Contract Logistics – An Introduction

For several businesses, logistics operations is one of the most essential aspects. This function could span from sourcing raw materials from various vendors to distribution of finished goods to the end customer. While some businesses are comfortable handling the logistics process in-house, and some believe in outsourcing it to contract logistics companies.

What is Contract Logistics?

Contract Logistics - ProConnect Integrated Logistics

Contract Logistics is much more than just warehousing, fulfillment and distribution. It refers to outsourcing of logistics resource management to an external company, a third-party company. These third-party companies undertake the planning of end-to-end supply chain on your company’s behalf. This involves designing and appointing warehouse facilities, infrastructure, transportation and distribution of goods, inventory management, order processing and even payment collection.

A contract logistics company possess the expertise across several logistics operations like network analysis, route optimization, warehousing, adhering to required compliance and many other logistics requirements possibly across several industries as well.

Why Is Contract Logistics Beneficial?

Contract logistics can prove to be an essential part of supply chain management, therefore it is important to understand its concepts and how it can prove to be advantageous to your business. Here are some of the top benefits of appointing a contract logistics partner –

Cost Optimization – Hiring logistics experts to handle the operations you do not have expertise in can help you save great deal of time and costs. This can reduce the cost per order, as a third-party or contract logistics companies will already have the required manpower and other resources available, leading to better cost optimization.

Better Infrastructure & IT Capabilities – A contract logistics company will already have the required warehouse facility, IT systems and resources in place to aid your logistics operations – which you will require to setup if you decide to handle these operations in-house. Also, it should be noted, that these companies will probably upgrade their systems more often than you might.

Increased Efficiency – Since third-party companies specialize in logistics, their operational efficiency would also be higher, leading to better cost and resource operating efficiency. Also, it is worthy to note that building own facility could take upto a year, whereas when outsourcing, you can start operations from day 1.

More Flexibility – A contract logistics company would be more accommodating when it comes to adjusting to the demand and supply fluctuations. Since a third party contract logistics company has the ability to share their workforce and resources between projects, the flexibility to scale is better as compared to that in an in-house logistics department.

Documentation and VAS – A third party company not only handles all the logistics operations but also differentiates itself by providing value added services like labelling, assembling, packing, stock keeping reports, etc. to make it easy for your further. Another minute but important point to note is that they have dedicated team to handle all the complex documentation involved within your logistics operations to make it seamless for you.

There could be several more benefits of appointing a contract logistics company, depending on the industry you operate in – but those mentioned above are some of the most common ones.

Choose ProConnect Integrated Logistics

With operational expertise across several industry domains like IT, e-commerce, FMCG, Retail, Apparel, spare parts, pharma and other dry goods, ProConnect Integrated Logistics has proven to be beneficial to many companies across UAE, Saudi Arabia and India. We believe in offering integrated supply chain solutions, making complex logistics simple for you.

With dedicated teams for all functions, we offer cost optimization and operation efficiency for all your needs. For any logistics enquiries and questions, contact us today!

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