What does logistics mean to a business?
It’s basically narrowed down to having what the customer wants, at a price they are happy to pay, providing the amount they want and delivering it when they want it.
That isn’t too much to ask for and it’s the basic meaning of logistics.
Companies that have a problem with this are always looking for freight management solutions and often turn to freight and transport brokers that specialise in finding the answer to their problem.
Solving the Problem
3rd Party Logistics – Logistics solutions can be solved in two ways – third party logistics or fourth party logistics.
When you use third party logistics then you are using an outside company to carry out all the normal warehousing, inventory management and transport operations that used to be done internally.
An example of this is when a company might have its own storage facility but uses an outside transport company to do the distribution. It turns out that the use of an outsourced carrier was more cost effective in that part of the supply chain.
4th Party Logistics – This is a newer concept but is gaining momentum in a fast-moving business world. This is when a company works out that they need their whole logistics process, or their whole freight management process outsourced.
The company they use is one whose sole purpose is to provide logistic solutions. They bring together all their resources and their technology to provide a complete supply chain system.
The main difference between the two logistics types is that 3rd party targets a specific function of the supply chain while 4th party manages the whole process from start to finish.
Now and the Future
Logistics companies that provide a 4th party solution is the present and the future of freight management solutions.
Freight and transport brokers go about offering significant cost savings and superior services to companies and they are hard to ignore.
When a business looks at their inwards and outwards freight movements, their inventory and a fulfilment delivery service, it’s easy to see why they turn to brokers to provide better solutions.
It is far more cost effective to outsource services rather than pay for your own logistics staff, your own warehouse and your own delivery vehicles and drivers.
Supply Chain – Inwards
This is a basic process in a business which includes –
- Purchasing
- Manufacturing support with inventory and materials
- Parts and finished goods
- Assembly plants
- Stores
Supply Chain – Outwards
- Storage
- Picking, packing
- Delivery
The logistics process is both complex and of paramount importance and integral to the successful operation of a business.
If you don’t have your logistics operating effectively, you could be losing a lot of money. Shipping costs and bad communication within the Supply Chain affects your bottom line.
A well-functioning freight management solution that provides timely delivery at a competitive price resulting in customer satisfaction will ensure a profitable business with optimised operating costs.