Introduction
The vast transportation geography caused by economic globalization calls for new approaches to the logistics and transportation of goods. Mass-production companies are finding it increasingly difficult to get their products across the globe. This essay will discuss the tools used in the supply chain, such as third-party companies, that can cope with the abovementioned problems. Careful cooperation between primary and third-party companies allow significantly reduces shipping costs and increases transportation efficiency, but, on the other hand, its lack could be catastrophic.
3PL Company and Its Importance to The Supply Chain
Considering the logistic supply chain, it is necessary to explore the role and advantages of the 3PL. According to Afgani et al. (2022), “third party logistics (3PL) is a third-party company that provides logistics service outsourcing services, either to companies or individuals” (p. 195). This type of company is critical in the supply chain because it performs those functions that are not able to perform by another organization or individual (Afgani et al., 2022). For example, because the 3PL company is located in a region where the core company lacks the skills and capacity to carry out logistics operations, it can provide significant advantages to the primary company. Therefore, it is an essential link in a supply chain geographically and economically.
Pros and Cons of Hiring a 3PL
The third-party company can have both advantages and disadvantages in terms of logistic operations. As the advantage of hiring a 3PL company such as TCW, one should highlight the strong ties such companies have because of their specialization. As Mittal et al. (2019) state, “their strong communication channel, which kept all involved parties in touch at all times, as well as their forensic dispatch practice…” (p. 3). Due to this scheme, logistics operations allow to meet the requirements of customers and efficiently transporting goods. On the other hand, a significant drawback of the 3PL company is the high level of competition among similar third-party companies. Consequently, a company that hires 3PL has significant risks because competitors may have more efficient 3PL companies. It will affect the overall competitiveness of the organization in the market.
Factors Influencing the Shipping Costs
One factor that could influence the shipping costs is a delay in receiving the goods. It is essential to highlight that it can significantly harm companies such as Bell Oil refinery because of its manufacturing specifications. It can cause considerable financial losses in millions of dollars (Mittal et al., 2019). The next factor is operations with oversize load transportation. In the article by Mittal et al., an example of a tank was discussed (Mittal, 2019). It showed that for this successful logistic operation, the company must use different transportation options, such as vessels, rail lines, and others (Mittal, 2019). Therefore, the lack of knowledge in efficient combinations can cause a significant cost influence for Bell Oil refinery.
Additional Information TCW Should Obtain
Besides the information provided in the RFP (request for proposal) for TCW, it will be essential to know the necessary packaging for goods. This is a critical factor as it affects the overall cost of transportation and is an important aspect in the delivery of goods in integrity and original form (Afgani et al., 2022). Another type of information is awareness of the company’s customers and requirements. The company must anticipate these factors in order to know how it must plan its logistics route and how to reduce shipping costs.
Conclusion
In conclusion, it is important to stress that many factors influence successful logistics operations. Among them are routes, customer needs, various transportation options, packaging of goods, and more. Therefore, it is critical to have the best possible communication between a major company, such as Bell Oil, and a third-party company, such as TCW. Thankfully to that, the 3PL will have all the necessary information to reduce shipping costs.
References
Afgani, J., Afriadi, B., Sudarmaji, I., Saefuloh, D., & Rahim, R. (2022). ICSST 2021: Proceedings of the 1st international conference on social, science, and technology, ICSST 2021, 25 November 2021, Tangerang, Indonesia. European Alliance for Innovation.
Mittal, N., Szewczuk, R., & Kumar, S. (2019). Tucker company worldwide: Delivering value in logistics services. Ivey Publishing.