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Advantages of Using Third Party Logistics
Third Party Logistics encompasses the implementation of supply chain procedures and practices that are in compliance with the requirements of third parties such as customers, suppliers and manufacturers. It also covers the delivery of goods in a timely fashion. This involves the identification and analysis of the requirements of both parties involved in the procurement process and the allocation of resources. Third Party Logistics is an important aspect of strategic planning in business that has the potential to create cost savings by streamlining processes and reducing costs. Strategic planning is an integral part of any business strategy, but it is especially important for small businesses and home based businesses which do not have the capital to invest in a full-time supply chain operation.

Supply chain management involves the physical transportation of raw materials, finished goods and other resources between suppliers, factories, depots and warehouses. us shipping zones of logistical methods are used depending on the nature of the product involved. Some methods are more efficient than others. In order to meet customer requirements, many organizations employ the services of third party logistics companies. These companies are responsible for managing the logistics involved in the supply chain. Third party logistics are important to supply chain management because they provide an alternative to scale suppliers or manufacturers.

Companies which are not located within traditional shipping lanes or choke-points may use third party logistics providers because shipping time, routes through ports and airports are not an issue for these companies. Shipping time is not a problem for companies that are located near the sea or air route, which means that logistics companies are often the most cost effective option for these companies because they can meet the supply chain needs of even these highly specialized companies. By using third party logistics, companies can also save on internal shipping costs.

The supply chain methods applied by third party logistics companies involve the use of carriers, trucks and ships. These resources are essential for companies operating in a global marketplace where competition is fierce. Therefore, logistics companies are particularly valuable when they are able to provide shipping services which meet the specific needs of the international company.

A major benefit of using logistics services is the considerable cost saving which occurs as a result of the reduced shipping time. When shipping products by freight, the delivery time is dependent on the carrier, which is in turn dependent on the shipping time of the destination port. If a company has to incur additional fees for shipping time, the profit margin can be significantly reduced, since there is a loss of revenue over and above the actual costs incurred. By using logistics carriers, the cost of shipping can be substantially reduced because of the time saved during the transportation of goods.

One of the primary reasons for using logistics services is the reduction in operational costs, which occurs as a result of the reduction in shipping time. In the case of small and medium sized businesses, the direct costs of shipping products can easily add up to more than half of the company's total revenue over a given time period. This cost can easily be eliminated with the use of logistics solutions. The reduction in operational costs also results in the improvement of customer service quality because customers are satisfied with delivery times, and they are satisfied with the speed of the product and service delivery. This leads to increased loyalty from existing customers.

Another benefit of third party logistics is the increase in profitability, which occurs due to shipping savings. The logistics provider pays for the transportation of the freight from the supplier's manufacturing facility to the customer's location. If the shipping time required to deliver the freight is cut by one third, the cost of freight will decrease by fifty percent. Furthermore, if the company ships by bulk then it will only need to pay half the cost of the shipment instead of the whole. In addition, the company does not need to invest in additional storage facilities for storing the excess freight which results in an increase in profits.

When a company uses third party logistics, it also allows them access to market sectors that would otherwise be inaccessible for them. For example, distribution companies would not normally access small shops and retail outlets as their distribution centres might be located in larger cities and towns where these enterprises do not reside. However, by using third party logistics the distribution company can access these markets because they can ensure delivery on time and at the right destination. Also, when a company uses third party logistics they are in a better position to negotiate with suppliers of raw materials or energy because they do not have to own the means of transporting the goods. The logistics provider takes care of this aspect and this results in the production of more products at the same time lowering the operational costs. Therefore, by adopting third party logistics a company increases its efficiency by reducing cost, increasing profit margins and improving customer satisfaction.