Importance of 3pl Essay Example

costs, a crucial aspect of logistics, was formally recognized in the field of economics as early as the mid-1880s. Throughout time, the idea of logistics has changed in response to shifting business environments. (1998, p. 5).

According to Grunnet (1996, p. 32), the 1950s focused on inventories, the 1960s on distribution, the 1970s on production, and the 1980s on purchasing/production/sales. In the 1990s, there was a focus on business processes. Logistics is a part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to meet customer requirements. LSP's come in many different types.

In Australia, there are various types of Logistics Service Providers (LSP’s), including Prime Assed Provider, Third Party Logistics Provider or Outsourcing (3PL), Lead Logistics Provider (LLP), Fourth Party Logistics Provider (4PL), Joint Service Company (JCS) and Virtual Network Consortium. Of these, Third Party Logistics or Logistics Outsourcing is the most important and popular. This involves outsourcing one or more logistics functions of a firm to a 3PL provider, such as inbound freight, customs and freight consolidation, public warehousing, contract warehousing, order fulfilment, distribution and management of outbound freight. According to the Bureau of Transport Economics (BTE), logistics activities in Australia contributed around $57 billion to the gross value added in 1999-2000, equivalent to 9 percent of GDP, representing a significant proportion of the country’s economic activity.

According to the BTE Report from 2002, a total of $57 billion was spent on freight logistics activities. Of this amount, roughly $31 billion was attributed to in-house activities while the remaining $26

billion was made up of services provided by the freight logistics industry to both private and government clients. Within the industry, freight transport logistics operators accounted for $23 billion while non-transport logistics operators contributed approximately $3 billion. Take note that in Australia, there are multiple third-party logistics (3PL) providers, with Australia Post, Toll Holdings, and P;O Australia Ltd being the largest among them.

(Appendix 1) According to the BTE's analysis, logistics activities make up a significant part of the economy in Australia, with an estimated contribution of around 9% of the GDP. This figure is similar to the proportions of wholesale and retail trade (11%), manufacturing (12%), and mining, construction, and utilities combined (12%). It is worth noting that logistics is more important than some other industries, such as construction (at 5%).

The percentages for different sectors are as follows: retail - 5%, education - 4.4%, and tourism - 4.5%; while the overall percentage is at 9%.

(BTE Report, 2002) The buyers of logistics services encompass a variety of organisations from the mining, agriculture, manufacturing, and service sectors. Although most are situated in Australia, international buyers are significant purchasers of services, particularly for the shipping of Australian exports. Logistics service users are diverse and range from small and unorganized businesses to larger enterprises. Coordinating activities and enhancing logistics performance can be challenging due to the presence of numerous suppliers and buyers of services.

The companies in Australia are more willing to entrust their logistics needs to 3PL service providers due to the increasing number of well-known participants in the region. Appendix 2 includes some examples of logistics users in Australia. (Source: tre.gov.au).

This decision permits manufacturing firms to

focus exclusively on their main areas of expertise, leading to decreased operational expenses, shorter lead times for raw materials and finished goods, and significantly enhanced process effectiveness. Additionally, contracting with 3PL providers saves a considerable amount of time and money that would typically be spent on personnel training and maintenance (Economides, N. 1996). The development of the 3PL industry is a result of its ability to adapt to the evolving demands of both consumers and the manufacturing sector.

The impact of global and local economic changes on 3PL operations in Australia have been significant, as noted by Gilmour (1999). These changes have been facilitated by advancements in logistics services, leading to better performance and a broader range of offerings. Additionally, the decrease in trade barriers, expansion of financial markets, and advancements in information technology have contributed to the increasing demand for logistics services and outsourcing in the international commerce sector, according to Malone (n.d.).

Major changes in Australian industry have been brought about due to globalization and microeconomic reform such as deregulation and privatization (1999).

The rise of international competition due to reduced levels of protection has led many local businesses to prioritize logistics activities. This is in an effort to enhance product quality, increase market responsiveness, and decrease costs. Logistics activities have expanded and undergone restructuring due to the growth of the Australian economy. In particular, increased economic activity has created more opportunities for specialized logistics service providers. Furthermore, the need for enhanced logistics services has arisen due to the implementation of more efficient production processes in response to intensified global competition. (Source: Supply Chain Review, 2000)

The implementation of concepts such as Just In Time (JIT),

Efficient Consumer Response (ECR), and Total Quality Management by companies has led to the need for low inventory levels, frequent small deliveries, continuous replenishment, and flow-through distribution (Critchley, H. 2001). This has resulted in the emergence of 3PL in Australia. Outsourcing logistics can provide businesses with various advantages.

