Logistic Providers in the Business World - Coursework Example

Logistics Mod-490-Case 2 Although 3Pl's and 4 PL's both function in an outsourcing capacity for other business and are based upon similar platforms of objectives, there is a marked difference with which the two function in the business world. 3PL can be viewed as the old school of thought for outsourcing business needs while 4PL is the newest method by which businesses can find themselves being assisted by outsourcing companies. 3PL's as the third-party logistic providers have come to be called in the business world, provides one of the most important needs in the business supply chain. To quote the Council of Supply Chain Management Professionals (CSMP), 3PL's provide an important function in the daily business dealings of clients in the field of customer service because the 3PL of a particular company (“The Growing Role of 3PLs) ; “provides multiple logistics services for use by customers. Preferably, these services are integrated, or bundled together, by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding. Composed of our business segments (Domestic transportation management, international transportation management, domestic transportation management and value added warehousing and distribution), the 3PLs have seen an increased need for their services over the years thanks to the growing need for outsourcing the transportation and logistics needs of businesses (“The Growing Role of 3PLs”). 4PL however is a trademark held name by Accenture which is used to describe the functions of an; “... integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions." (Kristol, “What Functions are Handled by 4PL?”). That said, there are only specific groups that can provide 4PL services to the business community. These professionals include (Kristol, “What Functions are Handled by 4PL?”): consultants IT professionals “E” Marketplaces Financial Institutions Private organizations Logistic Service Providers One will note an overlapping of duties between the 3PLs and 4PLs in the sense that both offer logistic services to their clients. Hence the “new method” of business description that was used at the beginning of this paper. Businesses have come to the realization that mom and pop stores are a thing of the past. What matters these days is the speed by which items are efficiently and carefully delivered to stores where the items make their shelf presence known. The business owners have also come to understand that the best way to keep their transportation and other costs down is to outsource the goods and services in the most efficient manner possible. Which is why items might battle for shelf space in the malls and stores, but find themselves sharing a warehouse space prior to delivery. Delivering the items by bulk, even if it is in shared cargo loads, drives down the cost of shipping for them (“The Growing Role of 3PLs). When a business owner thinks of the length of time that it will take to get his return on capital. he tend to look at the costs and expenses entailed in keeping the business running for the long haul. The more employees he needs to employ, the larger his operating costs, the lesser his income. If he were to personally ship all of his goods and oversee the value added services his company, there will be a tendency to have a higher cost of goods in the market as well. Therefore, he will have to look into various avenues that will offer him an opportunity to keep his business costs low but still return his investment within a reasonable period of time. That is where the help fo the 4PL companies come ine. By allowing him to enter into contracts with the 4PLs that encompass the value added services of his business, transportation of the goods, and other venues of business management, he will be able to lower his cost of operations. That is because instead of paying employees out of his own pocket, the 4PLs will do that for him through their group of workers who in turn work based upon the contract entered into by their 4Pl company and the business operator. It is because of these aforementioned reasons that it is also of the utmost importance to the business owner that he determine a workable “value” within the metrics of his relationship with the 4PL that will help him achieve his business growth and profit objectives. As explained earlier the function of a 4PL is to help a business sustain its profits by outsourcing their most expensive business operations. In the case of Big Lot's relationship with Unyson Logistics, the system that they implemented worked great for the end profit of Big Lots. That is because Unyson Logistics bothered to study the shipment and distribution method of Big Lots, map out a cost effective shipment and delivery plan for their client, and then sell their client on the idea that they developed by showing them the profits the company can make using the new method of delivery. In a way, they helped Big Lots develop a better business model which ended up benefitting the goals of both companies. What Unyson Logistics did, mapping out a plan and providing a cost effective solution to the perceived business problems of Big Lots was exactly in line with their responsibility as a 4PL company. Since as a 4PL, part of their job description is to ensure that their clients gets the most value out of their money and business relationship with their logistics provider. In the end, the duties and responsibilities of a 3 and 4PL provider is quite clear. So is their business relationship with their clients. It is a symbiotic relationship that allows for profitability, business growth, and expansion on both sides of the system. Therefore, the 3 and 4PL business models of the 21st century is proven to be the most effective method of doing business to date. Sources Edwards, J. (2006). Lots of shipments, loads of savings. inboundlogistics.com . Retrieved from http://www.inboundlogistics.com/cms/article/lots-of-shipments-loads-of-savings/ Kristol, J. (2007). What functions are handled by 4PL?. ittoolbox.com. Retrieved from http://supplychain.ittoolbox.com/documents/what-functions-are-handled-by-4pl-12608 N.A. (2011). The growing role of 3PLs. sdexec.com . Retrieved from http://www.sdcexec.com/article/10363909/the-growing-role-of-3pls Read More