In the context of supply chain management, contract logistics is a business model based on a long-term division of labor between a company and the logistics service provider and regulated by a service contract or contract. Logistics management is an important part of the profitability and overall success of many companies. While some companies manage their logistics, others find it more efficient to hire specialized contract logistics companies to manage their logistics for them. Contract logistics companies often need to develop a deep understanding of how different industries work in order to best manage the logistics of a variety of companies. Contract logistics refers to the long-term assumption of complex logistics service packages by freight forwarders or parcel services. This is essentially the outsourcing of logistics services to a third-party company. Hello, Varughese, the quality of logistics consists in carrying out highly productive operations, optimizing shipments and reducing product damage through excellent alignment with customer requirements and full compliance with legal regulations. ISO certification ensures that all operational aspects meet these strict quality standards, whether in the warehouse, on the customer`s way or somewhere in between, so that the company can guarantee operational excellence. There are 21,769 standards, with quality management (ISO 9001) being the most widely used in the logistics industry.
ISO standards are also important for connecting ports to rail hubs, air freight and land distribution, and for providing greater efficiency in the way goods are transported, making them a powerful tool for collaboration and efficiency throughout the supply chain. For this reason, many contract logistics companies are founded by former logistics managers who already have a good understanding of the industry in which they work, but also where they can best place their contracts. The contract logistics market has been growing for many years, but the market for 3PL providers has exploded after the birth and exponential growth of e-commerce. According to the Transport Intelligence market report, the strongest growth in Europe is expected in countries such as Romania, Slovakia and Poland: a contractual logistics partner will be better able to absorb increases and fluctuations in volume than an internal operation. The ability to share facilities and labor allows contract logistics companies to move resources and react in ways that the manufacturer cannot. This has a strong appeal for FMCG companies that have intense launch and advertising cycles that can lead to distortions in regular flows. Even ecommerce companies looking to dig deeper into a market may find that working with contract logistics partners provides an agile way to build a presence. The most obvious advantage of contract logistics is the saving of costs, whether in the form of equity or time, thus eliminating the need to build expensive infrastructure. For example, a company that manufactures windows may have a large factory and an office building next door to accommodate employees. Labor costs may be lower than managing your own logistics.
In addition, significantly lower regulatory costs reduce the price of outsourcing. In addition, companies can benefit from lower tax rates by operating in another country. The majority of e-commerce businesses place orders with logistics service providers to offer warehousing and distribution services. High-speed e-commerce business models require companies to have technology solutions that increase the speed of execution processes. With the advent of e-commerce, startups related to on-demand and cloud-based warehousing are gaining popularity. Companies such as Waredock, Flowspace, and Flexe offer companies flexibility in terms of using storage space based on seasonal demand instead of long-term contracts for a fixed space. Some examples of such companies are Stord, Flexe, Flowspace. This represents fierce competition with existing traditional contractual logistics service providers. If we look at the simplified supply chain map above, we can see that this pharmaceutical company outsources its logistics at different stages. From research and development to production, from warehousing to distribution to business partners, external suppliers are used in the fields of sea freight, air freight, ground transport, control towers and logistics centers.
For internationally active companies, logistics management is an essential element in creating a sustainable competitive advantage. There are international standards that structure critical aspects of logistics such as flows (associated with material, financial, information and personnel flows), system (micro and macro logistics) and operations (procurement, transport, manufacturing, sales, warehousing, service). However, the one specifically related to risk management is ISO 31000. According to wikipedia`s definition, these services are all provided by 3rd party (3PL) logistics service providers. Logistics management is an important part of the profitability and overall success of many companies. While some companies manage their logistics themselves, others find it more efficient to hire specialized contract logistics companies to manage their logistics for them. Contract logistics is defined as the complete process from production to distribution at the final point of sale. This means that contract logistics is not simply the process of transporting goods, but a much more holistic approach that combines traditional logistics with supply chain management processes. Examples of large contract logistics companies include United Parcel Service, Kuehne + Nagel, Exel, Genco and DHL. These companies have been around for a long time and have made a name for themselves in their respective industries, offering cost-effective solutions from customers and business owners. However, since the advent of the start-up culture, many new services have arrived on the market that disrupt the traditional supply chain model. Almost all companies that offer any type of logistics service will call themselves a 3PL.
Ideally, they offer bundled services, including: One of the most compelling examples is after-sales service. This can be a real problem in the reverse supply chain. Offering this service in the context of contract logistics brings real added value: Can you give me more details about contact logistics and the ISO standards that cover this logistics? Another service that logisticians should be able to provide as part of contract logistics is the collection and recycling of returns. Items that cannot be repaired will be dismantled. Then they are recovered, recycled or destroyed in accordance with the law. The value of the components is taken into account in the results of your company as well as in the secondary use of certain spare parts. The logistics service provider becomes an important link in the chain, uniting all the partners of the industrial company or retailer and maintaining its proper functioning. Contract logistics is the ideal solution for partners who are most often involved in long-term logistics service contracts. .