IT plays a crucial part in a company's prosperity and its supply chain network by facilitating value-added services, including complete visibility and product tracking throughout the supply chain. Insufficient IT capabilities, or a lack of access to them, are cited as the primary reasons for not attaining full supply chain benefits. With technology, it is now possible to achieve end-to-end supply chain visibility on different platforms (Berger, A. J. and Gattorna, J.).

According to L. (2001), utilizing third-party logistics (3PL) services can aid in aligning the customer with the company's strategies. While cost reduction and improved operational efficiency were once the main measures of value creation, successful outsourcing now requires comprehension of the end-customers' and clients' (Shippers') business requirements.

The Shipper-LSP relationship's leading criterion for performance is to achieve high levels of satisfaction deemed by the end-customer. Misalignment between Shipper and LSP on various dimensions leads to reduced customer service and missed revenue opportunities (BTRE Report, 2001). With the assistance of 3PL, Australia's geographical disadvantages are surpassed through better information technology and enhanced infrastructure. Additionally, multinational corporations (MNCs) are shifting their manufacturing overseas to lower cost locations, which will impact the product's movement in Australia in the future. Some MNCs may have fully integrated logistics solutions and able to realize scale and scope efficiencies that national service providers would struggle to accomplish.

Over the last decade, Toll Holdings

has obtained several of Australia's most robust logistics companies. Other companies, like Excel Logistics and DHL International, seem to be purchasing firms to enter new markets, including Australia, and expand their customer offerings. (Toll Holdings 2000) In conclusion, Third Party Logistics encompasses all activities required for the transportation and management of goods and materials, starting from inputs through production to consumers and waste disposal, including the corresponding reverse flows. Information systems and infrastructure/resources are vital inputs in providing Third Party Logistics services.

In Australia, the 3PL system plays a considerable role in economic activity and affects cost structures, service quality, and competitiveness. Studies suggest that there is room for enhancement in the system's performance. To tackle logistics industry challenges in Australia, the Freight Transport Logistics Industry Action Agenda has been introduced as a solution. Appendix 1, Appendix 2, and Berger, A. J. make up the reference list for this information.

The book "Supply Chain Cybermastery: Building High Performance Supply Chains of the Future" by Gattorna, J.L. (2001) was published by Gower Publishing in Aldershot. Additionally, the BTRE Report titled "Logistics in Australia A Preliminary Analysis" was released as Working Paper 49 in October 2001 and can be found at www. The information is encapsulated within a HTML paragraph tag.

btre.gov.au/docs/wp49 contents.htm contains Critchley's 2001 paper titled "Globalisation of supply chains - a provider's perspective" which was presented at the Smart 2001 Conference on the Challenge of Integration held by the Logistics Association of Australia in Sydney.

The 1996 article "The economics of networks" by Economides was published in the International Journal of Industrial Organization, in volume 4 and issue 2.

Gilmour, P. 1999, Logistics Management: An Australian Framework, Addison

Wesley Longman Australia, South Melbourne. Grunnet, B. 1996, untitled Ph. D thesis, http://cwis.auc.

The date of access for the full text of Lambert, Stock, and Ellram's work, which is located at dk/phd/fulltext/, was April 29th 2008. This information was presented in a paragraph tag.

Langley C. J. Jr. wrote a book called "Fundamentals of Logistics Management" in 1998 which was published by Irwin/McGraw-Hill in Boston. In 1992, Langley also contributed an article titled "The evolution of the logistics concept" in M.

Christopher's book, Logistics: The Strategic Issues, published by Chapman ; Hall in London, is analyzed in a preliminary study of logistics in Australia available at http://www.btre.

On April 30th, 2008, the resource with ID 26 and node ID 22 was accessed on gov.au. A presentation to the Working Party for the Information Economy Group of the OECD was given by P. Malone in 1999, which included a business to business e-commerce case study on transportation and logistics in Australia. The Supply Chain Review published its "Who's Who in Contract Distribution 2000" in the December of that year.

The Concise Annual Review 2000 by Toll Holdings, Melbourne contains information on volume 9, issue 6, pages 36-38.