Business Logistics: Third-Party Logistics Providers and Balanced Scorecard

This document discusses the need for third-party logistics providers and the concept of balanced scorecard in business logistics. It also explores the main logistics activities carried by 3PL and provides insights on how to enhance customer satisfaction using the gaps model. Additionally, it highlights the environmental challenges faced by international furniture retailer's logistic services and provides recommendations to address them.

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BUSINESS LOGISTICS
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Table of Contents
Question 1........................................................................................................................................3
The need for third-party logistics providers................................................................................3
The concept of Balanced scorecard 3PL service providers.........................................................3
Aims and objectives of the laptop manufacturer.........................................................................3
Measure and targets of Laptop manufacturers.............................................................................4
Strategic objectives necessary for the development of a balanced scorecard..............................4
Main logistics activities carried by 3PL......................................................................................6
Question 2........................................................................................................................................6
Enhancement of Customer satisfaction using the gaps model.....................................................6
Question 3........................................................................................................................................9
Environmental challenges Faced by international furniture retailer’s logistic services..............9
Recommendations......................................................................................................................11
Reference list.................................................................................................................................13

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Business Logistics
Question 1
The need for third-party logistics providers
According to studies, most successful companies have outsourced their logistics and
supply chain operations from third party logistics providers (Jayaram & Tan, 2010, p.263). Also,
there has been increasing competition in the current world market. Therefore, outsourcing
logistic services have provided an alternative method of sustaining in the competitive edge.
Additionally, companies and organization have adopted outsourcing method intending to
maximize their profits.
Findings show that third-party logistics service providers offer many services that enable
business organizations to outsource some of their routine logistic operations and other supply
chain management functions (Zacharia, Sanders & Nix, 2011, p.43). Third party providers
provide transportation, warehousing, and other detailed services such as inventory management.
Also, outsourcing provides many significant functions such as inventory management,
performance management, labeling and packaging, transportation, warehousing, fleet operation,
product marking, order management, distribution of products, cross-docking, freight payment,
and logistic information system. This gives an organization or a company a better opportunity to
concentrate on significant operations and maximize their profits.

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The concept of Balanced scorecard 3PL service providers
Aims and objectives of the laptop manufacturer
The concept of Balanced Scorecard is very significant at defining the aims and objective of the
company. Therefore, it helps a company to achieve a balance between customer’s satisfaction
and employee’s satisfaction with the expected financial outcomes. Thus, the organization has
developed various metrics about the expected outcomes that it aims to achieve. Laptop
manufacturers major aim is to meets customer’s satisfaction, at the same time attain better profit
margins (Rajesh at el., 2012, p.271). Therefore, they implement the concept of balanced
scorecard to achieve a balance between the two. Consequently, the BSC has assisted the laptop
manufactures to meet high customers depend and at the same time, attain better financial
outcomes.
Measure and targets of Laptop manufacturers
Studies reveal that the concept of Balanced scorecard facilitates the use of financial and
non-financial measures of performance about a particular industry or company (Forslund, 2012,
p297). There it allows a company to examine its strategic objectives through evaluation of a
balance between the companies for perspective. These perspectives are; customers, financial,
internal learning process, and the internal business process.
Laptop manufactures examines a balance between the four BSC perspective to
determines its position and targets. According to studies, the company has worked with other
organization to attain a balance and hit its target in the global market. In the current world,
laptops, demand is raising a higher rate due to an increase in their use. According to recent
statistics, more than 2 million laptops are bought every day in the global market. Therefore,

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laptop manufacturers are developing various strategy with the implementation of BSC to meet
the higher demand and hit their major target markets.
Strategic objectives necessary for the development of a balanced scorecard
Kaplan, Norton & Regelsjoen (2010, p.115) argue that the balanced scorecard is
significant to a framework that measures the overall organization performance in an integrated
manner. It also provides a proper methodology, which makes it possible to attain a balance
between financial and non-financial results during short and longterm periods. The concept of
the balanced scorecard is based on the integration of third party logistics providers. The
dimension of the balanced scored card enhances the manager to evaluate a business based on the
four perspectives; internal business, customer, financial perspective, and learning.
Financial perspective.
Sainaghi, phillips & Corti, (2013, p.152) argue that financial performance determines
whether financial strategies contribute to organization improvements. They also argue that the
main financial goals are to prosper, service, and succeed. Prosperity is measured by increased
market, the organization's cash flow measures survival, and success is measured by organization
growth. Therefore, the three financial strategies are very significant when designing a balanced
scorecard for third party logistics providers. From a financial perspective, it is evident that
outsourcing logistic service is essential to enhance the organization's growth.
Customer perspective.
Balanced scorecard requires that the management should define strategies that reflect
those factors that matter to customers. The mission statement should reflect customer needs.
Also, the organization should be capable of adopting environmental changes. Therefore,

