Third party logistics is also referred to as 3PL. If you have a business of your own for instance in Calgary where you will need a warehouse or services related to warehouse, there is every tendency to come across a contract warehouse in Calgary where you can secure the services of a third party logistics provider. Third party logistic providers provide warehousing, freight forwarding, transportation, inventory management, cross docking services and other services that involve in the supply chain management functions.
All their services can be personalized or scaled based on the market conditions or the demand of the customers. The third party logistics permits the company to remain competitive without having much assets and resources. Aside, it reduces many operational cost of the company of the client.
As information technology brought great exposure to globalization, the third party logistics pattern emerged in the 1980s. I am very sure you might have come across series of third party logistics companies such as freight forwarders and courier companies and lots more which incorporate subcontracted logistics and transportation services. Majority of the companies such as UPS, DHL and TNT logistics came to existence during this particular period.
Types of Third Party Logistics
There are four categories of Thirds Party logistics and they include:
Standard third party Logistics Provider: These are the logistic providers with the most fundamental activities such as warehousing, pick and pack as well as distribution.
Service Developers which are based on a strong Information Technology Infrastructure: These offer the clients with so many value added services such as cross docking, tracking, unique security system and specific packing.
Customer Adapters: These are logistic providers that take care of all the company’s logistics activities base of the client’s demand. They do not develop or change any event or process.
Customer developers: This take total control of the logistics functions of the company. They integrate themselves into the company and could change the process if need be.
Third party logistics provide some advantages to a company in different manners. A company can concentrate more on their core business instead of the logistics therefore strengthening their core competencies. Additionally, the logistics offered by the third party logistics could cost lesser since the resources are not required to be bought or rent. Also, logistic provider provides more professional and specialized logistic services in order to improve the competitiveness of the company.
Third party logistics might not be able to do all things your customers are expected of you despite the various advantages. There are some limitations and risks and one of them is the company loses and most of the control of the functions of logistics. Also the difference of the opinion between the company and the third party logistics provider is another disadvantage that may occur. This could hinder the aggregate logistic process and the function.
If your business has expanded to the extent of needing third party logistics service, then consider that it is a positive achievement. Without any doubt, the services of third party logistics can simplify shipping processes, assist in managing the inventory and as well increase the bottom line of your venture.