Overseeing logistics operations and supply chain management can be a serious time consumer and a demanding task. As a result, many companies decide to outsource their logistics operations and leave the job to a third party organization. As a business owner, one may not be aware of the economic value of outsourcing a third-party logistics provider. Value-added third-party logistics provider offer an array of benefits which many organizations are becoming privy to leading to a growth in the sector of third-party logistics. While outsourcing may not be suitable for all businesses, it can be ideal for many organizations. This paper aims at pointing out some of the benefits of outsourcing logistics operations.
Expertise
Third-party logistics providers are experts who have significant experience in handling logistics. An excellent third-party logistics provider always knows the latest logistics software and development, technology and other techniques. They are also innovative in many ways and may bring many helpful skills in the organization. For example, in IT-related activities, data processing, database management or warehousing play a significant role in the provision of logistics services (Lahiri, 2016). These activities require highly specialized skills as they cannot be handled by anyone. In this case, outsourcing a third-party logistics provider may be beneficial to a company. Another example where third party logistics provider is essential is when an organization or company is entering a new foreign market. Many Japanese firms, for instance, use experienced third-party logistics providers to enter new markets since they lack the know-how. The experienced logistics providers provide more effective logistics activity which improves supply chain performance. Logistics performance affects the general supply chain performance. For that reason, shippers may decide to outsource logistics operations to the third party providers when getting into a foreign market.
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Flexibility and Scalability
Using a third-party logistics provider allows an organization to quickly scale the logistics needs depending on the requirements of the organization. If for example, business is expanding into new areas or during busy periods like holidays the ability to scale up and be flexible is useful for an organization (Lahiri, 2016). It is much easier to use a third-party logistics provider in such instances as compared to reorganizing logistics department of the company. Outsourcing logistics operations enable one to concentrate on building business during different seasons. One does not need to relocate products or even to lay off staffs.
Cost-effective
Outsourcing logistics save a company a lot of time and money. Using a third-party logistics provider does away with the need to invest in technology, warehouse space, transportation or even staff that can implement the logistics operations. Third-party logistics provider helps in saving a company from many expenses and allows the company to build a secure network with higher return and lower risk. Also, the third party logistics provider helps in saving time which could otherwise be used to do supply chain. One, therefore, does not need to worry about audits, training, billing, paperwork, optimization or even staffing which would be involved to grow the business or get it running (Lahiri, 2016). The third party logistics companies bring operational best practices, and they can combine the volume of work and negotiate competitive rates for businesses so that the expenses would be cost-effective compared to when the organization is doing it. For example, for companies who are looking for ways to reduce transportation expenses, third-party logistics companies offer optimization tactics which can enable the companies to achieve a sustainable means of saving. Technology-based third-party logistics providers like GlobalTranz offer shippers with logistics operation platforms which can provide them with end-to-end automation.
Customer Satisfaction
The expectations of consumers and business buyers are increasing rapidly. To handle these demands, third-party logistics providers such as GlobalTranz are tapping resources and networks to provide timely logistics solutions which can meet the needs of businesses. Automated warehouse, multimodal, final-mile, and multi-vendor are some of the services that a third-party logistics provider can offer to meet the delivery requirements of the customers. If one has a business which is not growing because of lack of resources, one may only be able to supply the customer with few products. In this case, it can be challenging to develop and build the brand of the company. Outsourcing can be helpful as it enables the organization to take steps to get the number of products that a customer may want. This can help in boosting growth and propelling the business to the future.
Continuous Optimization
Third-party logistics providers have ready resources, and they can, therefore, make improvements and adjustments to the supply chain links. The experts ensure that the needs are met by using efficient, fastest and cost-effective methods. A third party logistics provider has got the apparatus which can restructure the supply chain and ensure that exact amount of goods are delivered to customers when they are needed. Complicated management software can be used to monitor and analyze practices to prevent inefficiencies and direct the supply chain (König & Spinler, 2016). Outsourcing third-party logistics providers ensure that there is continuous improvement in the company regarding logistics operations. They also help in maximizing profits, improving customer service and reducing the time that customers wait. Moreover, when one outsources logistics providers, one puts a day to day execution as well as strategic recommendations. In the process, one gets enough time to focus on customers, employees, and ways of expanding a business.
References
Lahiri, S. (2016). Does outsourcing really improve firm performance? Empirical evidence and research agenda. International Journal of Management Reviews , 18 (4), 464-497.
König, A., & Spinler, S. (2016). The effect of logistics outsourcing on the supply chain vulnerability of shippers: Development of a conceptual risk management framework. The International Journal of Logistics Management , 27 (1), 122-141.
