Businesses that are involved with goods or products cannot escape what is called logistics and supply chain. A supply chain is the system of organization, peoples, activities, information, and resources with the goal of supplying products and services to consumers. Logistic management is essentially the organization of goods from one point in a supply chain to another point. Supply chain and logistics can range from simple to incredibly complex. The complexity typically depends on the size of the business and the type of product. The most complex supply chain and logistics are typically seen in multinational manufacturing and retail. The simplest can be seen in local businesses with local suppliers. However, there is a middle ground between the complex and simple. This spot is typically habited by big domestic businesses and businesses that involve export and imports. Their complexity is brought on by either their size (like with large domestic firms) or the international trade process. These supply chain and logistic systems are usually not as complex as multinationals, but they are more complex than small local businesses. The tricky thing here is that these supply chains and logistics are usually too complex to do on your own but they do not warrant the investment that will be required like in multinationals. This is where outsourcing and third-party logistics come in.
Outsourcing is essentially when a business makes a contract or agreement with another company to take care of an existing or planned activity that can be done internally. For bigger companies it may involve exchange of information, assets, and employees. However, in the context of small and medium enterprises it is usually just giving up certain duties and responsibilities to the outsourced company so you can focus on more important things. There are upsides and downsides to outsourcing your logistics and supply chain. The first advantage is that you can just make requests to your third party to procure products for you, so you can essentially just sit back and wait until it arrives without the hassle. The second advantage is third party firms that accept outsourcing contracts are usually more focused on a particular goal. This means that their operations will be more efficient and effective than if you do it yourself. The disadvantage will be that you lose some control over the operations and if something goes wrong, you do not have a say in how to solve it. The second disadvantage is that you will have to incur more costs. This is because these firms have profit margins on their services so you will have to pay that margin compared to when doing it yourself.
Now that we understand outsourcing, let’s focus on what a third party logistic provider is. A third party logistic provider is a firm that accepts contracts or businesses to manage their customer’s logistics, sourcing, and many more. Third party logistics will provide advantages for those looking to have a more efficient logistic system, more time for other operations, or even cut down on costs depending on the scale of the operation. The typical third party logistics will serve various functions. These functions include transportation, warehousing, reverse logistics (recycling, returns, disposing), international shipping, and handling. However, the most common usage of third party logistics is to procure and source products from suppliers. They will typically handle everything from packing to shipping the goods from suppliers. Although it is not always the case, third party logistics can also provide services that help relations with suppliers. This can include negotiations, communications, and management. However, their involvement with the business depends on the amount of information sharing between your firm and the third party logistics.
Why and When You Should Outsource
Choosing to outsource logistics will not always apply to every business and situation. You have to have the right reason and situation in order to get the most out of outsourcing. If you are starting out, some third party logistics can be useful especially if they can help with things like customs, delivery, and more. However, it depends on what your business is. If it is domestic or local, you will have to take into account where your supplier is. If the supplier is a great distance from you it will be beneficial. Third parties can also help with finding suppliers, so it will be a great help. However, if it is nearby then it may be unnecessary. For businesses that require export and imports then it is a good decision. The customs and regulations can be burdensome and complex, so having help from an experienced firm will be good. Outsourcing your sourcing and logistics will be a great help to your business. A good reason for this would be if you want to focus on more important parts of your business. For example, you can instead focus on marketing or managing your business. However, if your reason is to cut costs it will depend on your business size and type. Outsourcing logistics will be beneficial for most businesses. However, you will have to analyse your business and see if it is the right decision.
Now that we have learned more about outsourcing and logistics, you can start developing and expanding your business. We have discussed third-party logistics. AsiaCommerce is one such third party that can provide solutions. However, AsiaCommerce is not just a third-party logistic since we also offer export-import services, procurement, and sourcing, as well as many more services. We offer fulfillment services that can satisfy all your business needs for an affordable price. You can just tell us what we want and we will do everything for you. All you need to do is sit back and do what is most important for your business and yourself. Join AsiaCommerce today and gain all of these benefits by clicking the banner below.