Growing manufacturers, retailers, and ecommerce businesses will all reach a point where their original logistics plan starts to fail under stress. Whether a business has outgrown a garage, storage locker, the backroom of a brick-and-mortar store, or a small warehouse, owners and managers will eventually come to a point where they must choose between drastic investments in logistics upgrades or outsourcing to a logistics company.
What is a logistics company?
Also sometimes referred to as a third-party logistics (3PL) provider or partner, a logistics company specializes in managing inventory and the movement of goods from one place to another. Generally speaking, they will be responsible for ensuring the client’s inventory gets stored, moved, and delivered efficiently but cost-effectively. By doing so, the logistics partner lets the business refocus its own resources on revenue-generating activities, such as sales and marketing.
Transportation management is one of the core functions of a logistics partner. Logistics companies typically work within a range of transportation modes, including ground, sea, or air, to ensure that customer shipments get to their destination affordably and promptly. As part of handling transportation, a 3PL usually takes on numerous tasks, such as freight brokering, route planning, scheduling, and shipment tracking.
Additionally, a 3PL can leverage established relationships and higher volumes with carriers to get better shipping rates. By combining the total freight volume of its entire client base, the 3PL can negotiate lower rates than any single client could negotiate on its own.
Warehousing is of the prime reasons that growing businesses turn to 3PLs. Logistics companies usually maintain a regional or national network of warehouses and distribution centers to store customer products near primary and secondary sales markets. By leveraging its logistics company’s network, a business can strategically locate inventory near population centers or near core customers for quick delivery without incurring the upfront cost of purchasing warehouses in those areas.
A 3PL with quality warehousing capabilities can also lend its experience and capabilities to improve inventory management, which benefits growing companies stretching the limits of their inventory tracking capabilities.
Logistics technology is expansive and expensive, making it difficult for a standalone business to afford all the solutions it needs to thrive. As a client of a logistics company, businesses gain access to a variety of technologies. Logistics companies may use many technologies, including (but not limited to):
- Automated storage and retrieval systems (AS/RS)
- Inventory tracking software
- Barcoding systems
- Labeling systems
- Packaging systems
- Conveyor systems
- Warehouse management systems (WMS)
- Transportation management systems (TMS)
- Voice picking solutions
- Light picking solutions
The benefits of using a logistics company
There are many benefits to using a logistics company for your business’s supply chain needs. Here are some of the most significant:
- Efficiency. Logistics companies are experts in managing the storage and movement of goods. They use sophisticated technologies and logistics management systems to ensure goods get safely handled and where they need to go on schedule. By using a logistics company, businesses can improve the efficiency of their supply chain operations, reduce lead times, and increase customer satisfaction.
- Cost savings. Logistics companies are experts in cost optimization. As a one-stop shop for logistics capabilities, they work to minimize transportation, warehouse, and inventory holding costs while maximizing profits for their clients. Additionally, partnering with a 3PL gives the business access to real estate and technology without the ownership investment. As a result, businesses can ultimately reduce overall supply chain costs and improve their bottom line by using a logistics company.
- Flexibility. Logistics companies can tailor services to meet the specific needs of their clients. Whether a business needs transportation, warehousing, or inventory management services, a logistics company can provide the flexibility to meet those needs.
- Scalability. It can be difficult for in-house logistics operations to scale up for peak seasons or unexpected demand spikes. Meanwhile, a 3PL should have labor and technology resources on tap to scale up quickly with demand spikes.
- Expertise. The experts working at logistics companies have years of experience managing the movement of goods. As a result, they have a deep understanding of supply chain operations and can provide valuable insights and advice. By using a 3PL, businesses can tap into this expertise and improve their supply chain operations.
The process of finding a logistics company can feel daunting for growing businesses, but the advantages of partnering with the right 3PL make the effort well worth it in the end.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.