Logistics services are the ones that deal with the elements of the supply chain. This means they’re involved in everything that happens from the factory to the product reaching the final consumer.
What are logistics services?
Logistics services are part of the logistics process that begins at the factory, where the supply chain starts. The product then goes through several stages until it reaches the end of the operation, which occurs when it is delivered to the final consumer.
Logistics management handles each of these phases, including shipping, transportation, reception, product management, and storage of every item produced by a company for consumer use.
To have a good logistics process, companies need a solid infrastructure. This means having a widespread network of facilities to store products and ensure timely delivery at each stage.
Not all industries have the facilities to handle all logistics services independently. That’s why it’s common for many companies to outsource these tasks to specialized logistics service companies to meet their needs and ensure timely product delivery.
What are the different types of logistics services operators?
There are different Party Logistics or PL providers, which are an indicator of the level of outsourcing in logistics and the types of services offered within a company’s supply chain. A 1PL involves less outsourcing than a 5PL.
- First Party Logistics. These are small production companies that distribute locally and handle their own logistics services.
- Second Party Logistics. In this case, transportation is outsourced, and the hiring company handles order coordination and preparation.
- Third Party Logistics. A significant portion of operations is outsourced, where the 3PL provider acts as an intermediary between the company and the client.
- Fourth Party Logistics. Also known as Lead Logistics Provider, they offer personalized services such as planning or integrating new technologies.
- Fifth Party Logistics. It combines 3PL and 4PL services, integrating logistics, transportation, and optimization.
Which logistics services are most used?
The range of services provided will depend on the specific needs of the company seeking logistics services and the type of provider selected. However, some of the most commonly used ones include:
- Warehousing. This refers to services like pick and pack, cross-docking, raw material manufacturing, order fulfillment, vendor-managed inventory (VMI), and free trade zone (FTZ).
- Road freight. This involves services such as Full Truck Load (FTL), Less than a Truck Load (LTL), expedited shipments, cargo consolidation, oversized cargo, and special projects.
- Ocean freight. Services such as Non-Vessel Operating Carrier (NVOC), Full Container Load (FCL), and Less than Container Load (LCL), along with consolidation and ocean bill of lading documentation.
- Customs and brokerage. This covers services like ACE Ready, remote entry filing customs clearance, ACS entry reconciliation in bonds – QP – Electronic, among others
Benefits of contracting a logistics services company
When you enlist logistics services, you’re ultimately cutting costs, mostly thanks to improvements in the supply chain. However, setting up all the necessary infrastructure to carry out each phase comes with a hefty price tag for the company to manage independently. Instead, outsourcing these services to a third party enables easier management, as they already work with multiple factories simultaneously.
Improved efficiency
Logistics services enhance the efficiency of the supply chain. These relieve the company from logistic concerns, allowing it to focus on production. When a specialized company handles the logistics, delivery times improve, delivery routes are optimized, and storage becomes more efficient.
Cost savings
Employing logistics services cuts down on storage and transportation costs. Many companies offering these services boast top-notch technology, enabling them to create superior delivery routes. Additionally, when a factory lacks its storage system, it maintains a smaller inventory and produces only what is necessary. This approach helps minimize the risk of damage and deterioration to merchandise
Customer satisfaction
One of the major benefits of utilizing logistics services is ensuring the satisfaction of the end customer. When customers receive their products quickly, undamaged, and without excessive additional costs, it significantly enhances their overall experience and leaves them highly pleased. This translates into increased sales and a larger base of loyal customers for the company, ultimately preventing people from turning to competitors and reducing profits in the long run.
Which companies need logistics services?
From small to large companies, logistics services are essential at various levels. For instance, a small clothing store with a handful of employees that operates locally relies on transportation services.
As the business grows over time, it may need to optimize its routes and utilize transportation services capable of operating nationally and internationally.
Multinational corporations are another kind of business that heavily relies on logistical support, which includes storage, transportation, and a well-coordinated logistics system to meet orders on time.
In this scenario, different factors affect the supply chain, demanding special attention and careful handling. For instance, there are multiple deliveries to customers while simultaneously having to store or transport products from the factory to storage facilities.
Now that you know what logistics services are and what types of services exist for various factories, you can better understand the range of needs in this logistic process and how companies dedicated to these services assist. Contact us for more information about logistics services for your business.
