Business models of all sizes have complications. The goal of businesses in terms of logistics basically narrows down to having what the consumer desires, at a price they are willing to pay, in the quantity they wish for when they want it. That isn’t too much to ask right? Companies with issues in logistics are continually searching for freight management solutions often times turning to companies that specialize in providing this service for companies big and small.
This is done in one of two different ways; third party logistics or fourth party logistics. Third party logistics uses outside companies to carry out the various logistic operations that have are accustomed to being done internally. An example of this is when a company that has its own storage facility decided that it will now use an outside transporter to carry out distribution. Distribution was previously done by the company but in evaluating it was determined to be more cost effective to bring in a third party for this sector of the supply chain. This was determined to be an effective freight management solution.
Fourth party logistics is somewhat of a new concept. This is when a company determines that the freight management solution they desire is one in which the whole logistics procedure is outsourced to another party. This company has a sole purpose of providing logistic solutions to companies. They bring together their companies resources and technology and pair it with other organizations to plan out, operate and maintain a fully functioning supply chain.
The main difference between the two; third party logistics and fourth party logistics, is that the third party is specifically targeting one function of the supply chain solution where as with fourth party they manage the entire process from beginning to end. In general a fourth party logistics provider is a contractor serving the entire logistic needs for a company.
Fourth party logistic providers are the future of freight management solutions. Consulting companies are now offering so much in the way of cost savings and services to companies that they are becoming hard to live without. It is easy to see how needed a fourth party logistics company is when examining inbound logistics and outbound logistics. In smaller companies especially it is important to have support that specializes in all aspects of logistics. To pay specialized logistic personal to be on staff would not be nearly as cost effective as hiring companies, with a system already in place to help manage that piece of the business puzzle.
Inbound logistics is a basic process in the business equation which includes purchasing, arranging the movement of materials coming in, parts and finished inventory from suppliers to manufacturers, assembly plants and stores. Outbound logistics is related to storing and moving the end goods and information from the end of production to the end user.
The field of logistics is complex and absolutely integral to a business’s success. Without the proper logistics in place a company could be losing money with increased shipping costs or improper communication throughout the supply chain. In order to give the client what they want, when they want it, at an acceptable price and time a highly functioning freight management solution should be maximized.
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