What You Need to Know About Third Party Logistics

If you happen to have a business in Los Angeles for which you would need a warehouse or warehouse related services, you must have come across a Los Angeles contract warehouse which also claim to provide Los Angeles 3PL. 3PL or third party logistic providers offer warehousing, cross docking, freight forwarding, inventory management and transportation services, or other service involved in the supply chain management functions.

The services they provide can be customized or scaled according to the market conditions or customers demand. The third party logistics allows the company to remain competitive without owning much assets and resources. This reduces a lot of operational cost for the client company.

As IT brought on a huge boom in globalization, the concept of third party logistics evolved in the 1980's. You must have seen a lot of third party logistic companies such freight forwarders and courier companies, and there are others which incorporate subcontracted logistics and transportation services. Most of these companies such as DHL, UPL and TNT logistics emerged during this period.

Types

Third Party Logistics can be classified into four categories:

• The first is the standard third party logistics provider. These are the logistic providers with the most basic activities like warehousing, pick and pack and also distribution.

• Service developers are based on a strong IT infrastructure. They also provide the clients with many value added services such as tracking, cross docking, specific packing or unique security system.

• Customer adapters are the logistic providers. They take care of all the company's logistic activities on the request of their client. They do not develop or change any activity or process.

• Customer developers take complete control of the company's logistic functions. They integrate themselves into the company and might also change the process if needed.

Usage

Third party logistic services or application are mainly needed for firms which may be too big or have a wide complex network. Therefore, logistics does not need to be the main focus or competency of many firms. In addition, these services are not needed at the time of acquisition of another firm or at the launch of a new product.

Advantages

Third party Logistics offer several advantages to a firm in different ways. A firm can focus more on its other main objectives rather than the logistics, hence strengthening its core competencies. In addition, the logistics provided by a third party may cost lesser as the resources are not needed to be bought or rent. Plus, a logistic provider may offer more expert and specialized logistic services to improve the company's competitiveness.

Disadvantages

Despite their many advantages, third person logistics may not be able to do all the things a client might expect from it. There are some limitations and some risks as well. One of them is that the firm itself loses all or most of the control of its logistics functions. Another is that a difference of opinion between the firm and the third party logistics provider may occur, thus hindering the overall logistic process and function.

Connor Sullivan recently stored the overstock from his store in a Los Angeles contract warehouse. He uses a Los Angeles 3pl to transport his products to the vendors.