3PLAdvantagesProvidesOtherFlexibilitiesFlexibility ingeographiclocationsFlexibility inservice offeringsFlexibilityinresourceandworkforcesize8-11
8-11 3PL Advantages ⚫ Provides Other Flexibilities ⚫ Flexibility in geographic locations. ⚫ Flexibility in service offerings ⚫ Flexibility in resource and workforce size
3PLDisadvantagesLoss of control inherent in outsourcing aparticular functionOutboundlogistics3PLsinteractwithafirm'scustomersMany third-party logistics firmswork very hard toaddress theseconcerns.Paintingcompanylogos on thesidesoftrucks,dressing3PLemployees intheuniformsof the hiringcompanyand providing extensive reporting on eachcustomerinteraction.Logisticsis oneofthecorecompetencies ofafirmMakesno senseto outsource theseactivities toasupplier who may notbe as capable as thefirm's inhouseexpertise.Wal-Mart,pharmaceutical companies8-12
8-12 3PL Disadvantages ⚫ Loss of control inherent in outsourcing a particular function. ⚫ Outbound logistics 3PLs interact with a firm’s customers. ⚫ Many third-party logistics firms work very hard to address these concerns. ⚫ Painting company logos on the sides of trucks, dressing 3PL employees in the uniforms of the hiring company, and providing extensive reporting on each customer interaction. ⚫ Logistics is one of the core competencies of a firm ⚫ Makes no sense to outsource these activities to a supplier who may not be as capable as the firm’s inhouse expertise ⚫ Wal-Mart, pharmaceutical companies
3PLIssuesCosts and CustomerOrientationKnowyourown costsCompare with the cost of using an outsourcing firmUse activity-based costing techniquesCustomerorientationofthe3PLAbility of provider tounderstand the needs ofthehiring firmand to adapt its services tothe specialrequirements of that firmReliabilityFlexibility oftheprovider8-13
8-13 3PL Issues Costs and Customer Orientation ⚫ Know your own costs ⚫ Compare with the cost of using an outsourcing firm. ⚫ Use activity-based costing techniques ⚫ Customer orientation of the 3PL ⚫ Ability of provider to understand the needs of the hiring firm and to adapt its services to the special requirements of that firm. ⚫ Reliability. ⚫ Flexibility of the provider