Evaluate third-party logistics services

When a business chooses to use third-party logistics services they are outsourcing elements of the supply chain to a specialist logistics firm. The level of service these companies provide can vary greatly. Normally one or more of the following will be included:

Inbound freight and customs management
Warehousing, packing and storage of goods
Fulfilling orders
Distribution of outgoing freight
Door-to-door delivery service

The main reason that businesses use third-party logistics companies is to achieve superior customer service by improving efficiency and productivity. A specialist logistics company will be able to offer expertise that may be lacking within your own company.

A good logistics company could add value to your company in the following ways:

Using their expertise to focus on the entire supply chain will enable them to achieve best practice performance
By outsourcing your logistics requirements you will be able to focus on your core business activities
A third-party company will have a lot of their own resources and facilities. As they are specialists in the area of logistics, their investments are likely to be far greater than your individual company could justify
A smaller company may be less competitive due to having smaller volumes to deal with. A third-party company will be able to merge transportation of goods with other smaller companies so that they each benefit from bulk discounts

Despite these advantages in using a reputable logistics provider, it is always necessary to exercise a degree of caution when selecting a company to entrust with your logistics management. Certain checks will need to be carried out:

Ensure that the carriers used by the company have satisfactory clauses if goods are lost or damaged. Will they pay you the full invoice price or the manufactured cost?
Is this provision subject to a maximum liability per shipment?
Is the intended company fully aware of all legal and regulatory constraints that you or they are bound by?