Meeting customer delivery demand should be the priority of any service or product company. Its shipping and fulfilment operations has to be tailored to convenience to suit the customer time and preferences. And this is why third party logistics comes in, to aid businesses in achieving customers’ delivery demands.
What is third party logistics?
Third party logistics (3pl) is a type of an outsourcing business which logistics services and support to some or all aspects of a business’ shipping operations, the management and movement of their goods from manufacturers and distributors to end consumers. When a company outsources its shipping and fulfilment services, the services expected include:
- Inventory management
- Customs brokerage
- Freight audit
- Shipping tracking
In short, third party logistics is an outsourcing service where your operational logistics from warehousing to delivery is being managed to save you time and fulfil customer delivery demands daily.
Functions of 3PL:
Warehousing: is a type of third party logistics service provider integrated into a business’s warehouse and transportation procedures. Which involves specialized storing and distributing of the goods. Usually customised ways to handle storage, distribution, and product transportation.
Distribution: Distribution of large quantities of product can be a bit overwhelming, especially for small businesses. So, by outsourcing your distribution service to a third party logistics, minimizes your task and draws focus on other business core competencies. The services would include outbound order fulfilment, picking and packing, custom labelling, and manufacturing.
Shipping: With a third party logistics, your shipping processes would be managed from start to finish, which includes management of carrier relations, and freight data and matrix reports for real-time visibility and increased transparency throughout the shipping process.
Transportation: When a company leverages on a third party logistics, what they expect is from the 3pl service provider is to manage the inventory shipment between the company and its buyers.
Third party logistics has been designed to help businesses optimize their logistics operations. Whether a business owner or as an individual, here is how you can benefit from the services of a third party logistics.
It saves you cost: Utilizing the warehouse services of a third party logistics saves you the cost of having to maintain your own warehouse and staff. You can now save money instead of spending it on stock levels and inventory storage fees.
Unlimited Access to Experts: A third party logistics company has a core specialisation in certain areas of logistics, that’s to say expertise knowledge in those areas you might have no idea about. These areas often come with its own challenges, so by having an expert handle your logistics functions, you can have time to increase your business value.
Simplified International Logistics: Third party logistics works for you when sell products across countries whether between two or three countries. Or maybe if you are in the category of wanting to expand your business Internationally. Third party logistics companies handles the custom, documentation, and other international duties which may delay shipment.
Everything has a disadvantage, just the way, there are benefits too. So here are some disadvantages of third party logistics:
No control of over delivery process:
Delivery is the most sensitive part of business, and issues arise during shipment, and are however impossible to get by, if you used a third party logistics company. And this will probably lead to series of back and forth, which would waste your company’s resources.
The initial cost of hiring a third party logistics company is high: At first, the cost of using a third party logistics company is expensive, and may have an effect on turnover. If your business doesn’t require substantial storage area, or have many orders, using a 3pl can weigh down on your business.
You can no longer monitor the quality of your products: This can be inconvenient if you have any quality control issues, or feel like you need to physically inspect your inventory for some reason. Always having a small supply of stock on-hand so that you know exactly what your products are like is one way to combat this, if it’s feasible for you to do so.
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