Logistics management is an important aspect of supply chain management. It plays an important role in determining the profitability of a company. Small and medium sized company which cannot have a specialized logistics department due to budget constraints can outsource the logistics to third party companies providing logistics support.
The third party logistics companies provide many specialist logistics solutions like transportation of goods from one point to another using different means of transport, looking after the warehousing requirements, delivery of the goods to the customers and other value added services like project management, high tech installation and reverse logistics. These companies provide customized solutions to suit the logistical requirements of their clients.
Apart from saving costs involved in maintaining an in house logistics departments, outsourcing the job has many advantages.
- Outsourcing logistics to third party companies providing specialist logistics solutions will help businesses to focus on other critical operations of the business. The logistics companies have the required skill and personnel to take care of the logistics operations.
- Outsourcing logistics reduces the back office work of the businesses. As these specialist logistics companies have all the systems in place, the staff of the business need not waste their time in preparing bills and getting them audited. They can focus their time on other important tasks like marketing and sales.
- The experienced logistics companies can come up with unique solutions to meet the business demands. These solutions will help businesses to reduce the transportation and warehousing costs and deliver products to the customer at lower prices.
- All the work relating to insurance, safety ratings, service contracts, invoicing etc. are taken care by the logistics company. This will reduced the liabilities of the business.
- All the expenses related to warehousing, transportation, docking, shipping and insurance are taken care of by the logistics company. The business needs to make a single payment to the logistics company. This will free the time of the accounts department, which can concentrate on more important work of the business.
- Outsourcing logistics helps businesses to enjoy economies of scale. Since the third party logistics companies are experienced in the department, they can provide the necessary information about the existing stock and the future requirement using latest technologies. This will help businesses to plan their production according to the peak demand and dull seasons.
- The use of latest technology allows specialist logistics companies to provide real time tracking of the loads. This ensures peace of mind to business managers as they can know the exact location of the products and expected time of delivery.