Third-party logistics, or outsourcing logistics to another company, is a common supply chain management strategy. The logistics duties are outsourced in various industries, but the following are often involved:
1. Inbound freight
2. Customs and freight consolidation
4. Order fulfilment
6. Freight management to customers
Why use a 3PL?
Companies can improve their customer service by using a 3PL, which uses the company’s international distribution networks and insider knowledge of importing and exporting to provide international customer service.
Because 3PLs can offer the most cost-effective services to medium-sized companies, they can maintain a lean and competitive status.
Smaller companies might not benefit from using a 3PL because their logistics structure might not be large enough to justify the commissions that the 3PL will charge to take over planning and managing the functions. IBM, a large company, uses a 3PL for its logistics functions.
Using 3PL has drawbacks, including the following:
- Loss of control over logistics functions
- Loss of contact with customers
- Disagreements over the service level to be provided
Performance-based logistics contracts
Many modern nations have intricate international supply chains in defence industries. Governments are moving towards performance-based logistics contracts, in which payment is based on guaranteed performance rather than services provided. Because the 3PL can minimize the cost of guaranteed performance, the supplier is granted more control over logistics.
ProConnect Integrated Logistics – Your Freight Forwarding Partner
There are many freight brokers in the industry, it is important for you to choose the right partner for your shipment. Your shipment is valuable, and we ensure we treat it like ours. We provide seamless Freight Forwarding service along with Customs Clearance. ProConnect Integrated Logistics gets its expertise, experience and value of working from its group company – Redington. Over the years, ProConnect has established itself as a preferred freight forwarder and logistics partner for many companies in the UAE and Saudi Arabia, catering to a variety of industries.
If you are looking for a partner to take care of all your logistics hassles, talk to us.