The Resource Curse: The Problem with Commodity Dependence
A large number of developing countries across the world are dependent upon commodities. About 135 of these developing countries were surveyed, and it turned out that more than 94 of these countries are commodity dependent. This means that primary commodities like food grains, oil, etc. account for more than 60% of their total exports. Prima […]
Smart Cities – What they are, How Realistic are they, and what can be done
What are Smart Cities and How They Have the Potential to Revolutionize Urban Living We often hear the term Smart Cities mentioned in the media. We also come across excited business leaders and politicians as well as urban planners and members of think tanks breathlessly talk about how Smart Cities would transform the way we […]
Top 5 Economic Myths
When analyzed in financial terms, it turns out that the world is in a precarious position. However, there seems to be no sense of urgency amongst the people. This may be because of the fact that newspapers, as well as other forms of media, are not warning the people that a recession might be around […]
Effective Product Design
Introduction Organization success is dependent on customer satisfaction and delight. Customer satisfaction is achieved through development of product and service, which have all attributes required by the customer. A success product or services do not only have attractive package design but should be also able to provide robust performance. Thus, product design must be practical […]
Warehouse Design Concepts
Supply chain efficiencies depend upon the efficiency of logistics including transportation and warehousing operations. Warehouse efficiencies depend upon a combination of warehouse design, layout, infrastructure, systems, process and people. In cases where one can design a warehouse and implement the complete project from ground zero, gives the SCM Project Manager a good scope to create […]
Procurement Logistics, Manufacturing Logistics and Finished Goods Logistics functions are managed by different independent departments in a company. Though the duties of the departments involve common activities like transportation etc., however, the processes and nature of logistics functions are specific to each function besides the requirements and sensitivities of delivery times, schedules, etc.
With the emerging trends and availability of third party logistics providers has pushed the companies to adapt the practice of outsourcing all supply chain components and logistics functions termed as noncore functions to their logistics providers.
In this topic we shall examine the role and functions of Third Party Service Providers a little closely to understand how they make a difference to the supply chain activities.
Third Party Logistics field is a multi-layer or multi-tier integration of various players who have the niche segment expertise to manage any one or many functions of Logistics. In any Logistics Contract or Supply Chain Network, you will not find one single service provider being able to manage the entire chain of activities. You can have a lead logistics service provider who will further tie up with and manage other service providers to provide a single window service to the client organization.
At all levels, a lot of components of logistics get outsourced by these service providers to contractors and local players. Like for example in a contract logistics facility, the third party logistics provider who has secured the contract may not own and operate the facility himself. Labor is often outsourced along with other operations like Loading/ Unloading, Yard Management, Fleet Management, etc.
Logistics further also works with the concept of the 4Party Logistics providers in the market who take up large projects spanning huge volumes and multiple locations and services as the lead service providers. They draw up the operating plans, requirements, and specifications for the services and, in turn, choose the best service provider in each segment or function for each of the locations and thus manage to provide the entire gamut of logistics services to the customer.
Normally in Logistics, the lead players front ending the businesses would be the Freight Forwarders, Transport Companies (generally in long haul segment only) and Warehousing Service Providers. In many cases Freight Forwards own and manage warehousing facilities too.
Freight forwarders are those agencies who consolidate the cargo and book the cargo for onward freight using an airline or a shipping line or use ground transportation network including rail services wherever required.
Freight forwarders do not own any mode of transportation services. They book the space with airlines and shipping lines and negotiate the freight. They play the key role of providing origin and destination services coupled with single window client services using other third party service providers. Most of them also have in-house customs clearance division to support ground logistics operations.
Without the support of the freight forwarders who are multinational companies capable of managing your supply chain with ability to provide services in any country, any location across the globe, supply chain would not be able to function efficiently, for it is impossible for companies to coordinate and manage each leg and every activity in so many locations and manage so many vendors and interfaces.
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