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How Business Organizations Uses Third Party Logistics Providers(3pl); a Detailed

  • Subject: Business
  • Topic: Logistics
  • Pages 2
  • Words: 971
  • Published: 12 March 2019
  • Downloads: 31
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In the modern business world, more and more companies are making use of third party logistics providers (3PL). Third party companies can handle many different functions that would otherwise have been up to the parent company. Companies can outsource different tasks to 3PL organizations and drastically improve their efficiency and scalability. The authors of the study were interesting in two different research questions. The first question was what factors companies consider when deciding which 3PL company to work with. Not all 3PL organizations offer exactly the same services. Some of them focus on distribution, whereas others offer things like customer service and product tracking. The authors of the study were curious as to how managers and companies decide which 3PL company to engage in business with. The second research question that the article was based on is whether or not there are specific segments of customers and whether those segments are based on different things that customers value with regard to 3PL companies. For example, things like high performance, customer service, rapid delivery time, and other factors were considered with regard to customer preferences. The goal was to identify if customers of 3PL organizations can be divided into different segments based on the things that they value most from the 3PL provider. Research on customer segmentation, and also on company decisions regarding with 3PL organization to choose, can provide benefits to several different groups of people. Companies that know what segment their own customers fall into can then select a 3PL provider that fits in with their target market. 3PL organizations can use the information on how companies choose a competitor in order to tailor their services to whatever companies they are interested in doing business with. The result is a more well-informed business marketplace where both parent companies and 3PL providers are in a better position to make strategic and informed decisions. The authors of the study arrived at some valuable conclusions, but the study also had some limitations. The sample sizes were small, and also the feedback from some customers could have been biased. Customers are not always aware of exactly what they value. As such, some of the responses may have been unreliable. Regardless, the study produced useful information.

SCM Theories

Several different supply chain management theories are related to the article. One is the theory of customer relationship management (CRM). CRM is based on the concept of maintaining strong relationships with customers in order to keep them for future business (Brown & Coopers, 1999). Most companies that use CRM have online portals where customers can login and see things like their purchase history. Many companies also save a customer’s orders, so that they can repeat them again in the future with ease. For example, some pizza companies save a customer’s order whenever it is placed online. The customer can then login and reorder the same thing in the future without having to input all of the information that they did when they placed their first order. CRM is related to the article on 3PL because a major part of the 3PL study was on customer segmentation. Companies that make use of CRM must identify and respond to any segments in their base of customers. If customers from one segment prefer something like rapid delivery, then they can tailor their services in that segment to appeal to those customers. If customers from a different segment prefer something like customer service and having their questions answered quickly, then the company can similarly shift their focus in order to appeal to that customer segment. Many 3PL providers interact directly with customers. They may receive emails, take calls, and provide information about pending or past orders. As a result, 3PL companies can benefit from taking the time to understand the process of customer relationship management. The parent company that works with a 3PL provider may have limited interaction with customers. As a result, it is the responsibility of the 3PL provider to be aware of different strategies on customer relationship management that can give them a competitive advantage over other 3PL providers.

Background

The use of third party logistics providers is becoming more and more popular. As more 3PL companies start to emerge, it is useful for researchers to identify what factors can give one 3PL company an advantage over their competitors. Other areas of business have been around for much longer than the third party logistics industry. As such, not much research has been done on strategic factors that can have an impact on the third party logistics industry. Organizations can use the information from the study in order to identify what segments of customers they have, and to identify which types of services are a priority for different 3PL companies that they are considering going into business with.

Managerial Implications

Results from the study indicate that not all 3PL companies offer the same services or prioritize them in the same way. Companies can benefit from analyzing their own operations and customer base in order to determine what services are most important to their organization. Once they have conducted such research, they can then choose a 3PL company that is the best fit for their organization. In addition, they can also research the different segments that their customers fall into based on their preferences and needs.

Summary

Authors of the study conducted research on both 3PL organizations and on customers. The purpose was to identify what factors companies take into consideration when selecting a 3PL provider, and also what segments customers fall into. Customer segments were based on things like high performance, fast response time, customer service, and other factors. Managers can use the information from the study when deciding what 3PL providers they want to engage in business with.

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How Business Organizations Uses Third Party Logistics Providers(3PL); A Detailed. (2019, March 12). GradesFixer. Retrieved October 20, 2021, from https://gradesfixer.com/free-essay-examples/how-business-organizations-uses-third-party-logistics-providers3pl-a-detailed/
“How Business Organizations Uses Third Party Logistics Providers(3PL); A Detailed.” GradesFixer, 12 Mar. 2019, gradesfixer.com/free-essay-examples/how-business-organizations-uses-third-party-logistics-providers3pl-a-detailed/
How Business Organizations Uses Third Party Logistics Providers(3PL); A Detailed. [online]. Available at: <https://gradesfixer.com/free-essay-examples/how-business-organizations-uses-third-party-logistics-providers3pl-a-detailed/> [Accessed 20 Oct. 2021].
How Business Organizations Uses Third Party Logistics Providers(3PL); A Detailed [Internet]. GradesFixer. 2019 Mar 12 [cited 2021 Oct 20]. Available from: https://gradesfixer.com/free-essay-examples/how-business-organizations-uses-third-party-logistics-providers3pl-a-detailed/
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