Third Party Logistics

Any type of business whether large or small must have an effective supply chain management. There are different oversights in supply chain management and I have chosen to elaborate on third part logistics. Third party logistics consist of many things; however, in this paper I will concentrate on the actual movement freight. Every for profit company is in business to provide a profit to its owner or stockholder and it is imperative they run as lean as can be.

Many companies have decided to outsource their logistics to a third party logistic provider; then the company can focus their expertise in their core business and save as much money as they can. A few things have been great contributors to third party logistics; globalization, customer orientations and outsourcing are one of the major contributors. These have led third party logistics to be in great demand, thus in the last few years TPL has skyrocketed. Companies have outsourced to third party logistics to save money and gain a competitive advantage (Herts, and Alfredsson 139-149). Companies want to stay competitive in this world by going global. As Dan Sanker, CEO for CaseStack says, everyone is looking to be efficient by cutting cost as much as they can, and logistics is an area they can look into. The high cost of diesel fuels can be a corporate nightmare for shippers; therefore, looking for a competitive cheaper TPL would be the way to go. (Bell)

Another reason companies want to outsource to a TPL provider is to provide an accurate delivery time to its customers which is an important part of business. An accurate delivery time will give the customer ample time to schedule its staff. Trust is a major source of being competitive, thus just in time delivery is crucial. As Geoff Sisko VP for Jack Kuchta says, if you give a certain date, you best have the product there on that day. Therefore, he advocates a company entrust their logistics to a third party provider. You have a greater chance in serving the customer and less risk of messing up JIT. (Napolitano) For example, Vesuvius, a $1.5 billion ceramics and refractory products maker received the results of a consultant's review of its company. There were two steps recommended specifically for the logistics organization, one of them was to hire a third-party logistics provider to manage the company's North American trucking operations. (Hannon)

Allowing other companies to handle their freight can substantially reduce their shipping cost, as full truck are not always shipped which is known as less than truck load and other personnel costs was well. A third party logistic provider is "C.H Robinson Worldwide, Inc., one of the largest third party logistic providers in the world". ("Our company-C.H. Robinson") CH Robinson "sports an asset-light business model--doesn't own any trucks, etc. Instead, it uses its solid relationships with 32,000 shippers and 50,000 trucking companies and its proprietary information system to keep trucks as full as possible and shipments moving economically." (Martin)