Third-party logistics firms' roles

Logistics Management – Assignment-2
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Logistics Management – Assignment-2
Question 1: Third-party logistics firms' roles
The third-party logistics firms play critical roles in multinational organizations' supply chain processes by enabling these companies to undertake their operations while enjoying economies of scale. According to Li and Chen (2019), an organization risks incurring higher costs when it resorts to in-house logistics services because of the possible lack of adequate required resources at its disposal. Instead, a firm dealing specifically with this function has a better and more reliable resource base because that is their core business. Therefore, they require little effort to perform this function within shorter time intervals. For example, this relationship has seen the American-based IBM (International Business Management) partnering with India for offshore services because of the significantly reduced labor costs experienced in the Asian market.
Additionally, third-party logistics offer efficient and effective real-time tracking, which is critical for organizations that intend to survive amidst the global market's cutthroat competition. This specific role is indispensable for organizations that outsource delivery services from established companies that sell products to customers in other continents or overseas countries. For instance, Almarai Company, a Saudi Arabia-based organization operating in the food and beverages industry, may outsource transport services from DHL to deliver certain products on their behalf to distant destinations, including neighboring countries like such as Jordan and the United Arab Emirates.
Besides, these firms increase customers' satisfaction levels. Chu et al. (2018) assert that most of these firms undertake third-party logistics activities, meeting the need for offshoring and outsourcing by prospective firms. Frequently, they employ resources that support the coming up with strategies and innovative ideas to reduce costs that often burden their clients. Indeed, this contribution results from their profound understanding of the domain under which their business is done. A better experience is typical of their services within the broader supply chain processes, especially for multinational firms. In the long run, these established partnerships lead to better working relationships that last longer durations between producers and customers.
Finally, the third-party logistics firms help in liability reduction, a role that closely ties to their ability to handle specific petty expenses. Specific cost centres like insurance certificates, safety ratings, and related carrier contracts and managed by their back-office team, who are dedicated to ensuring they work on carrier vetting processes and invoicing variances. In this regard, petty expenditures such as fixed warehouse, transportation, docking, and insurance costs are duly handled by these third-party logistics firms without involving their principals, whose most important goal is to increase their profit margins. Thus, the outsourcing or offshoring organization rests assured that their service providers can handle all their associated liabilities that may arise from time to time.
Question 2: Factors that motivate companies to go international
The prevailing market conditions have experienced changes that continue making business challenges. Often, existing companies notice it through a reduced market share as new entrants encroach the market share, which they controlled initially. Hence, the ability to survive these dynamics is based on how suitably an organization can adjust to facing competition within their industry. Notably, companies consider going international as a growth strategy and a means of increasing their profitability. Omokaro‐Romanus et al. (2019) note that a logistics firm stands better chances of increasing their customer base by reaching more customers, an achievement they can realize when they expand to new markets by going global.
Additionally, the existence of cheaper labor motivates companies to go international. It has become a pressing need for entities to control various overheads to improve their profitability. Indeed, most fixed and variable cos...