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Advantages and disadvantages of third-party logistics
Not all courier companies can afford to set up their logistics. Especially not the large multinational ones who have an extensive presence in different countries
This is a user generated content for MyStory, a YourStory initiative to enable its community to contribute and have their voices heard. The views and writings here reflect that of the author and not of YourStory.
Not all courier companies can afford to set up their logistics. Especially not the large multinational ones who have an extensive presence in different countries. Courier companies thus, often have to rely on the help of third-party logistics (3PL) companies. As with any business decision, hiring 3PL to carry out logistics comes with its own set of pros and cons. Here are some of them :
Advantages
Specialization
3PL companies are highly specialized because they are created with one and only one purpose - to provide logistics support to various businesses. Specialization naturally increases the efficiency of such organizations, which in turn benefits the courier companies that hire them.
Access to advanced new technology
Due to high specialization, 3PL companies usually have access to better technology than in-house logistics departments. The new technology helps both reducing the time spent on a task and cutting costs.
Access to required facilities
It is challenging for a company to have access to warehouses and transportation required for the shipment of items of huge volume or size. On the other hand, 3PL companies almost always have access to such facilities.
Ability to handle large number of clients at a time
Hiring 3PLs helps courier companies to handle a large number of clients at the same time. It is possible because such logistics companies usually have a large capacity along with a very high amount of efficiency.
Disadvantages
Irregularities on the part of Third-party company may lead to problems.
Once a courier company hires a 3PL company for its logistics distribution, it allows some of the control of the entire shipping process to slip away. When there is complete lack of control over a particular process, there is always a chance that a problem may crop up. And if it does, it may cause harm to the reputation of the company.
Communication problems
Two completely different companies are working towards achieving the same goal, and in a scenario such as this, communication is of very high importance. But, since the message must travel from one company to another, complications may arise, which in turn could lead to misinterpretation of facts or complete miscommunication. When this happens, most often than not, the delivery becomes a failure.
Therefore, it is vital for a company to be responsible while hiring a third party logistics company. All the advantages and the disadvantages have to be put through extensive scrutiny.