Cases of Damage in Third-Party Logistics Businesses

Abstract

Although the goal of Third-Party Logistics (3PL) providers is to transport goods without incidents, cases of damage do occur making the control and prevention of damage one of the significant quality concerns of Closed-Loop Supply Chain s (CLSC) and Reverse Logistics (RL) systems. The costs incurred through damage are often viewed as a necessary type of operating cost but there is no standard procedure for documenting and evaluating cases of damage. This chapter describes common types of damage sustained during the 3PL process and proposes a damage classification system which will improve the quality of 3PL services through an efficient tracking and evaluating system. This system will enable 3PL providers to identify and correct the systemic sources of incidents of damage. It also suggests that damages can be classified according to the location of the occurrence of damage, the type of damaged product, and the means by which damage is defined. Using a case study approach, this research analyzes incidents of damage that occurred at Borusan Logistics in Turkey, between 2005 and 2007. Based on this analysis, this study suggests that by designating its own risk expert to evaluate and manage cases of damage, a 3PL provider will benefit in several ways, as will the manufacturer of transported goods and the insurance company. These benefits include a more accurate and efficient damage evaluation process, expedited processing of insurance claims, and refinements to the stipulations of liability contracts. The proposed model may reduce cases of damage both by making patterns of damage visible and by clarifying appropriate corrective actions.