Third Party Logistics Solutions

The big buzzword sometimes used by marketing folks in the logistics industry is “flexible warehousing.” For those of you who are new to third party logistics or are still in the discovery phase of outsourcing part or all of the management of your company’s supply chain I thought I would provide a description of the phase and how it can help you.

Flexible Warehousing Many warehousing companies tend to use “flexible warehousing” as a way to describe their main benefit to potential customers. If I were to pick one of the biggest advantages of outsourcing to a third party logistics provider I definitely would say its the flexibility they provide. By flexibility they mean the ability to alter your logistics program to fit your current needs at any moment. By the business quarter, by the month, by season etc.. One disadvantage to companies who run their own distribution centers or network is they don’t always have this kind of flexibility. If your product has a very heavy seasonal inventory build followed by months of very low inventory levels then usually flexible space is going to be the best solution.

Using a 3PL offers flexibility in:

* labor

* storage

* handling

* equipment

* location

By using a flexible “variable cost” solution companies can ramp up inventory during their busy seasons and then bring inventory levels significantly down, or opt to completely cease storage of inventory with a provider for a period and then start building inventory again in peak season. Another term that is also sometimes used is “scalability.”