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Third party logistics refers to the outsourcing of distribution and fulfillment services such as warehousing and transportation to a third party company. These service providers are classified into asset based and non-asset based logistics. An asset based logistics uses their property such as trucks and warehouses to perform the client's supply chain. Contrary, the non-asset based logistics uses his expertise in securing contracts with carriers, warehouses, and distribution since he does not own any assets required to run the supply chain. The third party logistics manages clients supply chains to increase efficiency, cut on costs, mitigate risks and save time (Gilliam, 2015). Asset-based logistics cuts down the cost of warehousing and transportation since they are the owners of these facilities. The ownership provides them with abilities to set their price which is often lower than third party carriers and warehouse providers. On the other hand, the non-asset-based logistics that lack the buying power or trusted network could be ineffective in the provision of the solutions. This is due to the payments made to third parties such as carrier and warehousing facilities by the non-asset-based logistics (Norall, 2013). Non-asset-based logistics provides custom solutions to a company depending on various needs. Their capabilities to use expertise in identification of the best approaches in different situations put them in a better position than asset based logistics. Contrary, the asset-based logistics completely fits a company’s supply chain with that of their own with fewer considerations on client’s demands. Further, asset-based logistics are more stable compared to
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