The Function Of Third
Party Logistics Providers
Synchronized Supply Systems Ltd
A third party logistics company is an independent business
that specializes in providing a specific type of service to a
The majority of companies focus on one aspect of the
supply chain such as shipping.
The purpose of a third party logistics provider is to improve
the efficiency of a client and to help control costs.
This is done through the economics of scale.
Logistics providers like supply chain consultants and
couriers produce over $47 billion each year.
Areas like transportation and warehousing are growing
annually at a rate of between 5 and 6 percent.
Third party logistics companies perform a number of
Many third party logistics providers offer some form of
This means that a client business can hire the company to
store products in a controlled facility that is managed by
This is an attractive option because it removes the need to
lease a warehouse and pay employees who are only
tangentially related to the core business.
The third party provider usually makes extensive capital
investments in the warehouse allowing for increased
efficiency through modern technologies.
Another advantage is that a provider might have
warehouses in centralized areas that make shipping and
A number of third part logistics companies offer
transportation services. This is one of the most common
Transportation involves moving goods between two
locations. This could be from a coastal port to a warehouse or
from one retail store to another.
Transportation does not usually include other services
such as warehousing or consulting.
Transportation across different jurisdictions is normally an
invaluable service since local businesses do not have the
capital to invest in trucks and licenses that would allow for
cross-country transport of goods.
Many transportation providers have large fleets of trucks
available that can move goods between locations quickly
An increasingly popular type of third party logistics is
fulfillment. This is a version of warehousing.
Fulfillment means that a provider stores items in a
warehouse and then assembles different collections of items
in a box or other container.
This is how orders are usually filled for ecommerce and
The warehouse maintains pickers, packers and other
employees who can fulfill orders with a high level of accuracy
Most will also provide shipping services through another
third party logistics provider. Fulfillment providers sometimes
include value added services such as returns processing.
There are third party logistics companies that act primarily
These companies do not maintain assets like a warehouse
or a fleet of trucks.
The goal of these companies is to streamline the supply
chain and sometimes to develop an entire efficient supply
chain for a new business.
Supply chain consultants specialize in removing waste and
overhead from the procurement, warehousing and transport of
The knowledge and experience of these individuals usually
results in a collection of asset-based third-party providers who
can work together more efficiently than a group of random
businesses assembled without the assistance of supply chain