Engineering Homework Help

The purchase of these services 3PL warehousing services has traditionally been owned and performed by the

Logistics department. Many corporations have now expanded the role of their Purchasing (sourcing) organizations to include all purchases: raw materials, operating & office supplies, contract manufacturing, capital purchases, and with that 3PL warehousing and transportation services. This centralization is intended to assure standardization of buying practices, and to deliver savings.

There are implications to Logistics organization and to the 3PL warehouse providers. For example, the Logistics organization continues to own cost and service but may feel less ownership in the selection process. For the 3PL, there may be less certainty about the relationship. Some 3PL warehouse providers have opined that this trend has resulted in contracts of shorter duration, and that the award of business is weighted too heavily to cost. “My customers want and need strategic partnerships in today’s changing market. A strategic partnership requires that I invest to understand their strategies, and bring innovation in processes, systems, and equipment. I’m less inclined to invest when, in two years, I could be undercut and lose the business.”

1. What are the pros and cons of this expanded role of the purchasing department (specific to outsourcing warehouse services)? 

2. What recommendations would you have for the buyer and seller of warehouse services?