How 3PLI Can Help You Reduce Costs And Improve EfficiencyPosted by North Espersen on July 5th, 2021 Third-Party Logistics in Supply Chain Management defines an enterprise's use of third party entities to outsource certain elements of its supply, warehousing, and handling. These third party entities are typically companies that specialize in one or more fields related to the product or service that has been outsourced. The use of third party logistics outsourcing has become a vital strategy for many companies that face increasing shortages in certain areas of their business. However, the use of these services can also create certain disadvantages for a company that is not careful with how they outsource. By exploring the potential disadvantages that outsourcing can create for a business, a company will be better able to determine whether it is making the right choices in outsourcing certain aspects of its business. One major disadvantage of using third party logistics outsourcing is that an enterprise is entrusting the management and oversight of one of its most important resources to a disinterested third party. When a company chooses to hire a third party to manage the warehousing and shipping of their products, they often entrust the responsibilities and oversight of these assets to an entity that is ill-equipped to fulfill these duties. Merely signing a contract with a logistics provider does not mean that the company is adequately managing the warehousing and shipping of their goods. The responsibility for warehousing and shipping must be delegated by the business owner to qualified professionals in the area who have been specifically trained in these areas. The cost of hiring third party logistics providers can increase the operational costs of a company. For this reason, many organizations choose to contract with third party services only to find that the additional expenses of maintaining their own warehouses, depots, and shipping locations require them to pay more than the profits that they initially believe they will gain from outsourcing their warehousing and shipping needs. A business that is experiencing the difficulty of finding cost effective alternatives may wish to investigate the possibility of having their warehouses and distribution centers reorganized by a professional logistics provider. fulfillment of the primary reasons that companies choose to retain their own warehouses and distribution facilities is because it saves time and money. The reduction of transportation time allows the company to expand their production capacity without having to add new employees or incur additional costs related to increased manpower. Investing in a third party logistics provider's help can allow the company to focus on its core businesses rather than being burdened by the complex tasks of warehousing and shipping. This can prove to be invaluable to a company that is already facing financial challenges due to rising overhead costs. By outsourcing the management of their distribution and warehouse space, a company's leaders can free their time to create more profitable ventures or focus on developing more unique products to increase their sales. Cost savings are also created when a third party logistics provider utilizes their combined experience and resources to provide a superior level of customer service to their clients. As warehouses and distribution centers are staffed by multiple different employees, it becomes necessary to assign each employee their own specific job and responsibilities within the organization. Not only does this create a potential for human error, it can also make it difficult to coordinate among multiple locations and departments. By using single service providers to manage all aspects of warehousing and transportation, the entire operation becomes streamlined and seamless. Warehouses and distribution hubs no longer require a staff of administrators to monitor and report on the day to day running of the facility. Single service providers eliminate the need to have an entire department dedicated to the oversight and management of the business. Another benefit of utilizing third party logistics services is the avoidance of costly mistakes and miscalculations in the transportation and warehousing of goods. The use of multiple warehouses and distribution hubs can lead to a breakdown in communication between various parties involved in the supply chain. When fulfillment and distribution centers are not situated close enough to one another, it can be difficult to reach all of the necessary party involved in the supply chain. Utilizing a single transportation and warehousing provider can greatly reduce the potential for errors in order to increase a company's efficiency in the overall supply chain. One of the primary goals of warehousing and transportation services is to improve productivity. When companies spend money on their facilities, they want to be sure that their workers are able to effectively function. When multiple people must work at the same time in order to successfully complete the daily tasks at their facilities, it can take an entire day or longer for the task to be completed. By allowing third-party logistics providers to oversee the entire supply chain, the speed of the task can be considerably increased. When transportation services and warehouses are properly located and linked, it can take much less time to transport goods from one location to the next. This leads to a significant increase in efficiency within the supply chain and helps to increase profitability as well. Along with efficient transportation services and warehousing providers, third-party logistics providers also help with the shipping of finished products. The transportation services can include a range of services including air freight forwarders, sea freight forwarders, truckload services, special purpose carriers, as well as the services of registered carriers, consolidators, and drop shippers. All of these services work together to provide a seamless distribution network for clients, as well as the ability to improve overall organizational efficiency. When logistics providers can offer streamlined services to their clients, they are helping them improve their bottom line, which can ultimately benefit their clients.Like it? Share it! More by this author |