The Benefits Of Using Third-Party Logistics Partners For Your BusinessPosted by Holst Dougherty on July 17th, 2021 Third party logistics refers to a company's use of third party companies to outsource components of its logistics, warehousing and fulfillment services. This outsourcing reduces the logistical costs of a company because a third party logistics manager ensures that delivery times are kept at their optimum levels, inventory levels are maintained, and that goods are delivered in good condition to customers. Sometimes, the services of a third party logistics manager are hired directly by a company or are contracted through an agent. When these services are hired directly, the company does not have to compensate the third party logistics manager. However, if logistics outsourcing is contracted through an agent, the company will need to compensate the third party logistics manager for his services. The supply chain management processes that third party logistics manage include warehousing and shipping as well as fulfillment. Warehousing occurs when products are stored in a warehouse or another arrangement for storing and transporting them until they are ready to be sold. Shipping includes transporting the goods from the warehouse to the buyer and then on to their door step. Once shipped, the goods are packed and labeled according to the specifications of the company using third party logistics. A third party logistics company is an independent third party logistics manager. Many companies often outsource the fulfillment and shipping aspects of their supply chain only to find that the additional workload causes additional expenses and delays. To improve control of the whole supply chain, management must hire and retain a third party logistics manager. This additional cost and workload may increase the profitability of a company temporarily, but it usually has a long term impact on profits and cause a company to lose money permanently if the business gets a poor reputation on the market. Businesses should always try to choose a highly reputable and experienced logistics company that can guarantee consistent profits and long term dependability for their logistics company. Many companies have warehouses and distribution centers located apart from one another. If the logistics are not properly controlled and monitored the chain of command between the warehouse and distributor will be interrupted and the entire supply chain will be affected. When a company needs to purchase additional inventory or make changes in the order of items in their warehouse, they will contact a third party provider to provide them with the necessary services such as warehousing. The companies that do not have the time or knowledge to track their own shipments will turn to freight forwarders or third-party logistics providers to ensure that their products are received by their customers. Good freight forwarders and middlemen will work with carriers to determine the best routes for delivery, the type of vehicle to use and frequency of shipment. They will also determine the price for transportation. This service will increase a company's chances of increasing their profits since good freight forwarders and middlemen will be able to negotiate with carriers on the company's behalf to obtain the best rates. Another service that third-party logistics providers can provide to a business is warehousing management. If a company is unable to keep an inventory of their goods, then warehousing management will be required. Good warehousing services will provide pallet racks, rack storage and forklifts for the storage of finished goods. Warehouses will also be required to be regularly cleaned and sanitized to prevent the spread of germs and infection-causing bacteria. By providing this service a company will be able to reduce the amount of time that their employees spend cleaning their warehouse and will be able to free up their valuable staff to attend to other customers. Many logistics service providers offer customer orientation programs for their clients. These customer orientation programs are designed to ensure that the organization's customers are given the correct shipping information and that they receive the products that they have ordered properly. When a company does not provide the correct shipping information for their customers the customers may encounter difficulty finding the product that they want. Good third-party logistics providers will work with their clients to provide detailed shipping maps that include all of the areas of the world that a customer's shipment will pass through. By offering this customer oriented program a logistics provider is demonstrating their commitment to ensuring that the customers' needs are met. The third-party logistics providers that businesses choose to contract with will determine the extent to which they can fulfill their customers' needs. Therefore, it is important that the provider that a company chooses has experience in all aspects of warehousing. When choosing a provider it is best to seek a company that is experienced in providing transport, transportation and warehousing services for both small and medium-sized businesses. The transportation services that third-party logistics providers provide are crucial for companies that have expanded into a larger area or have moved their manufacturing capacity to this new location. Warehouses and delivery vehicles are also very useful when a company has made the decision to expand their business and add a sales force. By using third-party transportation services a company's ability to expand is increased and their customer base is also able to grow accordingly.Like it? Share it! More by this author |