Why Should A Company Outsource Freight Logistics?
It is a well-known fact that logistics is the most complex and difficult discipline for a company
. Similarly, there is a similar importance and complexity attached to Freight logistics as well. Thus, it should have perfect synchronization with the business to keep the supply chain functional. However, if it is not perfectly functional, a company may face a sudden increase in the overall cost, uneven supply and a bad experience for customers.
Since the competition among the companies has risen dramatically across the globe, most companies are looking forward to outsource their logistics. However, some companies show concerns for outsourcing their logistics. They believe that outsourcing logistics to an external source may increase the risk and may increase external expenses.
Nevertheless, it has become obvious that outsourcing the logistics of a company helps in reducing the overall cost of production and supply and makes the order fulfillment quicker than before. Thus, once a company outsources their logistics, they can concentrate on the core departments and help in planning future development of the company to make it move in the positive direction.
Similarly, outsourcing logistics helps the company cut costs by decreasing the total number of warehouses, labor, vehicles and excessive machinery. Thus, it helps the company to cut their overall cost to a great extent and hence increases the profit. So, if a company keeps a healthy relation with the customers and logistics suppliers, it tends to help in the long run.
So, the question remains the same, why should a company outsource their
freight logistics to a third-party logistics firm?
A third-party logistics firm is an external source of service provider that takes care of almost all the logistics functions of a company including freight and transportation. So, it may offer storing the supplies in a warehouse or transportation of the supplies altogether. However, the percentage of third party logistics has increased dramatically over the last couple of decades. So, a third-party logistics firm plays a vital role in offering several benefits to a company. A few of the most prominent benefits are:
1 Outsourcing the logistics not only saves money, but also save time. Thus, it helps the manufacturer and the retailers to have a trouble-free inventory on time.
2 Since the third-party logistics firms provide warehousing and inventory holding services, a company can save big amount of money by reducing the infrastructure expenses.
3 Third-party logistics firms have the core skills and experience in offering logistics services. Thus, they offer their services with the state of the art technology and highly skillful professionals.
4 According to a recent research, around 80% of the fortune five hundred companies are now outsourcing at least one of their logistics function to a third-party. Thus, it is another practical example of the benefit of outsourcing a logistics function.
5 Last, but not the least, third-party logistics firms offer an advanced management services for the inventory. Thus, it makes it easier to manage the inventory and hence improve the customer service satisfaction.
Therefore, if a company is looking forward to outsource its freight logistics function to a third-party; it will grab great benefits for the company.
by: Elissa Joyce
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