Though varying across industries; logistics cost contributes to a significant portion of business operations.
Logistics whether inbound/inward or outbound/outward ensure the proper functioning of a business. It is one way to measure how efficient a business is operating. Academic research confirms that outsourcing of logistics can serve as a means to achieving competitive advantage; especially in a world where competitors can quickly mimic manufacturing and technology practices. Third Party logistic (3PL) providers offer a wide array of services. It includes the likes of warehousing/storage facilities, retail distribution network, customer distribution network, importing and exporting etc. 3PL is not limited to provision of physical space and machinery but also software and soft skills. There are software houses offering custom-made logistic management software for companies opting for expert advice yet keeping the system control to themselves. 3PLs benefit the company with their extensive market knowledge and logistics experience. The synergy formed by adequate third-party logistics provider enhances business operations and improves a company’s customer service. While huge companies advocate full backward and forward integration of value chain as a key success factor, proper business synergies with 3PL can also contribute to success.