Third-Party Logistics in supply chain management and logistics is the use of third-parties to outsource specific parts of an organization’s distribution, manufacturing, warehousing and fulfillment needs. These services can be bought on a contract basis or on a payment-as-things-come basis. In order to determine if a third party is the best choice for your organization, it is first necessary to understand the different types of services that are outsourced. There are four main types:

Logistics services that fall into the first category, third party logistics, include the transportation of raw materials, resources and goods. The transportation of finished goods, or goods ready to be sold, falls under the second category, fourth party logistics. Last but not least is the third party distribution, which includes both storage and delivery of these goods.

While it is true that third party logistics outsourcing is one of the most widely used methods of logistics management today, it is also true that not every company that uses this method is successful. Many companies find that they spend more money than they receive in contract profits, and some even experience financial failure. Companies should also realize that not all third-partied logistics providers are equal. In order to ensure that you get what you pay for, you should make sure that the company outsourcing your logistics needs to have ample experience in the field. Ideally, the company should have been in business for at least a few years and should have plenty of positive reviews from existing clients.

The benefits of using third party logistics outsourcing for your ecommerce business are numerous. First, this method of operation frees up valuable time that you would otherwise have spent running your own supply chain. You won’t have to spend hours upon hours driving around the city trying to locate your vendors. You can simply let someone else do all of the hard work for you.

Second, third-parties often provide logistics experts with the expertise necessary to deliver a top notch product. You will no longer be forced to rely on your own expertise, or the expertise of your vendors. The logistics expert that you hire should know the best ways to package products in order to maximize customer satisfaction. They should be skilled in producing a well-designed product presentation, which will help to create a sense of security for your customers. Expertise from a third-party expert can help you to reduce the cost of fulfillment , as well as shorten the lead times associated with shipping.

Third, using third party logistics operations reduces the risk of costly over-supply, which will have a devastating effect on your bottom line. By outsourcing your warehousing needs, you can focus on improving your customer experience. The level of service that you receive will be outstanding, because your company will not have to waste precious time in addressing back-end issues. By delegating warehousing responsibilities to a third party, you are free to devote your attention to other elements of your business model. By cutting shipping costs and freight logistics expenses, you will be able to offer products to more customers, increasing your overall profit margin.

Finally, third party logistics is the most affordable way to meet your fulfillment requirements. If you cannot afford to buy your own trucks and storage units, you can outsource these services. By using a third-party expert, you will gain access to their extensive knowledge in the area of warehousing, transportation, and inventory. This expertise will translate into lower transportation costs for your company, which will allow you to pass the savings on to your customers.

No matter what your specific logistics needs may be, it makes sense to delegate such responsibilities to an expert logistics partner. Third-party warehouses and fulfillment centers to provide you with the expertise and the tools necessary to streamline your business model. They can also handle all aspects of your logistics needs, freeing up your valuable staff for the tasks that really matter. Working with a third party expert takes away the stress of managing your warehouse and distribution warehouses and simplifies the overall process of running your entire logistics operation. With a little help from a logistics expert, you can focus on creating and delivering your best product, while spending less time and money on the day-to-day operations that do not matter as much.