Logistics services are critical for all businesses involved in raw material or product distribution. To put that into perspective, about 12 million trucks, rail cars, locomotives, and vessels move goods over the transportation network.
However, managing entire business operations, including internal logistics, can be quite involving, often requiring extra help to move the bottom line forward. Additionally, the current volatility in transportation rates and changing government regulations have also made it necessary to outsource your third party logistics requirements to a reputable company. The logistics companies have become more complex and technology-driven and are therefore more efficient.
Below is an overview of the potential gains of outsourcing your business operations to third party logistics service providers.
1. Technology
Outsourcing logistics to a third party logistics provider gives you access to the latest technology. Shippers rely on the information technology services that third party logistics offer. The services are integrated into the client’s system, creating a powerful custom technology stack. Technology can be used to create real-time inventory updates. For instance, clients can access inventory through a mobile device. Logistics services have significant investment in superior technology in comparison with a small business.
2. Operating Costs
Investing in assets such as vehicles, technology, warehouses, and personnel can result in expensive overheads. Outsourcing logistics can integrate reverse logistics, reduce transport operations costs, and maintain recommended staff levels. You can also request the third party logistics provider to ramp up or down services for your business. This allows you to always operate at optimum levels. Additionally, third party logistics have greater insight into the supply chain, which can help move inventory and increase cash flow through faster delivery.
3. Expertise
Third party logistics providers incorporate skilled staff, processes, and technology beyond what a single business can develop independently. Logistics services have the experience to manage supply chain using client information and analytics to help you figure out the most efficient route for product distribution. Their use of sophisticated tools and technologies requires that in-house managers have higher-level skill sets, which has allowed them to be more efficient.
4. Reduced Liability
Outsourcing your business’s logistical needs reduces labor risks and the financial risks associated with an investment in warehouses, staff, inventory systems, and shipping processes. The third party logistics providers help to manage all carrier contracts, safety standards, and insurance certificates. Therefore, you may face fewer liabilities in areas of freight claims or in the event your business downsizes.
5. Optimization
Outsourcing logistic services help you access the necessary freight resources that your business does not own. Consequently, this helps you ensure that your logistical requirements are met adequately. Third party logistics provide in-depth expertise to carry out operations with ease helping you focus on other critical operations of your business.
6. Customer Satisfaction
Third party logistics service providers specialize in warehousing and fulfillment services. They have a better understanding of the product distribution services domain and can come up with innovative strategies to further reduce the cost for clients and as well deliver excellent customer experience. They also have a vast network of resources that can offer long term strategic alliance with the client.
In Conclusion
Outsourcing logistical services will benefit your business in the short term and help you realize significant savings over time. Remember, with the challenges being experienced in the logistics environment, partnering with a third party logistics service provider can help turn an inefficient supply chain business into a competitive one.
