What is third party logistics, and what do these providers do?

The below article comes from Richmond Cold Storage.

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Third party logistics providers offer a plethora of services to a variety of companies and clients on behalf of themselves. They have the capabilities to execute functions ranging from management, physical labor and systems technology. More specifically 3PL providers can carry out transportation, warehousing, distribution, packaging, cross-docking and inventory management.

There are two types of 3PL providers: asset-based and non-asset based providers. The differences are that asset-based providers own some of the elements, or assets, used in supply chain management. They may own and operate a distribution center or warehouse. They may also manage the trucking and freight services their clients need. On the other hand, a non-asset based provider does not fully own or operate any service offered to clients. This is a double-edged sword, while it gives them the freedom to select individual service providers based on the needs of customers; the operations are not done from the non-asset provider’s office or warehouse so there aren’t as many people overseeing that operations are carried out correctly.

Supply chain management offers many benefits to people in the production and manufacturing industries. Having even one key element of your manufacturing and distribution process covered by a logistics company greatly speeds up the entire supply chain. Not only do 3PL providers quicken the time it takes for an item to be ready for purchase or consumption; they provide greater efficiency and customer service to the businesses. Third party logistics and outsourcing companies take over responsibility of a company’s supply chain, and in doing so they build valuable relationships with their customers. The result is better efficiency and customer service, the two key components in running a successful, profitable business. For example, outsourcing warehouse and transportation functions offers the confidence of knowing that your goods will be stored and transported in a proper manner on behalf of the logistics company.

The future of 3PL companies continues to look bright. Many businesses will tend to prefer outsourcing all or some functions because it gives them more time to focus attention on the key elements of their business. One may not think that relinquishing some power over a company to a logistics provider will produce even better control, but that’s exactly what people find true. If you’ve chosen the right 3PL company, their expertise of the industry will ensure your supply chain is followed through and completed properly.