The main role of third party logistics is to provide support to the manufacturing companies for handling the movement of finished and raw materials. How they do it and which companies need them, let’s find out.
The third party logistics companies are popularly known as 3PL and TPL companies. These companies are specialized in storage and movement services. Some of the most important things to know about companies that constitute Third Party Logistics India sector are:
- Types of third party logistics
Logistics is a vast field. It comprises of warehousing, distribution, transportation, supply and so on. Not all 3PL companies are involved in all the processes. On the basis of the departments handled, the TPL companies are classified as:
- Production logistics and management companies
These companied offer support for the storage and movement of raw materials. Except a handful of industrialists, the manufacturing companies cannot afford to have in-house storage section for keeping raw materials. The location of production and logistics and management companies is strategically designed to ensure that the putting of equipment and materials is done with ease. This makes production easier and faster.
- Distribution and materials movement companies
The finished goods need to be moved to different locations where the end users can come to buy them. That is why; warehousing is one of the specialties of distribution and materials movement companies. Apart from moving the finished goods to the intended locations, the companies also take care of stock and record how it is used and by whom.
- Supply logistics company
Supplies ensure that the materials required for the production reach the manufacturing site in correct, unadulterated form and exactly when needed. The location is a bit difficult to reach, for example, military locations or constructions site.
- Reverse logistics company
The company handling reverse logistics has organized system for taking the unused raw materials back to the site where these are stocked. The projects are short-lived and the site has to be consolidated once the process of construction is over.
- Important benefits of using TPL companies
There has to be some reason why companies handling supplies and distribution are flourishing. They have a special role in developing the economy of the country. Here is why.
- Wholesome network
Third party logistics companies sometimes act as a connecting link between the materials suppliers and the manufacturing units. If you need something due to shortage of materials in the stock, the TPL companies can ask the other suppliers in their network and help the client company continue with the production.
- Helps handle market expansion
The demands of market expansion require looking for additional spaces to store extra raw materials required and the finished goods as well. When the buying a space overnight is not possible, the TPL companies offer space to keep up with the demands of an expanding market at a low cost.
- Ability to process orders on time
The companies having limited space find it overwhelming to process the orders with the limited set of resources. Having extra space and the support of older people in the system allow easy processing of goods and facilitates on-time delivery to the buyers by optimizing resources according to the buyer requirements.
- Challenges of outsourcing distribution and supplies
Going to TPL has some element of desperation and compromise attached to the action. Companies outsource the shipping and distribution for the sake of convenience, but lose the control over the goods in return. They might not be able to plug the loopholes that are in the service process of the TPL companies. And, so are at risk of losing the consumer trust for no fault of theirs. Once outsourced, bringing the distribution function back to in-house arrangement itself becomes a challenge due to less knowledge of prevalent market conditions.
Mumbai is the hub of business in India. If your manufacturing unit is anywhere near the city, you can consider 3PL logistics companies in Mumbai for your supplies and distribution needs. However, take time out to read the market conditions for any changes in future too.