Critical Thinking
The purpose of this assignment is to identify and apply Logistics and Supply Chain Management concepts/tools to suggest logistics performance priorities. To this purpose, you should review about these companies through secondary available information.
Logistics outsourcing has attracted the attention of lots of Supply chain industrialist in recent years. As firms enlarge their global reach, they often find that they need to reconsider their internal capabilities in managing the global supply chain. In many cases firms decide to outsource this function in whole or in part to agents or outsourcing firms (Trent & Roberts, 2009).
Using this concept of outsourcing you should answer the following questions by taking any Multinational company of your choice.
Question:
1. What are outsourcing firms?
2. Assess the reasons for using outsourcing logistics service in any company of your choice? Using some good examples.
3. Reasons why outsourcing logistics arrangement are not always successful?
The Answer must follow the outline points below:
1.) The outsourcing firms usually connect to both the Manufacturer and customers, such 3 PL firm act as shipper, they can provide various services but such services can be varied depends on the outsourcing functions, below stated are the services rendered by outsourcing, those are :-
They provide dedicated shipment services and transportation
procurement and contracting,
They allow for effective Inventory management, logistic management
and consulting and advisory services for effective shipment
They also help to allow for shipment tracking and providing
expected delivery date, as well as providing others essential
information, those needed by Manufacturer and customers,
They provide Freight related consulting and Freight auditing
They also keep options for reverse outsourcing and help to enable
value added services
Again outsourcing firms or 3 PL Firms can manage all the aspects of
transporting or shipping products/ goods from the location of
manufacturers and distributors to the location of customers, this
kind of firm can help manufacturer reduce liability and cost
related to taxes, Insurance cost and payroll expenditures, cargo
insurance, there are various 3 PL firms or third party outsourcing
firms available in Saudi Arabia, those are Integrated outsourcing
services, Platinum shipping services Imbad Logistics Etc,
2.) Following are the reasons for using outsourcing service in most of the organizations, those are :-
3 PL firms can reduce transportation cost by at least 3% to 30 %
as compared to the manufacturer, those are having their own
logistic services, thus manufacturing company can save associated
cost to an Extent,
As outsourcing related activity need to comply with various
associated regulations like for United states Federal
transportation regulations and for Saudi, the kingdom has its own
practices and National and international standards, thus 3 PL
outsourcing firms maintain such regulations and take responsibility
and risk for managing compliance to such regulations, thus
manufacturer can send their products or goods to various location
of their choice and even they can send their products and goods to
various countries,
3 PL firms can manage various issues with the outsourcing system
like defining product line and road map, fixing requirement of
shipment handling and fulfilling requirement of packaging, where
Manufacturer have to invest little or least amount, again they help
to provide tracking and tracing of the shipments, they can fix the
expected delivery time to reach the location of customers,
Again outsourcing have their own warehouse system, which can manage
fulfillment across the domestic and International market, thus
manufacturer can buy or take rental such warehouse spaces, reduce
significant cost and time as associated,
For Example company Aramco, who uses 3 PL firms, can get benefit
from the above points as mentioned, as we know they have product
like LPG, Gasoline, Diesel fuel, Oil and Asphalt, those need to be
transferred to the customers locations using such outsourcing,
which can benefit them many way as stated above.
3.) Following are the reasons, that outsourcing outsourcing arrangement may not be always successful, those are :-
Using 3 PL firms by the Manufacturer can bring many losses in
controlling the shipping activities, as the 3 PL help to make more
impact on providing better experience to their customers and gain
high rating and feedback from their customers, thus Manufacturer
can lose the market knowledge, if any manufacturer wants to bring
back their outsourcing and shipping function in near future, it
will become highly difficult,
3 PL firms used by the manufacturer can be cost saving approach but
not always same in all situation, for long term benefits,
Manufacturer should keep their own and In house shipping
departments, as Cost associated with 3 PL firms can go high and
will become no longer cheaper.
Critical Thinking The purpose of this assignment is to identify and apply Logistics and Supply Chain...
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