Logistics Service Provider About 70% of businesses in the UK have outsourced at least one key operation.
Running a business is never easy, and some present more challenges than others. There may come a point where you decide to outsource some business operations to make things easier. One of the most common things that some companies outsource is logistics using logistics service provider.
Logistics service provider can handle various tasks, giving you and your employees more time to focus on other areas of your business. But what is a logistics service provider?
In this guide, we’ll cover everything you need to know about logistics companies. Keep reading for more.
What Is a Logistics Service Provider?
A logistics service provider (LSP) is a company that specialises in handling logistical operations for other companies. This involves storing, handling, and transporting goods that can be anything from raw materials to final products. Some companies do this in-house, but others choose to hire an LSP.
The larger a company is, the more complex and in-depth the logistics can become. As your business grows, you’ll be more likely to consider working with an LSP. LSPs can offer cost-effective solutions for warehousing, the transportation of goods, supply chain management, and more.
Tasks of Logistics Service Provider
There are several types of LSPs, and the services they offer can vary. Some of the most common services that you may want to make use of include:
- Incoming goods logistics
- Inventory management
- Warehousing
- Order tracking
- Invoicing
- Picking and packing
- Shipping
- Payment and finance management
- Returns
- Disposal
It’s worth noting that you probably won’t need to use all of the services that a Logistics Service Provider offers. With AP+, you can let us know your business needs. We’ll then be able to determine the solutions that will serve you best to ensure you’re only paying for what you require.
Types of Logistics Service Provider
Before settling on an LSP, it’s important to understand that there are different types. Some may not be suitable, so it’s best to get an idea of how each type operates so you know what to look for.
First-Party (1PL)
These are companies that handle all logistics in-house. To do this, a company needs fleet vehicles and employees to handle every step of the logistics workflow. This can work well for smaller companies, but as a business grows, it can become far more challenging.
Second-Party (2PL)
2PLs provide intermediary transport solutions. Using their vehicle fleet, they can transport and deliver goods, but don’t deal with other processes such as warehousing. If you package your goods in-house but just need a company to transport them, this could be an ideal solution.
Third-Party (3PL)
Third-party logistics services are among the most well-known. They deal with warehousing as well as inbound and outbound transportation. You can usually lease warehouse space, and the 3PL will take care of all shipment preparation.
Some 3PLs have their own fleet, but others outsource the transportation to 2PLs. 3PLs also often deal with things like package tracking and delivery confirmation.
Fourth-Party (4PL) or Lead Logistics Provider (LLP)
Fourth-party logistics services offer somewhat more than 3PLs. On top of transportation and warehousing, 4PLs can oversee your entire supply chain. They work directly with retailers, suppliers, and other relevant parties on your behalf.
4PLs don’t own vehicle fleets themselves. Part of their management involves working with 2PLs and 3PLs to organise warehousing and shipping.
Fifth-Party (5PL)
5PLs are also known as logistics aggregators. They contract and oversee multiple 3PLs to combine them into a large supply network. They may be able to create market leverage that can allow them to offer discounts to their clients.
A 5PL can often provide a comprehensive framework to help a business execute supply chain operations. They take on more responsibility than other logistics service provider, so are typically only used by very large companies.
Benefits of LSPs
Sometimes a company will work with an LSP out of necessity. They might simply not be able to keep up with demand and may require warehousing, distribution services, or something else. With that being said, almost any company can gain something from working with LSPs as they offer a wide range of benefits.
Advanced Technology Access
LSPs tend to have plenty of experience in dealing with all logistics operations. They’ll have better shipping technology than most businesses, and your company can take advantage of this.
You won’t have to build up the infrastructure yourself and will be able to keep your goods organised and fulfil customer orders on time. Customer satisfaction should always be a priority, and an LSP can help with this a lot.
More Shipping Options
If you have your own fleet, your delivery options will probably be quite limited. An LSP can offer a selection of delivery options, and you can pass these on to your customers. You’ll be able to get urgent deliveries to customers faster, and those that want to save a bit of money can choose to pay for a less expensive delivery service.
Scalability
Growth is one of the key goals of almost any business. While expansion is a good thing, it makes certain operations more complex. Logistics become trickier with larger companies, which makes working with an LSP more ideal.
Being overloaded with orders can cause a lot of issues, and ultimately, customers won’t get their goods on time. An LSP can easily scale the services they provide up or down as needed. You’ll be able to deal with growth or any spikes in demand with ease.
Should You Work With a Logistics Service Provider?
Warehousing, freight shipping, order fulfilment, and all other logistical tasks can be difficult to deal with in-house. Working with logistics service provider is a great way to ensure you have no issues with these and can always fulfil customer orders.
AP+ is a leading LSP that helps businesses all across the UK. Take a look at our How It Works page today to find out more about how we can help your business.
