The Benefit of Using a Procurement Company With Logistics and Freight Transport Capabilities

Procurement is the process of identifying and obtaining goods and services. It includes sourcing, purchasing and covers all activities from identifying potential suppliers through to delivery from supplier to the users or beneficiary. Procurement is a key activity in the supply chain management. JTR

Logistics staff participation in assessments provides logistics information and data that supports program/response implementation. All major enterprise resource planning (ERP) software vendors like Oracle and SAP provide products around logistics and transport management. Configuration and deployment of these products requires in-depth knowledge of the industry, local and international freight policies, and foundational knowledge of the company strategy. The overall cost of logistics plays an important part in product pricing. The organization is then able to plan ahead for the provision of the goods and services. Hence, logistics is the cornerstone of companies which produce physical goods. Logistics also plays a vital role in military operations. Logistics deficiencies can cause severe problems to the company’s bottom line.

Many companies have been touted to lose their market position owing to competitors having better logistics management. Ecommerce vendors like Amazon and eBay rely on state of art logistics to keep ahead of the marketplace. Success of companies is not only a factor of how well they do their core-business (like produce a certain product) but also how well they outsource non-core parts of their business to third parties.

Given the complexity of logistics and transportation, this is a key area for outsourcing. Experienced companies know to work with one-stop shops to define key service level agreements around supply chain and then leave it to the experts to work through the complexity as a black box. This allows the company to focus on where it matters, their core business. Logistics companies provide myriad benefits (over attempting an in-house model):

Logistics automation
Procurement services
International network
Shipping and freight services
Industry experience and Volume discounts
Logistics Automation deals with reducing labor overhead by incorporating smart machinery, advanced software and progressive tools and technologies. As added benefits, automation also reduces energy and material wastage, improves quality and accuracy. By using warehousing advancements like RFID, automated placement and storage, software based inventory tracking, companies provide peace of mind with significant cost advantage (that comes with co-location of your products).

Procurement services can range from advisory on raw material procurement to rate management. Companies with both direct (raw material) procurement and indirect procurement (repair and maintenance materials). They help arrive at a sweet spot between quantity and frequency while providing industry specific value. It is commonplace knowledge that seemingly disparate industries use similar material and machinery. For instance, a manufacturing plant requires safety and medical supplies, whereas, a hospital requires general maintenance products. Using one stop shops allow one to take advantage of the wide range of materials in their purview.

Shakespeare’s ‘all the world is a stage’ very well applies for the current business models with free trade acts between countries being commonplace. The ability to supply to remote countries, while not needing to deal with disambiguation of policy, currency and language nuances is key to international success. One stop shops have all the international network and connections to advise and execute your international shipping endeavors.

The aim of transport is to physically move supplies in a reliable and safe manner, on time, cost effectively and efficiently to its destination. Even if an organization owns its vehicles, there may well be occasions when a need arises for additional capacity, to meet peak activity or other short term needs. This can be met by the use of vehicles supplied by a commercial transport provider (third party). Also tapping into the third party shipping and freight service is advantageous to the company because:

of the variable loads and journeys can be catered for
the hauler may be able to offer a more cost-effective and a more efficient service
the responsibility for administration of vehicles and drivers is no longer the responsibility of the organization (thus allowing staff to concentrate on more productive areas)
there is no requirement for capital to be invested in transport
Many online logistics companies provide consulting services whereby the clients can overcome their challenges that they face while trading goods. Industry experts well versed with policies and regulations, audit (like SAS70) and compliance requirements (for example dangerous and inflammable materials), dynamic factors (like weather, socio-political events) and supplier strengths (like volume discounts and geographical coverage) are consulted and the business organizations can formulate their own time and cost efficient logistical time table while optimizing their budget at the same time.