Third Party Logistics

The efficient movement of goods along the supply chain has become one of the major factors determining who will command the markets, both now and in the future. The so-called 'core competency' theory of modern management thinking holds that if a task is not central to an organisation's business, then outsource it to a specialist provider. In recent years, therefore, there has been an accelerating trend for companies and organisations in both the private and public sectors to contract out their non-core activities as management questions the waste of time and effort in trying to achieve something that is already being done much more efficiently by specialist contractors.

Up until the recent past, there were sizeable companies where materials handling, warehousing and distribution were regarded as a self-evident activities and unavoidable cost centres. Today, contracting out those functions is now regarded as a critical part of the effort to drive down costs, reduce stockholding and achieve time-critical deliveries to customers.

Cutting costs is often seen as a major benefit of third party logistics, but this can lead to disappointment. Research by a major transport association in the UK has suggested that contracting out does not necessarily save money. A much better reason for doing so is the specialist knowledge, flexibility and added value that a contractor can provide. Third party contracting should not be viewed simply as a way of off-loading a troublesome peripheral activity.

Companies entering into third party logistics agreements are generally looking for more added value services and technology is often the most effective way of providing such benefits. The increased use of IT, for example, offers a potential avenue for providing more added value to 3PL contracts.

Proteus Warehouse Management Solution aids third party logistics to run the warehouse in an efficient and cost effective manner. It allows the warehouse management team to have a complete overview of all activities within the warehouse environment. The software can interface into any ERP system, albeit the customers own back office solution or that used by the 3pl provider.

For further information please call Linda Rodway on +44 (0) 121 717 7474 or email me

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