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Third-party Logistics is simply the use of an outside company to perform all or part of the firm’s materials management and product distribution function. 3PL arrangements involve long term commitments and often multiple functions, as opposed to transaction based and single-function specific
A relationship between a shipper and third party which, compared with the basic services, has more customized offerings, encompasses a broad number of service functions and is characterized by a long-term, more mutually beneficial relationship
Characteristics of 3PL
Perform outsourced logistics activities
Process management / Multiple activities
More customized services
Mutually beneficial and risk-sharing relationship
Long-term commitments (1~ 3 years)
Why is it needed?
Advantages - Cost reduction, Focus on core competency , Improved efficiency, service and flexibility, Industry-specific application
– “build-to-order” systems and e-merchants
Disadvantages - Loss of control, Impact on in-house workforce
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