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effective logistics services should be taken in response to customer’s inquiries. The only way an
organization can enhance effective logistic operation is through outsourcing logistic services.
Through the use of outsourcing logistics services, the organization becomes capable of targeting
the customer base and meeting their expectations (Butler, Henderson & Raiborn, 2011, p.1).
Internal business perspective
To excel through a balanced scorecard, the organization should establish internal
strategies that incorporate the concept of outsourcing logistic services (Craig & Moores, 2010,
p.80). Also, the internal strategy must have a more significant impact on customer satisfaction.
Learning and growth perspective
An organization with the ability to learn and innovate is capable of gaining maximum
value. Learning and innovation are very significant approach since they enhance efficiency in
various organization operations. Outsourcing of logistics services is part of innovation. It
facilitates efficient delivery of various logistic services that easing company’s operations.
Main logistics activities carried by 3PL
 Facilitates transportation. These are transportation functions that include, international
traffic, inbound and outbound traffic, carrier and mode selections.
 Communication function. For instance, communication on, demand forecast, order
processing, and production scheduling.
 Corporate functions. They include strategic negotiations, strategic sourcing, and fleet
management.

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 Supply chain functions. For instance, logistics and inventory management. The third-
party logistics providers are in charge of all inventory operation involved with product
transportation and warehousing (Rajesh, Ganesh & Pugazhendhi, 2013, p.40).
Question 2
Enhancement of Customer satisfaction using the gaps model
The customer gap
Studies reveal that customer difference is the gap between customer expectations and
customer perceptions (Cheng, Chen & Hu, 2012, p.1157). Customer expectation mainly is what
the customers expect in terms of the available resources. However, customer expectation is
influenced by personality, experience with a similar product, advertising, demographics, cultural
background, and family lifestyle.
On the other hand, customer perception depends on customer interaction or service. In
the cases of laptop manufacturers, customer satisfaction can be achieved through the delivery of
quality laptops. Also, laptop manufacturers can enhance customer’s satisfaction through services
such as free windows installation and provision of a good warranty. Other services such as
training on usage and storage of the laptops can enhance customer’s satisfaction.
The knowledge gap
According to studies, this is the gap between consumer expectation and management
perception. In this gap, the management lacks a clear understanding of customer’s expectation
concerning the company’s product. Therefore, the company fails to meet the exact consumer's
needs. Thus, in the cases of laptop manufacturers, they should have a good understanding of
consumers’ needs on their products. They should be able to understand the kind of laptops that

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consumers want to meet their satisfaction. Therefore, to close this gap between the consumer's
expectation and management perception, laptop manufacturers should carry out detailed market
research on the consumer's needs and expectation.
The policy gap
Siddiqi defines the policy gap as the gap that exists between management perception and
service quality specification (2010, p12). Studies reveal that this gap reflects the management
action of mistranslating service policy into rules and guidelines concerning employees. Also,
some companies have the challenge of translating the consumer's expectation into special service
quality delivery. Therefore, in the cases of laptop manufacturers, should aim at providing
continues customers update on their products and provision of good customer services to
enhance their satisfaction. Thus, consumers will stick on their products and services due to better
product and service provision.
The delivery gap
According to Siddiqi (2011, p.12), the delivery gap is the gap between service quality
specification and service delivery. The reveals employee’s weaknesses in performance. Thus, a
company with a delivery gap fails to establish proper processes and train their employees.
Therefore, to bridge this gap and enhance customer’s satisfaction, laptop manufacturers should
train their employees and set a suitable process for service delivery. Also, the establishment of
right human resources policies is mandatory to enhance customer’s satisfaction. Finally, laptop
manufacturers should establish a cohesive team with the ability to improve suitable product and
service delivery.
The communication gap

