Benefits of Working with a Third Part Logistics Partner

For any business, the supply chain is one of the most essential aspects of the business. This supply chain stretches from the suppliers to the final destination at various customers of the business.

Given the importance of the supply chain, it is understood that many businesses actually base their entire business model on a high performing supply chain. This means that the continued operation of the supply chain is essential for the sustainability and continuity of the business.

Many businesses try to manage the supply chain in-house though various dedicated team. These teams handle aspects of supply chain management such as transport and warehousing. Several businesses try to do all these thing sin house by forming dedicated transportation and warehousing components. In-house supply chain management teams handle these components. The size of the teams expands to accommodate the increasing demands on the supply chain.

However, this model of business usually does not keep pace with the growth and expansion of the business. There is a limit to the investment that business could sink in maintenance of thee components. Once the scale exceeds a limit, several factors limit the growth of the in-house supply chain teams. In particular, the distance between the suppliers and the customers increases proportionally with the increase in the business’s volume. Similarly, it is not possible to maintain warehouses at appropriate distances along the supply chain. The result is an overworked and overloaded transportation department that often starts to sink the business.

When this happens, the business must turn to third party warehousing partners to sustain the growth and to maintain the supply chain. The right partner is like an external stakeholder in the business. The services provided by the warehousing actually augment the performance and work schedules of the in-house counterparts.

One of the most noticeable benefits of the warehousing vendor is the issue of scalability. The in-house components of the business are able to grow because the business is able to invest in the growth. In almost all cases, this investment comes from the profit reserves of the business. Given the rules of diminishing returns, it is easy to see that increasing investments in in-house components is not the best long-term policy. In fact, after a point, the investment becomes counterintuitive. 

At this point, the best bet of continuing the growth of the business is to collaborate with warehousing vendor who specializes in working with the industry of the business. This is an important decision and must not be taken lightly. Selecting a partner who is unable to support the functions of the business is one of the worst mistakes that few businesses could recover from without loosing a significant share of the growth.

A third party logistics partner is able to support the business by brining in its own resources at the disposal of the business. Thus, the business is able to utilize thee resources as an extension of its in-house resources. This applies to the warehousing capabilities as well. Addition of these capabilities is one of the best business moves for any business.