What Is a Third-Party Logistics Provider?

The so-called third-party logistics (that is, TPL) refers to the production and operation enterprises, in order to concentrate their efforts on the main business, entrust the logistics activities that originally belonged to them to a professional logistics service company in the form of a contract and maintain close contact to achieve The whole process of logistics management and contract logistics (Contract Logistics) is for third party logistics.

Third-party logistics service providers

Right!

The so-called third-party logistics (that is, TPL) refers to the production and operation enterprises, in order to concentrate their efforts on the main business, entrust the logistics activities that originally belong to them to a professional logistics service company in the form of a contract and maintain close contact to The whole process of logistics management and contract logistics (Contract Logistics) is for third party logistics.

Chinese name

Yongtong Logistics

Foreign name

yongtong

According to research, third-party logistics service providers are generally logistics service companies formed by traditional functional logistics service providers by expanding their business scope and increasing service content, and a large proportion of them are from the traditional transportation and storage industries. To start a business, the general situation is as follows:

(1) Originated from transportation enterprises

These enterprises use the traditional transportation resource base to expand more comprehensive comprehensive logistics functions, focusing on transportation services. Typical enterprises such as Sinotrans, COSCO, and China Shipping, etc.

(2) Originated from warehousing enterprises

Based on traditional resources and the distribution business that they have started, this type of enterprise expands a more comprehensive comprehensive logistics service, focusing on warehousing business and regional and intra-city distribution. Typical enterprises include China Storage, China Merchants, China Materials, and COFCO.

(3) Originated from freight forwarding companies

Such enterprises are generally agency companies that do not own fixed assets or logistics facilities. Based on agency business, they have contacts with many suppliers and have the ability to combine different logistics service items to meet customer needs. They have transformed from the current role of freight brokers to a wider range of third-party logistics service providers, such as many freight forwarding companies under Sinotrans.

(4) Originated from shipper

This type of enterprise has evolved from the logistics organization of a large company and usually has logistics expertise and certain resources. These suppliers have experience in managing the logistics of the parent company.

(5) Originating from a financial or information service company

Originated from financial or information service companies. These companies provide management services such as freight payment, auditing, cost accounting and control and monitoring, tracking and inventory management.

In summary, the third-party logistics service provider is an operator who engages in various logistic support activities for various users. It is independent of the supply and demand sides and provides professional logistics services through the cooperation of both parties. It pursues maximum profit.

The characteristics of third-party logistics service providers are:

(1) Improving the core competitiveness of enterprises: The core competitiveness of enterprises is the source and basis for enterprises to obtain sustainable competitive advantages. A good logistics service provider can allow enterprises to focus on their core industries without worrying about logistics.

(2) Reduce operating costs: Third-party logistics service providers have professional employees and rich work experience, which can allow enterprises to avoid unnecessary energy and expenses in logistics activities.

(3) Improve logistics service level: Compared with the chain enterprises themselves, third-party logistics service providers have rich professional knowledge and literacy, and the service level is very high, so outsourcing logistics to logistics service providers can increase the level of logistics services.

(4) Enhance market resilience: Outsourcing logistics to third-party logistics service providers can allow enterprises to cancel most of their own logistics institutions, avoid the bloatedness of the enterprises themselves, increase response speed, and enhance market resilience.

(5) Speed up the process of putting products and services on the market: After logistics is outsourced to a third-party logistics service provider, the response speed of the company is improved, so that the company can concentrate on developing new products and serve its customers with all its strength, without worrying about time in logistics And the loss of costs has accelerated the process of putting products and services on the market.

(6) Ability to improve a set of complete service chain solutions, which can effectively adapt to the needs, diversify and complicate the needs, concentrate all resources, and solve problems perfectly for customers.

The following briefly introduces several evaluation methods commonly used in traditional and current evaluation methods of third-party logistics service providers:

(1) Tender Law

The selection of logistics service providers through the bidding method usually involves the bidding conditions proposed by the enterprise, the bidding of each partner, and then the award of the bid, and finally the contract or agreement is signed with the partner who proposed the most favorable conditions. The bidding law can be open bidding or designated competitive bidding. Public bidding does not limit the qualifications of bidders. In the designated bidding method, a number of possible partners are selected in advance by the enterprise for bidding and final bidding [27]. Tendering logistics service providers are highly competitive, and companies can better select appropriate partners. However, this method is geographically limited. Most of the bidding companies are concentrated in the same area and the bidding scope is narrow. The bidding companies have certain business connections with the bidding companies, while other companies often do not know the information and the number of bidding companies is small; Even if companies in other regions obtain information, they will abandon bidding because of the high cost of bidding; companies participating in the bidding only obtain task information through bidding and lack in-depth understanding of it, so the submitted plan may not be optimal.

