14th Aug 2009
The Four Types Of Third Party Logistics Providers Explained
The great thing about capitalism is that there is so much choice to make use of. Even in a niche market such as third party logistics, there are several types of business models to choose from. The four models in current design will allow you to pick only what your business needs- and not the fluff that it doesn’t.
Your standard 3PL company will do basic activities to save you time. That would include picking up and dropping off items your business needs, handling of shipping to customers, and of course storing inventory and cataloging to the best of their ability. This is the least expensive of the four types of logistics operations, but also the least complex.
If your business has outgrown the basic model of third party logistics, the next model up for discussion would be the service developer model. This model is used when a business needs extra features that other companies don’t offer. Typically the extra features aren’t anything too drastic- perhaps something such as an improved method of tracking orders or more options in package design. This model typically costs more.
If you don’t have the man power to do any logistics work, the customer adapter is the best 3PL model. In this model of logistics, the company will adapt to your every need and do all logistics activities for you. Because of the nature of this model, there are typically few customers that these companies take on. Do note that at this point the 3PL company will not work in-house with your own.
The size of your business and your level expansion is what you should look at when you are determining what model you want to go for. Most of the time you can safely go with the standard model of 3PL businesses and be perfectly happy. Only when your business has outgrown its shell, and doesn’t look like it will cease any time soon, should you consider the more personalized services. A consultation is always a good idea if you are confused.
At the extreme end of the spectrum we have the customer developer model. This model allows a 3PL business to completely integrate with your own business. It will be much like you have just hired a whole new set of employees that work directly with you to develop your business. This model of 3PL services is extremely limited in the number of clients it can sign on- so these are the most rare of all.
Final Thoughts
3PL businesses are more abundant than most think. Most major cities should have more than a few to choose from. Take your time to go to each one to see what they offer, how much it will cost you, and whether you will or will not need a third party logistics service in the first place.
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