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The growth of internet commerce has had a profound effect on a number of industries. Even small online retailers are shipping hundreds of items each day. And when companies have to ship hundreds or thousands items at a time, they can’t simply take them to the local post office. For one thing, it would be too time-consuming.Also,the high shipping costs would likely bankrupt them within a month or cause them to lose customers that did not want to pay high shipping charges.
The solution to this problem is a system known as logistics management. Dating back to the battlefields of ancient Greece, logistics is way of ensuring the quick and efficient delivery of goods and services. Of course, the system is not nearly as simple as its stated goal. That is why many companies choose to hire a third party logistics provider.
Why should a company consider an outside transport company? For starters, most businesses do not have the budget to employ a full-time logistics team. This often means that they have people with no education or experience in logistics managing their supply chains. As you might expect, this often results in higher costs due to storage and shipping inefficiencies. In the end, the average mid-size company should focus on what it does best, which is running the business, and outsource the logistics of order fulfillment to a specialty third party provider. For many mid-size companies outsourcing logistics to a transport company is less expensive than building a logistics team from scratch.
Third party logistics providers offer three essential services to businesses:storage, transportation and supply chain management. The first and most important service to consider is warehouse storage. After all, the warehouse must be able to store the product that you are selling. For example, a company that sells ground beef and other meat products must find a provider that has access to a refrigerated warehouse. Location is also factor, but not nearly as important as finding a provider that can safely store your products. Using the same example, the company must also locate a transport company that has a fleet of refrigerated trucks. Cost and speed of delivery are also critical. And since the transport company will pick the goods up, it is important that their warehouse is nearby.
When it comes to supply chain management, third party providers should have a history of reducing costs at every leg of the supply chain. Regardless of their reputation, it is always best to ask for references. Select a company or two from the reference list, preferably one that is in your industry, and phone them up. Most owners will be happy to speak with you and to give you their honest, unvarnished opinion of the third party logistics provider.
