A Supply Chain Approach to Third-Party Logistics

Supply chains are significant sources of competitive advantage for most organizations and usually multifaceted. In order to enhance efficiency and improve effectiveness, firms have to optimize costs, improve predictability, analyze data, mitigate risk and minimize working capital (Mangan and Lalwani, 2016). Firms that strategically improve on one aspect of the supply chain have the operational advantage of creating a ripple effect in other areas. A successful and resourceful supply chain helps organizations to save money and have a better inventory management. For an organization to have an efficient supply chain, it must create reliable and effective transportation strategies and solutions (Belvedere and Grando, 2017). A well-developed supply chain is able to improve margins, reduce operational costs, promote a positive customer experience and support the expansion of an organization’s processes.

Maersk is a global organization that owns one of the largest shipping firms in the world. The firm has immense expertise in avant-garde machinery and logistics. As the Vice President of the supply chain management of Maersk, I intend to implement a third-party logistics approach to the transportation sector to improve efficiency and minimize costs. An effective network of transportation empowers a firm to enhance its service level with limited disruption to its processes and reduced shipment costs (Bohling, 2013). An effective network of transportation in a supply chain is pegged on shipment visibility. Visibility enhances routing, profitability, and capacity of firms.

Procedures to Maximize Efficiency and Reduce Costs

The shippers should work with the third-party logistics to explore new transportation strategies and solutions that would maximize efficiency and minimize transportation costs. The implemented processes and procedures should be innovative and impressive to customers. 75% of the firms that use third-party logistics reckon that new and innovative strategy helps to maximize effectiveness and minimize costs (Jothimani and Sarmah, 2014). It is important to note that domestic transportation is the most frequently outsourced supply chain activity. The third-party logistics, regardless of the freight volume or mode are useful in assessing and tailoring solutions that maximize efficiency and minimize transportation costs.

The firm will use a third-party logistics approach to gather logistics and transportation information to forecast the transportation needs of the firm, influence decisions, maximize efficiency, enhance customer service, and minimize transportation costs. The shippers in the firm will be expected to analyze the existing processes of the supply chain, transportation networks and distribution solutions (Ekeskar, 2016). The shippers will achieve this by analyzing the current and predicted delivery lead-times, inventory assets and logistics and transport expenses. The resources and technology that is used by the third-party logistics in firms are able to create flexibility, increase space, reduce costs, maximize efficiency, enhance visibility and improve customer service.

Metrics and Benchmarks to Measure Success

The efficiency of the supply chain is usually the core performance standard of most organizations and a significant benchmark. The supply chain efficiency is able to determine the ratio of works performed by the transportation processes and ascertain whether the transportation processes adopted the best possible practices and made the best use of the available resources (Mangan and Lalwani, 2016). The focus should not be on the supply chain efficiency only as that alone does not guarantee effectiveness. For instance, a firm could reduce the transportation costs effectively but end up having poor customer services. An effective supply chain that forms an appropriate benchmark should, therefore, focus on both the outcome and external standards.

References

Belvedere, V., and Grando, A. (2017). Sustainable operations and supply chain management. Hoboken: Wiley.

Bohling, J. (2013). Outsourcing and third-party logistics. Place of publication not identified: Grin Verlag.

Ekeskär, A., and Department of Science and Technology, Communications and Transport Systems, Linköping University, Sweden. (2016). Exploring Third-Party Logistics and Partnering in Constructin : A Supply Chain Management Perspective. Linköping University Electronic Press.

Jothimani, D., and Sarmah, S. P. (2014). Supply chain performance measurement for th-rd party logistics. (Benchmarking). Bingey : Emerald

Mangan, J., and Lalwani, C. (2016). Global logistics and supply chain management. Southern Gate, Chichester, West Sussex, UK : Wiley