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3pl's

By Jimmy Lane,2014-09-18 11:19
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3pl's

How Third Party Logistics Companies Contributes

to the Environmental Sustainability of Customer Supply

Chains

    Executive Summary

    According to the Council of Supply Chain Management Professionals, 3PL is defined as a company which can offer many kinds of logistics services to use by customers. These multiple services are very comprehensive, or combine with each other by the provider. In this complicated service system, 3PLs offers transportation, warehousing, cross-docking, inventory management, packaging and freight forwarding service and so on. The third-party logistics industry has enjoyed steady growth since the mid 1990s. For the 3PLs, to fulfill the long-term and sustainable development, they must take actions to try their best to protect the natural environment of the world. Meanwhile, many CEOs have indicated that the biggest concerns of 3PLs at the moment are the influence of the recession on their business, environmental sustainability issues, and the fact that 3PL customers are trying their best to shorten their supply chains. This paper generally analyzes how third party logistics companies contribute to the environmental sustainability of customer supply chains.

    Table of Contents Executive Summary………………………………………………………………...2 Introduction………………………………………………………………………....4 1. Third-party logistics providers play key role in integration, environmental

    sustainability and security of the supply chain ………………………………….4 2. The limited Contribution of 3PLs in Enhancing Customer Operations Sustainability………………………………………………………………………..6 3. Conclusion…………………………………………………………………………6 References…………………………………………………………………….………8

    How third party logistics companies (3PL‟s) can contribute to the environmental

    sustainability of customer supply chains.

    Introduction

    The third-party logistics industry has experienced a very steady growth since the mid 1990s.In the academic researches, third-party logistics (TPL) can be also called as logistics outsourcing. As it is important in the business, it has got a lot of attention both from the scholars and the business man. The interest of researchers in TPL aspect should go on as many recent studies tell that an increasing number of firms in the industry sectors use third-party logistics providers to manage the logistics operations.

    Recently, the environment protection has become a very important problem. Additionally, as the global economic crisis took place, it needs the sustainable growth where better usage of natural resources makes the possibilities to develop a green economy. The influence of the business for the natural environment is one of the major fields where the whole society has become more sensitive about. That is the reasons why firms need to face the challenges of green problems by doing sustainable logistics and supply chain management. As the logistics process will inevitably cost so much energy and resources, it also results in the pollution, and in order to achieve the long-term aim, the long-time development, much attention should be paid to protect the natural environment. (Ashenbaum, B., Maltz, A.B., Rabinovich, E., 2005) 1. Third-party logistics providers play key role in integration, environmental sustainability and security of the supply chain

    With many decision makers in the big companies are becoming more and more serious about their firms environmental influence, the third-party logistics (3PL)

    plays a very important part in adding the impact of their transportation functions and lessening its pollution. (Cooper, M.C., Lambert, D.M., Pagh, J.D., 1998) As a lot of retailers are finding to provide the consumers special transparency, manufacturers and

    suppliers have to go deeper into supply chains to improve the environmental influence of their goods. In many cases, carbon pollution can be taken as a symbol for the companies operational efficiency; generally, 3PLs succeed in enhancing supply chains influence in the highest-traffic shipping lines where shipments can be simply combined. This model is hoped to save the energy as well.

    Thinking about the increasing energy cost and the usage of the limited resources have spurred efforts in the business community to seek green and sustainable initiatives that make the environmental influence minimized. Go beyond traditional methods of recycling and energy conservation, companies are trying to improve the source reduction through the development and use of lighter, more flexible materials, as well as reducing package size and exploring alternate materials. The Third-Party Logistics industry particularly those engaged in packaging are in the midst of this

    evolution. Although an increasing number of 3PLs are pursuing “green” policies, its influence according to attracting new, like-minded customers is yet to be fully assessed. A 2008 study found that marketing “green” capabilities have made little

    effect in attracting or maintaining business. Most of the 3PLs showed they are spending funds on “green” activities primarily as a social responsibility rather than a response to customer demand. (Ptak, C. A. 2000)

    An increasing number of 3PLs want their customers to view them more as strategic partners, who are ready, willing and able to take an active role in helping them solve supply-chain management issues. However, many 3PL customers prefer their providers to remain primarily execution-oriented. Unfortunately, some customers do not mention the 3PLs with whom they work as having the range of business knowledge which they feel is enough to help them enhance their supply-chain outsourcing.

    Many 3PLs tries to re-think their strategy because they have to think how their cost is distributed. Many researched showed that 3PLs focused on going green is not concern for the environment, but the fact that it could save them money. In order not to do

    harm to the environment, first, the 3PL‟s should have the aim to improve people‟s lives, especially the consumers‟ green consumption. Second, as we know, the logistics

    cost so much energy and resources which will result in the environmental pollution, such as save the petrol and the labor. Last but not least, the 3PL‟s should encourage the consumers to consume green logistics in order to continue its development and expansion. (Chopra, S. and P. Meindl, 2001)

    2. The limited Contribution of 3PLs in Enhancing Customer Operations’

    Sustainability

    First, as we know, optimizing the logistics process will cost a lot of funds, as the competition is very fierce and many logistics companies are lack of working capital, not so many companies would like to do the big change in their own daily management. And the advantages of the environmental sustainability are not generally realized. Secondly, as many logistics companies are not so big, and they do not pay special attention to the new operation methods in their business, they are lack of technology, management methods and information, especially the computer applications in the logistics field is quite unpopular, it makes the environmental sustainability hard to achieve. Thirdly, the professionals and experts are few. As far as I am concerned, although in the academic area, there are many people working, in the logistics companies, the number of the professionals and experts is small, it made the new technology is hard to make full use.

    3. Conclusion

    Many researches indicate that many companies have made substantial commitments to environmental sustainability goals during the past several years and that they have launched a broad range of related projects that have had quite positive impacts on those companies. The evolution of the logistics service industry outlined above highlight that 3PLs are playing a more critical role. This puts these companies in a critical position to support the efforts towards environmental sustainability of supply

chain operations. As the advantages of 3PLs and its business in the market, traditional

    opinions about 3PLs have disappear, many product development, design should be

    close to the green and environmental logistics to help these companies get their great success.

References:

    Ashenbaum, B., Maltz, A.B., Rabinovich, E., (2005), „Studies of trends in third-party

    logistics usage: what we can conclude?‟, Transportation Journal, Vol. 44, No. 3.

    Chopra, S. and P. Meindl (2001). Supply Chain Management: Strategy, Planning, and Operations. Upper Saddle River, NJ: Prentice Hall.

    Cooper, M.C., Lambert, D.M., Pagh, J.D., (1998), „What should be the transportation

    thprovider‟s role in supply chain management?‟, proceedings of the 8 World

    Conference on Transport Research, 12-17 July, Antwerp (Belgium). Ptak, C. A. (2000) ERP: Tools, Techniques, and Application for Integrating Supply Chain. New York: The St. Lucie Press.

    Selviaridis, K., Spring, M., (2007), „Third party logistic: a literature review and

    research agenda‟, The International Journal of Logistics Management, Vol. 18, No. 1 Simchi-Levi, D., P. Kaminsky, et al. (2003). Designing and Managing the Supply Chain, 2nd edition. New York: McGraw-Hill.

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