Introduction
Logistics is that part of the supply chain processes that plans, implements, and
controls the efficient and effective forward and reverse flow and storage of goods,
services, and related information between the point of origin and the point of
consumption in order to meet customer requirements (www.clm1.org).
Owing to the globalization of sources, manufacturing and production, distribution
companies in recent years have been adopting the logistics management view to guide
their business operations. The adoption of logistics concepts has increasingly forced
such companies to focus on their core business and, at the same time, to outsource their
transport and other logistics activities. This has resulted in an increasing demand for
logistics services that has generated, in past decades, the creation of a worldwide
growing market in which specialized service providers, which are called third party
logistics (3PL) providers, operate. Recently, it has been highlighted that successful
logistics management depends more and more on the performance of the 3PLs.
Accordingly, they can play a key integrative role in logistics functions by the
management of information flows connected with the entire delivery of goods.
This has created an increasing need to support customers’ logistics requirements through the
effective use of information and computer technologies.
Bendor-Samuel (1998) asserts that outsourcing provides a certain power that is not
available within an organization’s internal departments. This power can have many
dimensions: economies of scale, process expertise, access to capital, access to expensive
technology, etc. Another possible benefit is that outsourcing provides companies with
greater capacity for flexibility, especially in the purchase of rapidly developing new
technologies, fashion goods, or the myriad components of complex systems (Carlson,
1989; Harrison, 1994).
One of the advantages of using 3PL results from economies of scale (merits from
large truck fleets, warehouses, etc.) and economies of scope, which encourage firms to
increase net value by reducing costs. The effects of these economies depend on the type
of 3PL provider (e.g. IT-equipped, marketing-based, non-asset-based, etc.) Competent
3PL providers possess high coordination ability, enabling them to find reliable
partners or sub-contractors, and to efficiently manage the inter-firm flow of goods.
Such ability can be developed through experienced 3PLs.
Likewise, by outsourcing logistics activities, firms can save on capital investments,
and thus reduce financial risks. Investment on logistics assets, such as physical
distribution centers or information networks, usually needs large and lump sum costs,
which involves financial risks. Furthermore, the 3PL provider can spread these risks
by outsourcing to sub-contractors.
In developed countries, transport carriers and logistics service providers are
expanding their services into various areas that traditionally belonged to their
customers upstream as well as downstream. This outsourcing trend is a huge
challenge for operators but is also a great opportunity for enlarging their base for
business activities. To be able to carry out these new services effectively, significant
requirements are put on development for appropriate processes, capability of
collaborating and use of advanced information technology.
On the other hand, as the world becomes more globally integrated and the
boundaries between countries and cultures disappear, many developing countries,
including Turkey, are turning into attractive centers for international firms because of
their geographical locations, low working fees and high potential for market
extensions. However, a previous study shows that in Turkey, outsourcing is still solely
based on transportation (Ulengin and Ulengin, 2003). As can be seen from this
research, many Turkish firms understand logistics services as taking the
transportation order from the manufacturer and delivering the goods to destination
points, without thinking about the warehouse design, the optimum location of the
warehouse or of inventory management. Such ways of thinking are concerned only
with one side of the subject and reduce logistics services to a narrow transportation
perspective.
The main focus of this particular paper is to analyze the current as well as the future
state of Turkish firms in terms of their use of transport carriers and 3PL providers.