If you are a company involved in the physical
transportation of any type of goods from one place to another, then logistics
services play a vital role in day to day running of your business.
A quite remarkable statistic is that 90% of the Fortune 500 companies in the United States employ third-party logistics providers. (Armstrong and Associates)
These are referred to as 3PLs. A 3PL (third-party logistics) provider offers outsourced logistics services, which encompass anything that involves the management of one or more facets of procurement and fulfilment activities.
The fact is that most companies outsource Transport and Warehousing services. It is, perhaps, the only sensible solution for a problem that can only get worse as the company expands and increases goods traffic. The cost of providing an adequate truck fleet and warehousing facility can easily become prohibitive – BUT – as I have pointed out in previous articles – one should and must consider that this is not the most telling reason for employing an outsourced entity.
A company manufacturing and selling articles does not
want to be bogged down by the tedious and meticulous method of their
distribution. The main aim is to produce and get paid. How these things get to
their required destination is not of ‘core’ importance and will, in most cases,
provide headaches as the production of those goods increases.
There are other very compelling reasons to choose an
outsourcing route and these can be summarized as follows:
To find adequate facilities for global capability within the given marketplace. When you can adequately maintain an increased distribution network, it can be increased by not having the complication of delivery
To achieve and maintain customer service improvements. When customers are given the time and point of delivery and those parameters are scrupulously met, customer expectations are met
To increase flexibility and market penetration. When you don’t have to worry about things getting there, your time can be spent on realizing the full potential of the product
To benefit from cost advantages reaped when production becomes efficient. This economy of scale can be realized by efficient delivery mapping
To tap into advanced logistics technology which many 3PLs now offer to improve visibility, aid process-efficiency, and meet customer demands for real-time information.
To reduce Back-office Work: 3PL outsourcing service providers should have sufficient manpower and the proper systems already in place. They are specialized to process a multitude of receipts and audit them appropriately within a short time.
To reduce liabilities: The 3PL helps to take care of all inter-connected carrier contracts, safety ratings, and insurance certificates. This makes you not financially liable and the bulk of the hard work is taken care of by the service provider
These then, are the factors that should influence and drive company owners and Directors to investigate and evaluate a third-party outsource provider within the logistics field.
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