(2) Analytic hierarchy process

In the early 1970s, Professor Saaty, an American operations researcher, proposed the Analytic Hierarchy Process (AHP), a multi-objective decision analysis method that combines qualitative and quantitative analysis. This method is simple, practical and effective, and has been widely used. This method makes full use of human subjective initiative, makes judgments based on human experience, intuition, and insight in an uncertain environment, and expresses some qualitative factors in quantitative form. This method can consider many factors that cannot be directly quantified, especially some factors that have long-term significance for future cooperation and development. Therefore, the AHP method is widely used in the selection of quality control systems, priority evaluation, and enterprise development planning, and it is applicable to the evaluation and selection of long-term partners.

(3) Data Envelopment Analysis (DEA) method

Data envelopment analysis (DEA) was created in 1978 by A · Charnes and W · W · Cooper and others. It is an ideal method for solving multi-input, multi-output decision problems. The data envelopment analysis method is actually an application of linear programming model. This method can evaluate the relative efficiency. The method is characterized by using the weight of change to evaluate the decision unit based on the input and output observation data. . DEA includes the index weight allocation process, which is consistent with the multi-objective decision method. In the DEA method, the decision unit is equivalent to the alternative in the multi-objective decision model. The DEA method is used to calculate the maximum validity value of different decision-making units. The weight of the indicator changes. Weight variability is an essential feature of DEA. When using the DEA to adopt the dichotomy method, the full ordering cannot be performed, and only the decision unit is valid. In fact, some of the output indicators of the third-party logistics service providers are as small as possible, while others are as large as possible. For example, the smaller the wrong delivery rate is, the better, and the larger the on-time transportation rate is. Combining the characteristics of smaller input volume and better output volume, according to specific conditions, output indicators and input indicators can be selected to construct models for evaluation of third-party logistics service providers.

(4) Consultative selection method

The negotiation selection method is a method of selecting partners according to the conditions of the service provider. Specifically, the enterprise first selects several partners with more suitable conditions, and negotiates with them separately to determine the appropriate partner. Compared with the bidding method, the negotiation method is more guaranteed in terms of quality, date, and after-sales service due to the negotiation. When the time is tight, there are fewer bidding units, and the degree of competition is small, the negotiation selection method is more suitable than the bidding method.

(5) Grey correlation degree method

The theory of gray system was put forward by Professor Deng Julong of Huazhong University of Science and Technology in 1982 in response to the grayness of people's understanding of thingsincomplete and uncertain information. It evolved into an evaluation method and a gray correlation degree. The main idea is to use the sample data of each factor as the basis, and describe the strength, magnitude, and order of the relationship between the factors with gray correlation. The steps of establishing a grey relational evaluation model for third-party logistics suppliers are: determining the reference sequence and dimensionlessly processing the variable sequence with the expected value as the reference sequence; finding the difference sequence and constructing the comparison matrix; finding the maximum and minimum differences and constructing the association Coefficient matrix; calculation of correlation; ranking. Due to the incompleteness and uncertainty of the information of the third-party logistics providers, the gray correlation method has also been widely used in the evaluation of third-party logistics providers.

(6) Neural network method

Neural network theory is a cutting-edge research area of artificial intelligence in recent years. It is based on large-scale parallel processing and distributed information storage based on connection control. It depends on the connections of a large number of neurons and the different excitement of neurons caused by such connections. A theory of the overall behavior exhibited by states and systems. The neural network is used in the evaluation of third-party logistics service providers, and the purpose is to establish a comprehensive evaluation model combining qualitative and quantitative. This method can better ensure the objectivity of the evaluation results.

Through the above analysis of the evaluation methods of third-party logistics service providers, we can understand that some qualitative evaluation methods such as the bidding method are mainly based on past experience and rely on previous relationships to evaluate. This subjective judgment is often not accurate enough, especially when it comes to services When business conditions are close, service providers cannot be distinguished. However, some quantitative evaluation methods like DEA only consider an indicator such as cost and ignore other important indicators. The evaluation of service providers is not comprehensive. The disadvantage of the DEA method is that when there are more evaluation indicators and there is a correlation between the indicators In the relationship, the evaluation results will show a certain regularity and are not satisfactory. At the same time, the negotiated selection method also has certain shortcomings. Due to the limited range of options, it may not always be possible to obtain the most reasonable supply source with the most favorable supply conditions. When there are many suppliers and it is difficult for the enterprise to choose, a method of negotiation and selection can be adopted. The disadvantage of the neural network method is that the work is relatively random, and it requires labor and time to debug manually. Although the analytic hierarchy process has the advantage of combining qualitative and quantitative, but there are relatively subjective factors in determining the index weight, it is inevitable that errors do not occur, and in the presence of a large amount of data, the stability of the analytic hierarchy process is poor, so we need to An objective and effective method is needed to choose a third-party logistics service provider.