Definition of logistics service provider
Logistics service providers perform various tasks and services for other companies and thus act between the client and the end customer. In the meantime, logistics services include more than just the pure transport or storage of goods: Customs, assembly, labeling, shipping and much more are now also provided by logistics service providers.
Classification of logistics service providers
Logistics service providers are classified according to their range of services. Depending on the logistics tasks they perform for other companies, they are divided into First Party Logistics Provider, Second Party Logistics Provider, Third Party Logistics Provider and Fourth Party Logistics Provider:
Requirements for logistics providers
Short delivery times, permanent delivery capability, always optimal stocks and maximum flexibility - the tasks for logistics service providers are manifold and the demands of the customers are high. Customers who use logistics services place particular value on:
- High speed (fast processing, orders at short notice)
- Quality (avoidance of delivery errors)
- Perfect IT integration (compatibility with freight forwarding software, material flow systems and warehouse management systems)
- Value Added Services (additional services such as final assembly, display construction, quality controls)
- Cost-effectiveness (adequate price-performance ratio)
- Transparency
To meet these, service providers need software-based support.
Software for logistics service providers
Logistics service providers use different software for the individual logistics areas. For example, they use route planning systems to record the complexity in the transport process and to be able to take into account special restrictions such as defined time windows or the inclusion of several depots. If not only the transport process is to be recorded, but the complete warehouse logistics optimized, warehouse management tasks must also be performed. This is where the warehouse management system comes into play. This is because the system, together with others, forms the basic framework for ensuring a smooth logistics process. Through integration into the merchandise management system, WMS collect data from incoming and outgoing goods as well as warehouse stocks and pass this on to other departments. In the process, sophisticated systems offer integrated mobile data collection: Articles, pallets, shelves and compartments are systematically marked and recorded via mobile terminals. Manual post-recording and long paper lists are thus a thing of the past.
Tasks of logistics service providers
Logistics service providers cover various areas related to warehouse logistics and supply chain management. Logistics services include:
- Transport, distribution and storage
- Order picking and shipping
- Incoming goods logistics and warehousing
- Payment management as well as control, monitoring and documentation of all processes
- Returns management
- Inventory management
- Warehouse management
Advantages and disadvantages of outsourcing
Outsourcing tasks to a subcontractor has both advantages and disadvantages. When a logistics company is contracted, the company needs to plan and organize in the best possible way.
Advantages
- Optimal infrastructure for smooth operations: logistic traceability and reduction of inventory volume
- Higher quality of the logistics service
- More efficiency in warehouse logistics and in shipping and returns
- More flexibility and adaptability
- Time and cost minimization
- Focus can be placed on development and distribution of goods and products
- Shifting of problem solving to the provider of the logistics services
- Personnel resources can be saved
Disadvantages
- High dependency between company and service provider
- Control over logistics processes is relinquished
- Loss of flexibility
- High effort for control and quality assurance