3plin India

Introduction:

Outsourcing of logistics function is a business dynamics of growing importance all over the

world. A growing awareness that competitive advantage comes from the delivery process as much as from the product has been instrumental in upgrading logistics from its traditional backroom function to a strategic boardroom function (Razzaque and Sheng, 1998). In order to handle its logistics activities effectively and efficiently, a company may consider the following options – it can provide the function in-house by making the service, or it can own logistics subsidiaries through setting up or buying a logistics firm, or it can outsource the function and buy the service. Currently, there has been a growing interest in the third option, i.e. outsourcing of

logistics functions to third party logistics service providers.

Typically, a core company providing services or products is considered the first

party; the customer, the second party. A third-party, then, is a firm hired to do that which neither the first or second party desires to do. A third-party logistics firm is a firm that provides outsourced or “third party” logistics services to companies for some portion or all of their supply chain management functions. 3PL typically specializes in custom clearance, Freight Forwarding, Warehousing, transportation services that can be

customized to customer needs and demand.

The 3PL industry evolved in the 1970’s when during a time of expanding globalization

and an increased use of information technology (Song & Regan, Industries in Transition: Freight Transport Intermediaries in the Information Age, 2001). The first generation

3PL’s (1970’s-1980’s) offered services such as transportation, brokerage, and shipping. Second-generation 3PL’s (1980-1990) were mostly asset or non-asset based companies with increased service offerings. The third-generation-3PL’s (2000 onwards) were mostly web-based 3PL’s with increased supply chain...