YOUR CART
- No products in the cart.
Subtotal:
$0.00
BEST SELLING PRODUCTS
Magnusson Hviid posted an update 2 years ago
What is third party logistics? Let us define logistics: the art or science of movement and interaction of materials and products. In simple terms, logistics deals with the flow of resources from A to B. It is the scientific management of the movement of material and goods from A to B. In supply chain management, logistics has evolved as an important management tool for businesses that process raw materials into finished products. In logistics, there are three interacting parties: suppliers, customers, and the physical locations where production, processing, packaging, and shipping to take place.
Transportation logistics comprise the system of shipping a product from one point in a supply chain to another. In other words, it is a system of moving resources from A to B. Logistics services include air freight, sea freight, trucking and freight shipping, rail transport, and road transportation. There are four major categories in supply chain and they are:
The first category is realized through third party logistics providers who ship raw materials, finished goods, and inventory from A to B. When goods are delivered, the third party logistics provider takes care of the shipping costs. The supplies must be stored while in transit and the transportation logistics provider handles warehousing requirements. The warehouse management is handled by the fulfillment companies who provide space, equipment, and employee facilities to store finished goods.
The second category is realized through transportation logistics. The objective is to save time, reduce freight cost, increase profit margin, reduce customer inconvenience, and reduce waste. Transportation logistics include vehicle transportation, trucking and auto transport, rail transportation, and boat transportation. Freight shipping involves the movement of goods from A to B and involves both trucking and auto transportation. Rail transportation involves long distance freight transportation.
The third category is realized through information technology logistics. This includes electronic information systems for freight, transportation, and warehousing. These systems include freight scheduling, vehicle information systems, freight forwarding, information management, inventory control, and supply chain implementation. Information technology also includes computer software designed for logistics management. Computer software has the ability to gather, collate, analyze, and transmit information about the business. The software then creates reports that are often used by managers, executives, or other employees.
The last category is realized through warehouse services. Warehouse management includes functions such as collecting and distributing goods, securing and storing products, labeling and packing goods, and retrieving goods. These services vary according to the nature of the business and include material handling, stock and dockage, and cross docking. These services are generally outsourced to other countries. Outsourcing helps these logistics providers reduce operating expenses, which ultimately increases profits.
The use of third party logistics and warehousing providers can improve efficiency in the supply chain. In addition, these services help decrease the cost of doing business. By using this warehouse equipment and services, an ecommerce fulfillment company will be able to improve customer satisfaction and boost customer retention. In fact, most businesses experience a positive return on their investment by utilizing third party fulfillment companies.
When choosing a third-party logistics provider, make sure you check out the experience of the provider. Make sure they have experience in providing the type of services you need and are able to provide a cost-effective solution. Find out what the logistics provider’s hourly labor rates are. Furthermore, look at the types of available warehouse equipment and warehousing systems they offer.
Outsourcing your order fulfillment centers can be a great idea for many reasons. You would not only free up valuable office space, but also provide fulfillment warehouses and material handling equipment that your employees or yourself could not afford. Additionally, third-party logistics companies usually provide excellent customer service. So if you are considering expanding your business, then outsourcing is a logical decision.
One drawback of third party logistics services is the additional cost for their assistance. In most cases, these warehouses and material handling systems will require some sort of material transportation. This is especially true if your business is relatively new and does not yet have its own trucks, airplanes, or other forms of transportation. Even though the costs for transportation will eventually come down, it may take a few years before the price goes down enough to make the outlay worthwhile.
If you are interested in saving money on your order fulfillment efforts, then third party logistics providers are the best way to go. Not only do they save time for you, but they also allow you to expand and grow your business while making significant savings on the front end. With today’s economy, it is critical that you utilize every advantage you can get.