What is Third Party Logistics?
← BackWith the importance of trade and supply chain and technological developments, the concept of third party logistics has emerged. With another short name, 3PL can be defined as a company's outsourcing of logistics and supply chain activities outside the scope of its core business to another company. A certain part or all of the activity may be outsourced to another company.
With the importance of trade and supply chain and technological developments, the concept of third party logistics has emerged. With another short name, 3PL can be defined as a company's outsourcing of logistics and supply chain activities outside the scope of its core business to another company. A certain part or all of the activity may be outsourced to another company.
In order to understand the third party logistics process more clearly, the concepts of first party and second party logistics are instructive.
- The first party is the party receiving logistics service. This could be the manufacturer or any sender.
- Second party refers to companies that are direct customers of companies identified as first parties. They are companies that are called asset-based and investment-based, which have their own assets such as truck fleets, warehouses, warehouses, and provide traditional transportation and warehousing services with these assets. These companies do business with first parties.
- Third party logistics companies can provide the service themselves or they can be intermediary companies. These intermediary firms may also be firms with their own investments or firms that use more than one second party in their organizations. In third-party logistics, one company transfers its authority in materials management or product distribution to another company.
Third Party Logistics Advantages
The advantages of the third party logistics process are that it generally keeps up with the times and requirements. These advantages can be explained in four different items:
1- Reliability
Thanks to third party logistics, all kinds of products, services and information flows are followed without skipping the slightest detail. This enables efficient processing and storage of movements in the supply chain . The most secure digital storage of these vital data is among the most important advantages of this logistics type.
2- Strategic Management
Third-party logistics enables products to be classified, placed, transported and ultimately distributed according to their characteristics. Thus, time is saved in the whole process of logistics.
3- Appraisal
In today's complex market, it is difficult to master the entire logistics process. Third party logistics service providers have knowledge and experience in the following subjects.
- shipping documents,
- Importation and exportation,
- international compatibility,
- Economic regulations.
These companies again provide advantages such as speed and information to their customers.
4- Customer Satisfaction
When we list the advantages provided by the third party logistics process, all of these advantages increase customer satisfaction. Improving services and their duration ensures on-time delivery and brand reliability. The result of all this is a cost-reduced process and satisfied customers.
Third Party Logistics Costs
One of the most important focuses of companies in today's market is to keep costs low. 3PL companies are also companies that specialize entirely in logistics. Therefore, it has a wider network compared to any company's supply chain.
Thanks to this network, they have stronger relations in the logistics process and are more effective in negotiations in the sector. As a result, it will be able to provide more discounts to customers, in short, it will keep the overall costs to a minimum.
By partnering with this type of firm, you can save your company the expense of making major infrastructure investments. Because these companies will provide you with transportation, storage space and staffing services, among other things, at a cost .
Third Party Logistics and Materials Management
Signing a 3PL company also means you gain a partner in what you do. This partner will assist you with the best packaging, shipping and materials management options. Material management is a laborious task that requires expertise.
These companies take care of the whole process for you, from where and when the goods will be found to their categorization. In fact, all the advantages mentioned are found under the material management process. Therefore, in summary, we can say that third-party logistics companies provide this whole process for you in the fastest and most cost-effective way.