Get to know your logistics provider, a special partner in your supply chain
What is a logistics provider? As an essential player in the supply chain, a logistics service provider will provide you with a range of services and play a decisive role in your business.
They will be involved in many aspects of your business, including logistics, goods transportation, product quality and customer satisfaction.
With the growth of e-commerce, the demand for logistics service providers has increased in recent years. In this article, we'll take a closer look at the different fields of action and services that a logistics provider can offer you.
What is a logistics provider?
Logistics service provider: definition
A logistics provider is a company that intervenes in your company's supply chain, handling many different aspects (transport, storage, etc.).
It will take care of one or more tasks on this same chain. Companies outsource tasks to logistics service providers in order to improve their performance.
Given the many stages in the supply chain, logistics service providers can provide a number of different services, specializing in one or more of them.
The roles of a logistics provider
Logistics service providers can play a number of roles for their customers. With a direct impact on your supply chain, its missions and services are varied:
- Inventory management: the service provider will manage the handling of its customers' goods in a storage facility, and will monitor your stock levels to prevent any surplus or shortage of products and goods.
- Transport : this covers everything to do with the movement of goods throughout the supply chain. Service providers will manage your transport fleets, whether by land, air or sea.
- Order picking: order picking involves sending goods from one place to another, whether for storage or production. Service providers can also handle shipment to the end customer and customer returns.
What are the different types of logistics provider?
To better identify logistics providers in the supply chain, they have been divided into several different categories. Each provides a specific service.
Some logistics providers fall into more than one category.
1 PL (First Party Logistics)
The first level of logistics outsourcing, companies categorized under 1 PL are transport agencies. They take care of distributing your company's products, whatever the means of transport.
2 PL (Second Party Logistics)
Service providers in the 2PL category may be in charge of transport, but will mainly deal with everything to do with the storage of goods. Being in charge of transport will enable them to take better charge of storage by managing the flow of products, goods and raw materials.
3 PL (Third Party Logistics)
Providing a much more comprehensive logistics solution than its predecessors, the 3PL provider will handle transport and warehousing logistics, as well as managing the administrative surplus and the flow of information (customs documents, invoices, etc.).
If the 3PL doesn't have its own transport or storage facilities, it can also manage the 1PL and 2PL service providers. Some of these operators can also provide complementary services, such as production.
4PL (Fourth Party Logistics)
4PL logistics service providers are sometimes referred to as "integrators". They have a consultancy role: the main service they can provide is to identify areas for improvement within the supply chain, in order to optimize it and make it more efficient, and they are often on long-term contracts.
In most cases, they work with the logistics service providers who make up the 3PL.
These are evolving professions, constantly adapting to technological change.
5 PL (Fifth Party Logistics)
Closer to the engineer than the logistician, 5PL logistics providers also have a consultative approach. They provide their customers with personalized, tailor-made solutions.
Like 4PL logistics providers,their aim is to make the supply chain as efficient and optimized as possible, by providing solutions tailored to their customers' specific supply chains .
What are the advantages of an outsourced logistics provider?
Reduce inventory levels
Logistics providers can provide their customers with a range of information to help them reduce inventory costs:
- The product references that work, so they know which products to prioritize,
- The evolution of stocks in relation to orders, to anticipate stock-outs and overstocks.
Improving logistics service quality
The logistics provider has a role to play in improving the supply chain. Your company needs to listen to the comments and feedback your customers and service providers can provide on your supply chain.
You may receive alerts or warnings about the quality of your goods or the performance of your supply chain in general. The benefits of paying attention to these signals are twofold: it will help you increase your sales, but also keep your customers satisfied.
Expert skills
One of the advantages of logistics service providers is that the logistics service they offer is their core business. As a result, they are more frequently confronted with the problems associated with their sector of activity, and will find it easier to resolve them. As a result, they are more likely to be successful in their field of expertise than if your company were to handle it.
Greater flexibility
It's easier for your company to terminate a service it's paying for, and to change providers if it's not satisfactory. You won't have this flexibility if you take care of a logistics stage yourself.
A logistics service provider brings concrete solutions to your business. He adapts to your offer and your demand. They are there to support you throughout your supply chain. The right choice will optimize your supply chain, improve your production and delivery times, and boost your sales tenfold. That's why it's important to analyze your logistics needs before choosing your service provider.
International logistics management tools as an alternative
As you can see, the logistics provider's job is varied and has a direct impact on your supply chain. But if you're not sure you want to outsource some of your activities, you can always opt for tools specialized in international logistics management!
For example, TRADE.EASY Import-Export is a high-performance import-export management software package that helps you streamline your entire supply chain:
- the solution enables you to better control the flow of goods and anticipate logistical contingencies;
- automatic workflows (based on the formalities to which you are subject) guarantee the customs and regulatory compliance of your international operations;
- shipment tracking (including multi-container shipments) is facilitated by access to all essential information, automatic ETD/ETA updates, transit time and carbon impact calculations;
- unified, centralized and historical data sharing between all stakeholders (customers, suppliers, forwarding agents, banks, shipping lines) secures operations management;
- opting for software such as TRADE.EASY also means guaranteeing data security.
These tools meet the challenges of international trade and help you optimize your supply chain.
Article translated from French