Logistics Impact on the economy has been so strong it ignited the economic growth and expansion from 2009- until now, which is the longest in history. Have you ever wondered we are expanding at a rate and why we are having such a run? Was it the Federal Reserve bank, The President’s economic policies, the demographic shift or the US Currency?  Well it is none of those reasons. The correct answer is logistics.

Many years ago, companies lived and died by the Inventory Cycle. Companies used to bulk up on inventory in anticipation of demand and sales afraid of long delivery times from vendors. It used to take weeks or months before customers took possession of their goods. Companies would carry a lot more inventory that they needed, that tied up financial resources and made them vulnerable to demand changes. We all have witnessed large companies getting rid of obsolete items at a total loss.

Nowadays, companies have a lot more flexibility when it comes to inventory control, they do not have to pile up inventory in their warehouses.  Shipping companies have made it easier to get the product on time (Just in Time or JIT).  Companies can use the services of the Freight Forwarders to make sure the products are shipped on time and received at destination rapidly.

Logistics Impact on the shipping Industry

As more and more products are being imported, Freight Forwarding Companies became an integral part of the Supply Chain Providing services such as Quality Control, Compliance and import services. Companies passed some of the responsibility of getting the inventory on time to Freight Forwarders. These companies order less amount of inventory, but they are receiving it more frequently.

The direct Impact of Logistics on the various sectors of logistics:

1. To control Inventory levels, a new class of consultants came to the scene, Supply chain Consultants. The help companies control their inventory levels and ensure on time delivery.
2. Warehousing Companies grew in number as companies sought to hold inventory in different locations in order to service a larger area.
3. Third party Logistics Companies or 3PL Companies emerged into the market as providers of all the logistics solutions needed to deliver products from Manufacturer to End User such as Order Fulfillment, Inland Transportation, Ocean Freight shipping and Storage. Companies no longer need to have their own warehouses to store their products and fulfill their orders. Knowing that you can depend on a 3PL Company to fulfill orders allow companies to focus more on their core competencies which fueled product innovation.
4. International Freight forwarders started opening more locations around the globe to facilitate the transfer of goods from Vendor to Customer.

The re-engineering of Logistics

The reengineering of the Logistics Industry has contributed to creating more jobs and new companies offering logistics services. It also allowed for new products to enter the market creating new demand for products.

Products no longer take days or weeks to be delivered, thanks to logistics they can be delivered the next day or even the same day.

In conclusion, logistics made it easier, cheaper and faster to deliver orders from Factory to end user. There is no more need for companies to carry large amounts of inventory and invest large amounts of money in inventory since, thanks to logistics companies, product delivery has been made easier than ever.

Resources:

Omni Channel Fulfillment

Contract Logistics Companies

International Freight Forwarders

TPL Companies , Third Party Logistics Companies , or 3PL companies face continuous and evolving challenges in order to keep up with demand.

These days, many companies have outsourced their warehousing and distribution services to a 3PL Company.

To differentiate themselves, 3PLs are working to provide value, innovative solutions and information to facilitate data-driven decisions. 3PLs are also using technology and data to aid shippers in selecting the right shipment modes to maximize efficiency and reduce costs.

Major challenges facing TPL companies

• Finding New Talent
  The 3PL industry faces a challenge in the form of finding talent and this requires attention.. Most of the companies complain that it is very difficult to find the right candidates for the right vacancies.
• Rules and Regulations
  3PL companies need to stay informed of the new sets and regulations imposed by the different countries.. It is a challenging task,  for 3PL companies who try to cover as many markets as possible.
• Lack of Collaboration
  The lack of collaboration between the shippers, the carriers, and the end-customers can have an adverse effect on the smooth functioning of the supply chain. That is why keeping the lines of comuincation open is key to a successful relationship.

Other Challenges

• Meeting Requirements
  This is a major challenge that is faced by 3PL companies wherein in certain cases they are not able to meet the specific logistical needs of the shippers. The shippers are usually disappointed with some of the factors provided to them such as packaging, on-time delivery, customer service, etc.
• Lack of end user understanding.
  This is one key factor where 3PLs struggle with. Just imagine a customer who does not provide full scope of the work required and insists on changing the game plan on regular basis. Add to that the customer’s lack of knowledge of rules and regulations that 3PL companies have to abide by. In conclusion, the customer play a major role in the success of the cooperation with a 3PL company.

Due to the nature of the logistics industry, 3PL companies find themselves constantly battling customers, vendors and regulations to try to stay afloat. That is why, in the past,  most of the TPL companies tried to stick to one line of business such as freight forwarding or just transportation.

Furthermore , due to the nature of the relationship between end user and a 3PL company, common understanding on both sides is a must. if either side is not able to cooperate, the result is failure of the process