week 8 Discussion Questions
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Western University *
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Information Systems
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Feb 20, 2024
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docx
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Uploaded by PresidentMongoose3454
The benefits of outsourcing logistics to Third Party Logistics Providers (3PLs).
Third-Party Logistics is utilizing transportation and logistics companies to increase the company's competitive market, lower risk, and increase returns.
Outsourcing Third-Party Logistics (3Pls) benefits not only the seller but also the buyer and purchasing companies; these will allow a better response time, timely and quick delivery, and sustain customer demands and satisfaction.
An example of a third-party logistic provider is the Amazon Flex driver program. A driver can use their car and choose to deliver as often or as little as they like or need; all they need is a car, a smartphone, a valid driver's license, and be 18 or older. Amazon's only expenses are the driver's minimum wage salary and commercial liability coverage while the car is utilized and is on Amazon's clock. Amazon does not need to pay for warehouse space, utilities, and equipment, while the customers benefit from discounts and same or next-day delivery.
Amazon also helps intrapreneurs and small businesses; they can start a delivery business with an initial $10,00 investment. According to Amazon sources, the company will lease the vans, insurance, gas cards, and training to launch a delivery fleet, knowing that they already have a client with a potential earning of $300,000 a year.
Is this outsourcing better implemented in a centralized or decentralized procurement structure?
A centralized procurement structure consolidates similar requirements and standardizes procurement processes in various facilities. The most important
benefits of a centralized purchase structure are a lower price and combining the volume of various units to obtain the best value and uniformity for the entire company and not only one facility. Centralized organizations minimize reddendum or duplicate efforts by having one logistic department in a centralized location.
A decentralized procurement structure has the advantage of a quick response time and better customer support by having purchasing authority in each location with knowledge of products, customer needs, and business processes while developing relationships with local suppliers and understanding the differences of each location.
While the 3PLs outsourcing can be implemented in both procurement structures, it will benefit the decentralized procurement structure. With the purchasing authority's knowledge and local suppliers' relationship, the 3PLs can be adjusted based on distance, frequency, volume, and the customer's local area.
How has governmental deregulation of the logistics and transportation industry contributed to cost savings and revenue enhancement of private sector organizations?
Governmental deregulation of the transportation and logistics industry improved efficiency and market competition when the government removed troublesome restrictions in the late 70s and early 80s. From the buyer's standpoint, the deregulation offers savings and proficiency due to market competition and having more companies negotiate prices and quality of service. From the carrier's perspective, these regulations took protection and
reduced profits, and they had to learn new ways to compete with competitors in a new, open market. Many went out of business, and others had to merge with others in order to survive. The private sector and consumers benefit the most and take advantage of all these changes, lowest
prices, and efficient service.
Briefly discuss one issue from this week's material that may help you personally or professionally.
This week's discussion on outsourcing logistics to Third Party Logistics Providers will help me professionally; I am trying to start a small business, and understanding this logistic option can help alleviate and allow me to deliver products faster and more efficiently.
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