Reason To Hire A Third Party Logistics Company

Third party companies that specialize in logistics are responsible for the planning and performing shipping duties. They are often referred to as freight forwarders. This can be beneficial as small companies do not sufficient trucking operations or trained logistics personnel. As a company grows the owner may assigns an individual extra duty to handle shipping needs, when and if the need for logistics attention arises. Once a certain growth point is reached the business owner will need to make a decision. Should the company hire a dedicated logistics person or turn these duties over to a third party logistics company? To help a business owner make this decision, here are some information on the pros and cons, the benefits and disadvantages of using a third party logistics company.

Advantages

– The qualified third party logistics company will have access, and experience using, the latest logistics technology. This should allow logistics functions to be carried out easily and with professionalism.

– The third party logistics company will utilize the best technology possible, even if the most efficient manner does not use the latest technology.

– The third party logistics company has their in-house administrative and warehouse space. They are able to handle all commitments they undertake, regardless of the number of other clients they have.

– The third part logistics company has their own heavy equipment capability for transport, lifting and moving of items being shipped.

– Using a third party logistics company will allow their client to move inventory and service the orders of their customers in a much improved manner.

Disadvantages

– If communication between the third party logistics company and the customer are not excellent, there can be new challenges to overcome.

– Failure of a third party logistics company to deliver on the advantages listed above can return the customer to the same, unacceptable situation they had previously.

– Care must be taken to keep third part logistics suppliers out of the line of communication between the company and its suppliers. The logistics operation must focus only on the duties for logistics as contracted by the customer.

– If duties, roles and responsibilities are not clearly defined, and maintained, the company that outsourced their logistics needs may think they have lost some control of the movement of both their incoming supplies and outgoing products.

For an outsourced logistics operation to be successful there needs to be experienced personnel on each side of the agreement to keep things moving properly. Ideally, the experience of both individuals’ includes positions in the other type of company. This enables easier understanding of the problems that both the outsourcing company and the logistics company will face. All freight forwarder organizations have their own intra-company situations to deal with. If the person in the outsourcing company has spent a reasonable amount of time working in a freight forwarder company, communication between the two entities should be smoother. There is also an improved chance for excellent cooperation if the contact person in the freight forwarding company has worked for a company that utilized freight forwarding services.