Contract Logistics - The Future of Supply Chain Management

Contract logistics A whole new game

With increasing globalization and ease of trade, Indian firms are demanding new logistics capabilities and more complex solutions from their 3PL partners. Greater acceptance of demand-driven logistics practices brings forth a plethora of complexities into the supply chain and generate the need for contract logistics providers to deliver more expertise-driven services.

Supply Chain Activities constitute multi-modal transportation, customs clearance, and warehousing activities in one or more locations in the entire network. Supply chain activities may be local referring to within the country or regional meaning within a continent or region and global which is essentially intercontinental. Global operations are the order of the day as businesses follow markets and also look for cheaper conversion costs that are achieved by setting up manufacturing facilities in countries where costs are cheaper.Distribution management is a critical function involved in the supply chain that can lead to cost savings in the overall supply chain. An organized distribution network saves significant money for the businesses the costs to store them for longer times at the warehouses are eliminated. Inventory stored at warehouses incur costs to the businesses. Rent, interest payments, insurance taxes about the stock stored coupled with depreciation and obsolescence of the product add to the costs. The services offered by logistics firms add substantial value to the manufacturing companies. These firms help different companies to reduce weak points that outcomes in loss of revenue or profits and further help to assure maximal profitability. Contract logistic companies specialize in several logistics operations that offer network analysis, mode network optimization, warehousing, management of vendor compliance, and other logistics operations. Distribution management is, therefore a great value-added service in the contract logistics market.

Leading Companies in Contract Logistics are Deutsche Post AG, XPO Logistics Inc., Kuehne + Nagel International AG, CEVA Logistics AG, DB Schenker, Hitachi Transport System Ltd, Geodis, Neovia Logistics Services, UPS Supply Chain Solutions, and Ryder System.