Outsourcing and Third Party Logistics

Book excerpt: Essay from the year 2013 in the subject Business economics - Supply, Production, Logistics, grade: 1, Heriot-Watt University Edinburgh, language: English, abstract: The process of globalization and the removal of barriers to international trade have led to an increased importance of Supply Chain Management for most businesses involved. To remain competitive, there is a need for all partners within the supply chain to collaborate and communicate (Zacharia et al. 2011; Christopher 2011). These two requirements, together with the creation of efficiency in all processes involved, an increased concentration on core competencies and the outsourcing of certain functions, can enhance the competitiveness and the service level of a company, as discussed by Christopher (2011). According to Bolumole (2003), there exists an imbalance between what companies seek to achieve and what they are able to perform in-house. Therefore, “the rationale for outsourcing to third party increases” (Bolumole 2003, p.93). This assignment will illustrate the development of third party logistics companies (3PLs) from the initial outsourcing to a collaborative partnership in supply chains today. The essay will be divided into three parts: development of 3PL, drivers for outsourcing as well as outsourced activities and how these add value to businesses.