Get to know your logistics service provider, a special partner in your supply chain
What is a logistics service provider? An essential player in the supply chain, the logistics service provider will provide you with a range of services and play a key role in your business.
They will be involved in many aspects of your business, such as your logistics, the transport of your goods, the quality of your products, customer satisfaction, etc.
With the development of e-commerce, demand for logistics service providers has increased in recent years. In the course of this article, you will gain a detailed understanding of the different fields of action and services that a logistics service provider can offer you.
What is a logistics provider?
Logistics service provider: definition
A logistics service provider is a company that intervenes in your company's supply chain and handles many different aspects (transport, storage, etc.).
It will handle one or more tasks in this same chain. Companies subcontract tasks to logistics service providers in order to improve their performance.
Given the many stages in the supply chain, logistics service provider companies can provide several different services and specialise in one or more of them.
The roles of a logistics service provider
Logistics service providers can play a number of roles for their customers. With a direct impact on your supply chain, their missions and services are varied:
- Stock management: the service provider will manage the handling of its customers' goods in a storage facility and will monitor your stock levels to prevent any surpluses or shortages of products and goods.
- Transport : this covers everything to do with the movement of goods throughout the supply chain. The service providers will manage the transport fleets, whether by land, air or sea.
- Order preparation: order preparation involves sending goods from one place to another, whether for storage or production. Service providers can also take care of shipping to end customers and customer returns.
What are the different types of logistics provider?
To better identify logistics service providers in the supply chain, they have been divided into several different categories. Each provides a specific service.
Some logistics service providers fall into more than one category.
1 PL (First Party Logistics)
The first level of logistics outsourcing, companies categorised under 1 PL are transport agencies. They take care of distributing your company's products, whatever the means of transport.
2 PL (Second Party Logistics)
Service providers in the 2PL category may be responsible for transport, but will mainly be involved in everything to do with the storage of goods. Being in charge of transport will enable them to take better charge of storage by managing the flow of products, goods and raw materials.
3 PL (Third Party Logistics)
Providing a much more comprehensive logistics solution than its predecessors, the 3PL provider will handle transport and storage logistics, as well as managing all the administrative overheads and the flow of information (customs documents, invoices, etc.).
If the 3PLs do not have a transport or storage structure, they can also manage the 1PL and 2PL service providers. Some of these operators can also provide additional services, such as production.
4PL (Fourth Party Logistics)
4PL logistics service providers are sometimes referred to as "integrators". They have a consultancy role: the main service they can provide is to identify areas for improvement within the supply chain to optimise it and make it more efficient, and they are often on long-term contracts.
In most cases, they work with the logistics service providers that make up the 3PL.
These are evolving professions that are constantly adapting to technological change.
5 PL (Fifth Party Logistics)
Closer to the engineer than the logistician, 5PL logistics service providers also have a consultative approach. They provide their customers with customised, made-to-measure solutions.
Like 4PL logistics providers,their aim is to make the supply chain as efficient and optimised as possible by providing solutions tailored to their customer's specific supply chains.
What are the advantages of an outsourced logistics provider?
Reducing stock levels
Logistics service providers can provide their customers with a range of information to help them reduce stock-related costs:
- The product references that are working, so they know which products to prioritise,
- Stock levels in relation to orders, to anticipate stock shortages and overstocks.
Improving the quality of the logistics service
The logistics service provider has a role to play in improving the supply chain. Your company needs to listen to the comments and feedback that your customers and service providers can give you about your supply chain.
You may receive alerts or warnings about the quality of your goods or the performance of your supply chain in general. The benefits of being attentive to these signals are twofold: it will enable you to increase your sales, but also satisfy your customers.
Expert skills
One of the advantages of logistics service providers is that the logistics service they offer is their core business. They are therefore more frequently confronted with the problems associated with their sector of activity, and will find it easier to resolve them. As a result, they are more likely to be successful in their area of expertise than if your company took care of it.
Be more flexible
It's easier for your company to terminate a service it's paying for and change provider if it isn't satisfied. You won't have this flexibility if you take care of a logistics stage yourself.
A logistics service provider therefore provides your company with practical solutions. They adapt to your offer and your demand. They are there to support you throughout your supply chain. If you choose the right logistics provider, you can optimise your supply chain, improve your production and delivery times and increase your sales tenfold. That's why it's important to analyse your logistics needs before choosing your service provider.
International logistics management tools as an alternative
As you can see, the logistics service provider profession is varied and has a direct impact on your supply chain. But if you're not sure you want to outsource some of your activities, you can always opt for tools specialising in international logistics management!
For example, TRADE.EASY Import-Export is a high-performance import-export management software package that helps you streamline your entire supply chain:
- the solution gives you better control over the flow of goods and enables you to anticipate logistical contingencies;
- automatic workflows (based on the formalities to which you are subject) guarantee that your international operations comply with customs and regulatory requirements ;
- tracking shipments (including multi-container shipments) is made easy, with access to all the essential information, automatic ETD/ETA updates, transit time and carbon impact calculations;
- unified, centralised and historical data sharing between all stakeholders (customers, suppliers, forwarding agents, banks, shipping lines) ensures secure management of operations;
- opting for software such as TRADE.EASY also means guaranteeing data security.
These tools meet the challenges of international trade and can help you optimise your supply chain.
Article translated from French