21. October 2013 10:44
Companies today cannot be stand-alone entities. Most companies focus expertise on producing the best product within their factory, but smart management realizes that a competitive advantage means reviewing all aspects of the supply chain -- from the actual development phase of a product to logistics, to sourcing, and information systems. Rather than devoting energy and capital in developing this extended capability, many companies often use an outside third party logistics (3PL) firm to handle warehousing and distribution activities.
Reasons to Use a 3PL Provider
Outsourcing supply chain management saves money and time for a company, and allows staff to devote their energies to creating the best product possible. By using a 3PL provider, individual companies do not need to invest in technology, extra staff, warehouse space, and transportation to complete the logistics process. A 3PL has the specialized expertise to expedite the supply chain, taking on the tasks involved in getting products to where they need to be delivered.
Here are a few typical reasons why a company chooses to use a third party logistics provider:
- To improve inventory efficiencies and on-time performance by using an outside firm that has expert and superior technology than is available in house.
- To provide a test support service in new markets so that a company does not immediately have to open its own distribution center.
- To provide additional support when workloads change with seasonal demand.
- To quickly develop a distribution network in a number of locations without major capital investment.
- To take advantage of lowered transportation rates available from the buying power of larger specialized firms.
- Take advantage of 3PL best practices programs to reduce labor, errors and cycle time, and at the same time increasing service and accuracy.
- Advance notification systems let receivers know when a specific purchase is being shipped, and when it can be expected to arrive.
- Ensure state of the art technology is being used to manage company goods and all client interactions.
Choosing the right 3PL company to manage the supply chain for a company will have a significant impact on a company's future activities and bottom line. Outsourcing warehousing and distribution activities provides reliable logistics advantage to a company. It is reasonable to expect that this combined expertise will result in maximized profitability.
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