Third party logistics risk management

In order for third-party logistics (3PL) relationships to continue to provide strategic and operational value and innovative ways to improve logistics effectiveness, there is a need for the proper planning and management of these relationships. Heightened service requirements, demand for higher expertise, globalization expansion pressures, and a need for shared risk-reward arrangements are some of the challenges. This brings risk management of 3PL arrangements to a sharp focus and creates the need for a clear methodology to address 3PL challenges. In this paper, we provide a comprehensive framework for 3PL risk management (3PL-RM) based on the ISO 31000 risk management standard. The elements of the 3PL-RM process are enhanced using an extensive literature review on different aspects that provide some initial information and best practices on various risks and mitigation measures that can serve as a starting point for the implementation of the proposed framework.