Good Example Of Essay On Logistics
With growing competition in the market and increasing focus on reducing cost, logistics is becoming a key strategic decision point for managers in most of the businesses today. The objective of this paper is to discuss logistics, its uses and need for outsourcing this business function. The paper is divided into four sections. The first section defines logistics and describes its use in daily operations management. The second section of the paper discusses the need to outsource logistics to third party and their role in the OEM industry. The third section enlists functions that third party providers perform in OEM industry. The fourth section concludes the paper.
Logistics and Its Uses
According to Bass (n.d.), logistics refers to the systematic movement of goods, as well as their storage and packaging. Companies use logistics management to ensure that movement and storage of resources are done in such a way that carrying and transportation costs are minimised. In addition to this, effective logistic management must also ensure that, in this process, optimal service levels should not be compromised with.
On a daily basis, logistics involves taking a stock of the demand of a particular resource, available stock and time required to procure the resource. A firm may have multiple offices. Logistics management also involves planning movement of product between these offices. In nutshell, logistics involves ensuring that the required product is available at the right place at the right time (Bass, n.d.).
Outsourcing Logistics to Third Party
Outsourcing is a commonly observed trend in recent days. Third party logistics or 3PL is nothing but contracting out logistics part to an outside vendor. For example, if a manufacturing firm outsources its warehousing function to an external company, it will be called third party logistics. There are multiple reasons that companies outsource to third party logistics providers.
First, it helps organisations focus on their core activities. According to Bernstein (2001), firms are increasing turning to transportation management providers to outsource their transportation function. It improves overall efficiency of the supply chain. Second, it saves time for businesses and they can redirect their energies to their more strategic problems. Third, it is a good tool to be used during business expansion as wide branch network of 3PLs can be used.
Third Party Logistics in OEM Industry
Third party logistics performs three important functions for OEM manufacturers. First, OEMs use 3PLs to transport products from factories to warehouses. According to Cognizant (2015), the third party providers now provide real-time cargo tracking and vehicle movement services. This helps OEMs to track their products on a continuous basis so as to ensure timely delivery and result in higher customer satisfaction.
Second, 3PLs also provide end-to-end warehouse management services to OEMs. This includes real-time stock keeping of stored products, their inflow and outflow. It also involves providing latest storage infrastructure to ensure product safety and reduce damages during handling and storage.
Third, 3PLs also provide transportation and warehousing function integration services. This offering is particularly beneficial for OEM manufacturers as it helps reduce risk of non-service fulfilment of the customer and risk of holding idle stock.
In today’s world of highly competitive markets, it is important for businesses to make them as efficient as possible. 3PLs or outsourcing of logistics is a reliable tool to focus on core competencies and contract out the non-core functions. It not only saves time, but also increases efficiency of the entire supply chain.
Bass, Brian (n.d.). The Definition of Logistics Organisation. Retrieved from http://smallbusiness.chron.com/definition-logistical-organization-23276.html
Bernstein, Matt (2001). When Should You Outsource? Retrieved from http://www.inboundlogistics.com/cms/article/when-should-you-outsource-transportation/
Cognizant (2015). 3PLs Service Management. Retrieved from http://www.cognizant.com/manufacturing/outbound-logistics-suite
Please remember that this paper is open-access and other students can use it too.
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