Third-Party Logistic Essay Example | Topics and Well Written Essays - 1000 words

Third-Party Logistic - Essay Example The third party logistics is an innovation that has become an inevitable solution for companies. Studies show that the rate of dependency of the 3PL has grown over the years. This is because of the integration model that most 3PL providers include in their package ranging from inventory management, fleet management, and order processing, forwarding among other functions. This puts 3PL providers at the strategic intermediary position that cannot be bypassed by any business. This is very true because 3PL providers are of two categories. The asset based 3PL and the non-asset based 3PL.The latter provides consult services, brokerage, forwarder, marketing companies and information systems management services. The former however provides the transportation and warehousing solutions to business. Both these 3PL act as either direct contractors or sub-contractors to the contracted Logistics Service Provider. The main advantage of acquiring 3PL services is the direct capital cost that can be a voided by outsourcing logistics. This means that businesses do not have to worry about the cost of acquiring modes of transport and managing the modes of transport. Outsourcing logistics means that the company can concentrate on its core business without worrying about factors such as fleet maintenance and the extra costs of paying drivers, mechanics and even security for the vehicles. Another huge cost that a company avoids is the cost of parking the vehicles and coordinating the fleet and routines of the modes of transport.