Tag Archives: 3pl logistics

How Does Supply Chain Management Work?

Supply chain management is a set of activities that includes supply, production, and distribution of a company’s goods. This production cycle plays an enormous role in any business. Proper supply chain management can reduce transportation costs and enhance productivity, and in order to succeed, companies should learn how supply chain management works.

What processes does supply chain management include?

A supply chain process can be described as a simple example: imagine a cake. First, raw eggs are transported from the farm to the grocery retailer. Then, the eggs are bought by a bakery to bake a cake. The cake is then either set out in the bakery or delivered to a grocery store to be sold to the final customer. All of the processes that stand in-between the raw egg and shelve-ready cake are classified as a supply chain.

So, how does supply chain management work? As a first look, the process can seem very complicated. However, supply chain contain many important key components that make it work properly.

What are the core components of supply chain management?

Transportation

Essentially, transportation is one of the main components that make the supply chain work. Transportation plays a crucial role in every step of product movement, allowing companies to focus on arranging well-organized, smooth logistics for their goods.

Communication and visibility

Supply chains are different in every industry. No matter if it’s a small local business or a large enterprise, supply chain management is a complex process. With so many links involved, it requires proper handling. Without efficient communication between manufacturers, suppliers, vendors, distributors, and retailers, supply chains would fall apart in no time. That’s why consistent communication between all parties is crucial for efficient supply chain management. Another essential part of a successful production cycle is visibility into the supply chain. That means you can easily access and analyze all the needed information to make strategic decisions.

Finance

A complex supply chain suggests high financial responsibility. Bills, invoices, and reports are key points you can’t run production without. Accounting plays a large role in supply chain management since all of the payments have to be documented and stored in a proper way.

Final thoughts

Of course, supply chain management involves numerous other activities and processes. However, the above listed are the primary parts of any supply chain. Today, companies constantly work to enhance their efficiency by applying various supply chain management practices and technologies. With more innovations and automation, it becomes easier to focus on the strategic part of the supply chain management than on its execution.

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How a 3PL Can Help You Get Lower Freight Rates

If you are frequently shipping freight, there’s a good chance know what third party-logistics companies do. In fact, 3PL’s can help your business in many ways, and one of those ways is getting lower freight rates for you.

Why is outsourcing so popular?

Outsourcing logistics to a 3PL provider has become more common among many companies, regardless of their size and expertise. Many businesses have chosen to outsource their logistics because of the growing importance of customer experience. People want faster shipping and cheaper delivery costs.

Inventory, warehousing, and logistics costs are constantly rising. Managing logistics becomes costly and complicated for companies to do themselves, so businesses are seeking efficient solutions to save costs on transportation. One of the best ways to cut transportation costs is getting low freight rates on a regular basis. Outsourcing transportation to a 3PL can help companies in many ways and help get you the best rates for your freight.

How can a 3PL get you better freight rates?

An experienced third-party logistics provider has a wide network of carriers and freight brokers with reliable and trusted relationships. This lets a 3PL negotiate exclusive rates for your company. The negotiating process is usually held through a freight broker, who arranges the final shipping cost for a customer.

What are other ways a 3PL can help save transportation costs?

Apart from better freight rates, here are some other benefits of partnering with a 3PL:

Available carrier capacity

One of the primary advantages of third-party logistics providers is that they let you access a wide range of carrier capacity. Regardless of your freight type and volume, an experienced 3PL will always provide you with the required equipment. You don’t have to interact with multiple people and can instead have a single point of contact for anything.

Supply chain management

Usually, a 3PL provides you with a dedicated person or team of experts to manage your company. Apart from freight brokerage, you can also use a 3PL for managing your supply chain. Professional analysts can define gaps in your current supply chain and can help you outline a new strategy. This eliminates waste operations, and, therefore, reduces unnecessary costs.

Custom approach

While you focus on your business, a 3PL should focus on seeking efficient solutions for you. An experienced logistics provider will learn your businesses characteristics and needs so that they can provide you with useful solutions (for example, freight consolidation or shifting to multimodal transportation). Developing a custom approach to your company helps 3PL’s reduce your transportation costs.

Final thoughts

Collaborating with a 3PL can significantly reduce overall transportation spend of your company through competitive freight rates, supply chain management, carrier capacity, and experience in the logistics industry.

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