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Studies reveal that the communication gap is the gap that exists between service delivery
and external communication (Sharpe, 2013, p.527). Better communication to the customer is
essential to enhance their satisfaction. However, in some cases, companies deliver promises
mainly through advertising, thus increasing customer expectations. Subsequently, when those
promises fail to match with the service or product provided, a communication gap is created.
Laptop manufacturers should make sure that their promises to customer’s match with the actual
product and service delivery and bridge the communication gap at all levels to meet the
customers’ expectations and enhance their satisfaction.
Question 3
Environmental challenges Faced by international furniture retailer’s logistic services
Natural resources in the supply chain
Products are the basis of retail business in any part of the world. However, the raw
material used in the production process has some environmental impacts. Studies reveal that all
natural resources have negative effects on the environment (Guang at el., 2012, p.56). The
cutting of trees for use in furniture production leads to deforestation. Therefore, supply chain
disruption is affected when there are constraints on natural resources required for furniture
production. Also, the effects of deforestation have contributed to climate changes, which has
affected the agriculture sector due to lack of rains. Additionally, it has contributed to drought and
work scarcity in different areas of the country, thereby risking the life of individuals. However,
concerning international furniture retailers, it has become a problem to reduce the business risk
at the same time meet the consumers demand in logistic services.
Environmental impacts of products

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Studies reveal that during product life, there many ecological effects that are encountered.
In these cases, the light is casted on implications during transportation since most retail activities
involve the provision and transportation of products to the final consumers. Most of the furniture
products are exported overseas. During the transportation process, some harmful chemicals and
gases may be released onto the water surface, thus endangering the life of aquatic animals. Also,
the retailers might encounter hash climatic conditions, which make it impossible to reach out the
potential consumers. These environmental impacts profoundly impact the retailers in logistic
services.
Waste products
Waste is a detrimental challenge, also in all sectors that deals with products. Some waste
products cannot be sold such soda ash from furniture production. Also, some waste products are
not adequately disposed of, thus posing a problem to the environment. Also, retailers incur lose
when some furniture products are blocked cannot be recycled. The only alternative way is to
replace the broken part of the furniture, thus incurring an extra cost. Waste is a problem to
international retailers since it brings no gain more of loss.
Energy and greenhouse gases
Norgate & Haque (2010, p.270) argue that energy and greenhouses have huge impacts on
the environment. The emission of gases by the vehicles and industrial machine leads to air
pollution. Energy used in fueling vehicles that are used by the retailers incurs the high cost of
buying that fuel. Therefore, it makes it challenging to attain the maximum profit. Furniture
products require sustainable means of transportation to the final consumer, therefore. This is a

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challenge since retailers also encounter hash climatic conditions, which makes it difficult to
reach the target market.
Chemical and Toxic
Most products contain chemicals. However, in retail furniture production, the chemical
may not be harmful, but some of the potential to affect the environment or harm people. For
instance, some furniture might contain toxic chemicals which emit harmful gases, posing a
challenge to people (Yan, Zhao & Zhao, 2011, p.363). Therefore, it can be a challenge to
retailers since they have to work with their manufacturers and look for alternatives which are
safe to consumers.
Recommendations
• The retailers should ensure that they have product certifications to avoid any interactions by
the law.
• They should adopt regulatory requirements to reduce the negative environmental impacts that
their products might have on the environment.
• They should minimize deforestation by facilitating tree plating
• They should establish a sustainable leadership model that can help then design programs
aimed at improving environmental performance.
• The retailers should adopt alternative methods of, which is cost-effective to maximize their
profits.
• They should adopt a waste management program that puts the waste to an alternative use.

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• They should also establish a sustainable environmental framework that improves
environmental performance.
• They should develop knowledge aimed at addressing the current environmental challenges.
• Suitable environmental planning should be adopted before creating any project or business, to
determine the problems and how to overcome them
• Environmental friendly facilities and furniture should be made cheaper, to facilitate price-
sensitive customers.
• Establishment of an international approach is crucial to address the ecological challenges
facing logistic services and come up with a better solution to cope up with those challenges.

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Norgate, T. and Haque, N., 2010. Energy and greenhouse gas impacts of mining and mineral
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