New models in logistics network design and implications for 3PL companies

Abstract

Logistics network design is an important strategic decision that companies must make to ensure that required raw materials and components can be distributed efficiently from their suppliers to their manufacturing plants and warehouses, and the final products to their customers. It is concerned with the determination of the number and location of warehouses and production plants, allocation of customer demand points to warehouses, and allocation of warehouses to production plants. As companies have become more global, there has been a trend towards outsourcing the logistics function to third-party logistics (3PL) firms, so that manufacturing companies can focus their efforts on their core competencies. Thus, 3PL companies must have the capability to design efficient and effective logistics network so as to add value to their clients’ business.