The Role of Third-Party Logistics in Supply Chain Management

by Michael Kotendzhi | Logistics

Advancements in technology and globalization directly correlated to an opportunity for companies to expand their research to customers around the world. It is because of this desire to expand their products on a broader scale that third-party logistics companies have grown immensely. But how do the two correlate, and what exactly is the role of third-party logistics in supply chain management for these companies? Continue reading below to find out.

How They Connect

Third-party logistic companies provide material procurement, product sourcing, and additional services such as warehousing and delivery, in addition to planning the logistics of the entire process. When looking at the overall goal of supply chain management (which is to achieve sustainability while maximizing benefits for the company and customers), you can see how a third-party logistics company fits right in. Hiring a third-party logistics company will allow companies to not only deliver items efficiently but also do so in the most cost-effective and timely way possible.

Think about it like this—if your company is based primarily on the east coast, but you want to expand your consumer base to the west coast without having to expand your warehouse and supply chain facilities, you can simply hire a third-party logistics company to handle operations on the west coast. In most cases, this will be cheaper than building new facilities across the nation every time you want to expand.

Goals of the Relationship

Companies don’t partner up for no reason. If a company is hiring a third-party logistics team, it is because they believe they will benefit from the relationship in the long run. Some outcomes from this type of partnership may include an increase in inventory without the need for additional funding and overall delivery or the inclusion of tracking software to streamline the delivery process. In addition, shipping and fulfillment times become must faster and more efficient.

After understanding the role of third-party logistics in supply chain management, why wouldn’t a company hire a third-party logistics company? Logistically speaking, it just makes the most sense.

If you are in the market for a logistics company in Vancouver, Canada, you have come to the right place! Here at 18 Wheels, we can provide you with anything you could possibly need related to logistics. Check out our website or give us a call today to speak with a professional about our services and the opportunities we offer.

Michael Kotendzhi is President of Operations & Transportation and a partner at 18 Wheels. Michael has over 15 years of experience and is equipped with a degree in Logistics from the University of British Columbia Sauder School of Business. As well as a background in logistics from XPO Logistics (formally Kelron Logistics), North America's largest contract warehousing provider.

Michael's experience includes supply chain management, reverse logistics, & domestic transportation. He has developed 18 Wheels' trucking solutions, effectively utilizing the sister company's vehicle fleet and building a transportation supply-chain network across North America.