Third party logistics is an increasingly popular service with companies of all sizes. They provide storage, packaging and transport of all company products. Because they focus exclusively on logistics, they are able to create highly efficient logistical systems to suit the needs of any business. In this article we will discuss the many advantages of hiring a third party logistics provider.
What exactly is logistics? Believe it or not, the first logistical systems were used on the battlefields of ancient Greece. A rudimentary supply chain was created in order to deliver food, weapons and medical supplies to troops in the field as quickly and efficiently as possible. As you might expect, having healthy, well-armed soldiers gave the Greeks an enormous advantage over their enemies so supply chain management was critical to winning the war.
Modern logistic works much same, but instead of focusing on the prompt delivery of weapons to troops, it focuses on the prompt delivery of products to customers. Of course, contemporary logistical systems are far more sophisticated than they were two thousand plus years ago. They rely on computer software and highly experienced logistics managers who examine every leg of the supply chain for inefficiencies that cost the company time, money and customers.
Why use a third party logistics provider? For one thing, building a logistics network from the ground up is extremely expensive. You have to hire a logistics team, rent a warehouse, and buy a fleet of trucks. But even then the network will rarely function efficiently right from the start. It may take months, even years for a network to run like a well-oiled machine.
By comparison, a reputable third party logistics provider or fulfillment company will already has access to a warehouse and a transport company. And their teams of experienced logistics managers can design and maintain the perfect logistical system for your company.
When it comes to price, third party providers often have greater leverage with a transport company, courier or carrier service than the average business, which often translates into more competitive shipping rates. Companies can also expect significant administrative savings when they outsource this essential service.
But cost savings are not the only reason companies are turning to third party providers in greater numbers these days. One often overlooked explanation is that there has been a change in thinking with regard to outsourcing. Years ago, it was believed that everything should be handled in-house so that the company had complete control over its destiny. But nowadays, business leaders have come to the conclusion that it is far more effective to focus on core competencies, rather than diverting valuable resources to the things they do poorly.