Submitted by: Submitted by smiles021899
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Pages: 7
Category: Business and Industry
Date Submitted: 11/17/2014 11:22 AM
Assignment # 2
Question 1:
A third-party logistics (3PL) provider is a company which provides a service to assist in managing all or part of another company’s product delivery operations. This entails a longer-term and strategic relationship between the two companies.
Service examples would include warehousing, transportation, product packaging and cross-docking to name a few.
Advantages to utilizing a 3PL provider are:
* Cost and time savings through efficiencies of the 3PL network.
* Better customer service through the use of better knowledge base and experience provided by the 3PL.
* Scalability for growth.
* Low capital commitment as company does not require warehouse or transportation assets as these are outsourced.
* Organization able to focus on core business needs.
Disadvantage of utilizing a 3PL provider is:
* Less control over logistics which could impact customer service.
Question 2:
Costs which contribute to the management of inventories are:
* Holding (or Carrying) Costs are the total costs associated with holding inventory. This would include costs such as rent or mortgage for facilities, petty theft, loss of value, insurance plus perishability to name a few.
* Set-up (or Production Change) Costs are the costs associated to changing the manufacturing line from creating one item to creating another. Companies need to analyze the best way to minimize the time and cost of changing production on the line itself. This in turn would result in savings regarding set-up/production change cost.
* Ordering (Order Preparation) Costs are the costs associated with expenses incurred in placing an order with a vendor. Such costs include preparing a requisition, to creating a purchase order, stocking the items when they arrive, processing and payment of the vendors invoice.
* Shortage Costs are the costs associated when items are out of stock and need to be refilled and/or where orders need to be...