Traditional and Virtual
Read all of the articles on the Background page. Background LOGISTICS PROVIDERS: TRADITIONAL AND VIRTUAL Required Reading Alan Win. (2008) The value a 4PL provider can contribute to an organization, International Journal of Physical Distribution & Logistics Management. Bradford: 2008. Vol. 38, Iss. 9; pg. 674. Dutton, Gail (2009 Jan) The Rise of the 4PL, World Trade, Troy: Vol. 22, Iss. 1, pg. 20. Stefannsson, Gunar (2006) Collaborative logistics management and the role of third-party service providers, International Journal of Physical Distribution & Logistics Management, Bradford, Vol.36, Iss. 2, pg. 76. Edwards, John (2006 Dec), Lots of Shipments, Loads of Savings, Inboundlogistics.com. After reading the articles, answer the following questions in a 3- to 4-page paper: 1. Compare and differentiate the functions normally associated with 4PLs to those of 3PLs. 2. What are the factors responsible for more and more companies relying on the services of 4PLs? 3. Explain why it is important to establish metrics that can help determine the “value” a 4PL can contribute to the supply chain when entering into these agreements. 4. Would you consider Unyson’s logistics solutions defined for Big Lots consistent with the role of a 4PL in adding value to a supply chain? (Explain and illustrate.) Assignment Expectations Display comparative analysis skills in differentiating the roles of traditional logistics service providers with virtual logistics service providers. Demonstrate an in-depth knowledge of why virtual logistics services are important, the reason for increased specialization among third and fourth party service providers, and how these services support collaborative logistics management initiatives. Demonstrate synthesis skills in incorporating previous course work in assessing the changing roles and character of the decision to outsource logistics to specialized providers.
Traditional and Virtual Logistics
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Traditional and Virtual Logistics
Introduction
The term Traditional Logistics refers to general material flow and or bulk shipping of goods from a certain location (of production or processing) to a specified client within predetermined geographical areas. The goods are mostly transported in bulk units like containers, pallets or other portable platforms and data processing, recording and analysis is done manually. Manufacturers would normally load transportation vehicles at the docks for dispatch to distribution outlets or retail stores as the final phase of the supply chain. This form of logistics is characterized by lack of clear visibility all the way from manufacturers to distributors and clients. As such, mutual coordination remains unfulfilled in traditional logistics.
Virtual logistics on the other hand involves elements of computing and technological applications in running logistical operations of an organization. It makes use of management information systems to oversee transportation and handling of goods involved in a firms supply chain. Indeed, International business owes much of its existence to a range of innovative technological approaches to logistics, which are directly correlated to increased demand for these services, and occur in terms of 3PL and 4PL, which are further discussed in this paper.
1 Functions of 3PL and 4PL
It is important to point out the other methods of logistics that include first party (1PL) and second party logistics (2PL) to gain a good comprehension of the functions of 3PL and 4PL. The former refers to companies carrying out logistics by themselves while the later involves use of other niche-oriented firms like trucking or warehousing companies that facilitate an enhanced geographical scope for firms. In other words, 2PL firms aid in facilitating capacity for commodity handling. All the same, needs for commodity handling increased with time resulting in the development of 3PL and 4PL.
Cost savings, operational efficiency and productivity represent some of the fundamentals of logistical outsourcing. 3PL in its original sense is an abbreviation of Third Party logistics while 4PL implies Fourth party logistics. 3PL application involves a scenario where an organization provides coordination and transportation services to another organization- the customer/ client as a function of supply chain management. In its basic form, 3PL focuses on provision of integrated warehousing, inventory management, freight forwarding, packaging and transportation services, this can be customized or tailored to suit the clients' needs and the prevailing market conditions. More so, 3PL make possible for firms to take advantage of lead-time besides allowing for economies of scale (Gunar, 2006).
The concept of 4PL on the other hand brought about a revolution in logistics outsourcing by bringing up the concept of ‘Supply Chain Integration’, which involves resources management and integration of technology used by a company with those of corresponding service providers in the business environment. The overall result is that 4PL bears enhanced capabilities over 3PL in terms of establishing desirable supply chain solutions.
2 Factors responsible for making more and more companies reliant on 4PL services
More and more companies get to rely on 4PL since it involves an amalgamation and or intergration of resources, capabilities and technology of an organization with those of other organizations for the establishment of ample supply chain solutions; furthermore, 4PLs manage organizations entire supply chain management (Dutton, 2009). Another advantage is that this approach makes use of e-commerce, which has considerably developed to influence the activities of businesses at all levels of operation. Furthermo...