- Steps involved
One: Performing a strategic assessment; the logistics of the department and company as a whole are assessed. Information concerning the goals of the supply chain is considered. The needs of customers in relation to the supply chain are also considered.
Two: Decision to create a relationship; the need to enter into a 3PL relationship is assessed. The supply chain is assessed to check if there are compelling facilitators and drivers for outsourcing.
Three: Evaluating alternatives; the drivers and facilitators are weighed. Input from other managers will be helpful. The company’s needs will be evaluated to establish what kind of outsourcing will be required.
Four: Selecting partners; all possible candidates are appraised. The selected candidate should meet the company needs efficiently.
Five: Structuring an operating model; operations like financial investment, relationship scope, style of contract, risk/reward sharing, planning, communication and joint operation controls are properly structured.
Six: Implementation and continuous improvement; the period of implementation varies among companies. Improvements on the relationship have to be continuous to ensure success.
The primary advantage of an asset based 3PL is its infrastructure. The infrastructure is usually available to the clients. There are times when logistics involved in the supply chain get expensive due to market forces. Asset based 3PLs are usually cheaper at such times and a client may prefer them.
The main advantage associated with non-asset based 3PLs is their flexibility. Their freight management plans are flexible and are custom to different clients and their different needs. This is because their plans do not revolve around putting their assets to use. A client that needs more of management may prefer using non-asset based 3PLs; especially if they own their own infrastructure like trucks and warehouses.
References
Coyle, J. J. Novack, R. A., Gibson, B. J., & Bardi, E. J. (2011). Transportation: A supply chain perspective. Australia: South-Western Cengage Learning.
