3PL: Pros and Cons of Outsourcing
Published: November 18, 2008 (Issue # 1426)
In contrast with transportation companies and warehouse operators, Third Party Logistic companies offer a comprehensive range of services. Industry experts, however, note that there are both benefits and risks associated with outsourcing logistics.
Third Party Logistics, or 3PL, is the outsourcing of logistics services. 3PL operators organize the management of the flow of goods and optimize financial and information resources for product shipment and distribution.
“A 3PL operator provides a whole range of services necessary to deliver products from producers to retailers. 3PL starts with moving the products from the production line, packaging and storage and delivering product lots to the stores,” said Alexei Gorinov, head of the sales department at Nienshants Logistics.
Antonina Amerik, head of the marketing and development department at Maxilog logistics company, added that 3PL operators also offer secondary services such as document clearance, insurance, agent services (including loans and assistance in signing contracts), consulting and outsourcing of other business processes in the client’s company.
Gorinov said that about 50 companies in St. Petersburg market themselves as 3PL operators. The market is dominated by large companies (Nienshants Logistics, Interterminal, Mega-Logistics, Relogix and FM-Logistics) and transportation companies that offer logistic services (STS-Logistics and Velts).
In addition, distribution companies use their ties with retail chains and offer logistics services, Gorinov said, as do companies that own former industrial premises in the city and in proximity to the ring road.
The benefits of 3PL are time and cost saving and a higher quality in product shipment and distribution.
“The main benefit of logistics outsourcing is the time that you save by delegating the distribution process to a specialized company. Having experience of working with various groups of products, 3PL providers can organize a better and more effective distribution process,” Gorinov said.
Logistics outsourcing does not mean that the company loses control over its goods while they are being transported.
“High-quality logistics outsourcing always includes distant management of the flow of goods. Using a laptop, the client can order additional product delivery from any place, if he unexpectedly gets an order,” Gorinov said.Pages: