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One of the most important decisions every business that ships goods must make is their choice of a logistics service provider. What is logistics? In short, it is a system that ensures the prompt and efficient delivery of goods or services. Whether a company is shipping playing cards or pharmaceuticals, the right logistical system can help reduce costs and improve performance.
As you might expect, the bigger a company is, the more options it has open to it. For instance, most corporations choose to establish their own logistics networks. This means that they hire professional logisticians, purchase a warehouse for storage and buy or rent a fleet of trucks for transportation. This puts them in complete control of logistics.
Of course, most companies simply cannot afford to spend millions of dollars on logistics. Furthermore, it is always a good idea for a business to stick to the things that they do best. This is especially true for small businesses. Think about it. For a large multi-national corporation, a few logistical errors may not be such a big deal. But for a small regional business, one or two relatively minor logistical errors may result in bankruptcy. That is why most small and even mid-size companies hire a third party logistics provider.
What are they? Third party providers are experts in logistics. They will see to it that your products are properly stored, packaged and shipped. Because they employ professional logisticians just like the corporations, the service can result in huge cost savings.
What should you look for? As we mentioned, there are three basic services a third party logistics company provides–storage, transportation and supply chain management. Let us take a moment to discuss each one individually.
Storage is the first and arguably the most important service these companies provide. After all, if your product cannot be safely and affordably stored, it cannot be sold to the consumer. The choice of a provider often depends on the product and the type of warehouse the company has access to. This is especially true when a company sells a perishable product like meat or produce, which must be refrigerated. In this instance, the third party provider must have access to a refrigerated warehouse.
When it comes to transportation, most of the large service providers own their own transport company. They may have a large fleet of trucks or vans. Other companies rely on an outside transport company like a courier service. In the end, the only thing that matter is that the products are shipped out quickly and affordably…and that they reach their destination.
Lastly, a third party logistics provider must have an experienced management team. It is the job of this team to consider all aspects of the logical system from the storage to the transport company to the delivery. No matter how highly recommended they come, it is always best to ask for and to check references.