Third party logistics, as its name indicates, deals with logistics and supply chains that involve transportation of goods and storing them in warehouses, for instance. Third Party Logistics Providers are those who provide professional services and additional services that will enable customers or businesses to consult about logistics and business management to develop and upgrade their products or services. Internationally, businesses hire third party logistics providers to deal with transportation systems, distributions of goods, storage, and supply chain management. In order to develop a strong and a structured system of production and high technological improvements, businesses have to make good decisions in choosing 3PLs that provide services and meet standard requirements of a specific business or company. 3PLs often ask for high salaries and additional fees due to their ability to manage and cope with difficult tasks other individuals can’t do. Third party logistics providers often work in warehouses, monitor truck drivers, check products lists, and make sure things are done to meet customer needs and wants.
Benefits of Having Third Party Logistics Providers
The main benefits of having third party logistics providers as your helping hands will benefit decision making processes and will ensure quality of products and operation processes as well. Additionally, these providers provide and ensure that all processes will be made safely. The following are the major benefits of having 3PLs:
1. Third party logistics providers can access to shippers and individuals that deal with transportation. 3PLs can also deal with organizations easily and they give access to hundreds of carriers all at the same time. With their help, shippers save time and money to search for carriers individually.
2. 3PLs have the ability to negotiate and bargain. These providers are trained mentally and physically to act persuasively and be able to persuade others. These people are more experienced and well trained than individual shippers. When looking for carriers, providers are often well-trained enough to let them settle for reduced prices. With their ability to persuade, shippers can save money and effort.
3. With 3PLs, administration and management will be effortless and safe. Administrative aspects include transportation of goods, when goods will be shipped, and how goods move from place to place. Without these services shippers would have to monitor everything. Furthermore, these firms often offer services in a lower price compared to other firms that provide consultations and services.
4. A shipper can safely hand some responsibility to third party logistics providers. Also, with a believe that 3PLs will take responsibility and will monitor the supply chain; shippers can take lesser responsibility and focus on other aspects.
5. Third party logistics providers can enhance productivity and improve organizational performance. By assigning these providers to work on supply chains and its functions, businesses can focus and devote more time to work on other important aspects and essential issues such as financial planning, transportation of goods, and others.
Disadvantages of contracting Third Party Logistics Providers
Hiring third party logistics providers and assigning them logistics related work or topics may result in numbers of conflicts and problems. Since logistics is a key of doing a business, leaving it behind for unknown professionals can mean that a business might lose control of all logistical functions and lose track of the movement of supplies. The following are the main disadvantages of having 3PLs:
1. When a business hires a third party logistics provider, almost all functions related to logistics will be entirely in their responsibility.
2. Third party logistics providers, knowing that they are essential for a business’s life span, may ask for raises which can contribute to expenses that are unnecessary.
3. Different ideas and logic can contribute to problems, misunderstandings, and a lack of cooperation between clients and these providers. When problems occur, it will most likely affect a business’s functions and logistical issues. Systems might work ineffectively, workers might not cooperate and work as a team, and lastly, the third party logistics themselves will not work efficiently. These providers know that they are important and needed in order for a business to be able to maintain their customers and ensure that logistical issues will be kept on track. When other employees or workers have ideas that are not matching with those of the providers, it is most likely that problems and conflicts may occur easily, affecting other areas of a business unreasonably.
Businesses need good management in order to develop and upgrade themselves to the top of the others. To compete amongst the wise and to keep their heads up high, it is essential to keep financial issues a secret and develop fine plans for future emergencies. To decide on something, ensuring to make sure that everything is safe will be one of the best actions needed to be taken. Choosing third party logistics providers will affect a business’s plans, methods, and processes. However, if the providers are well-trained and are named as efficient planners, a business can earn surpluses and obtain profits professionally.