to integrate specialists (including strategic business partners) into their manufacturing and distribution processes to gain the sharpest competitive edge? Are they able to get their product to their customers via the most efficient and cost-effective methods? Getting to a “yes” answer to those questions requires that companies consider outsourcing one or more facets of the business to a more cost-effective service provider.

1. Industry Trends

1.1 Global Business Communication

This will be the 3PL growth model for the foreseeable future and the relentless growth and expansion of global third-party logistics (3PL) now puts the industry at an important market which is expected to continue unabated as increasingly more companies do business abroad. Most of the growth in the 3PL arena will come from doing business abroad, and we don’t see that changing anytime soon is like a virtual lock on most of the planet’s manufacturing outsourcing. The pressure to outsource has never been greater, yet the emergence of hundreds of providers of 3PL services has placed the question of “if, when and how” to use 3PL services and assets squarely in front of every large, medium and small logistics organization. 3PL improvement is needed; 3PLs’ IT capabilities are expected to become even greater differentiators of 3PLs than they are today.

1.2 Just In Time

As most companies use an inventory system best suited for their company, the Just-In-Time Inventory System (JIT) can have many benefits resulting from it. JIT strategy is provider with flexible space for inventory needs with 24/7/365 availability. Their systems are inherently designed to rapidly receive and ship products on a moment's notice. JIT is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated carrying costs. It also can lead to dramatic improvements in a manufacturing organization's return on investment, quality, and efficiency.

1.3 Technology Innovation
Innovation as “a process of turning opportunity into new ideas and putting these into widely used practice.” proposes that innovation is the use of new technical and administrative knowledge to offer a new product or service to customers. Same as well...

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