contract logistics
discussion of the contract
Definition: The term contract logistics refers to the long-term cooperation between a company and a logistics service provider. It is defined by a service agreement - a contract. The contract logistics service provider takes on the logistical tasks and acts as a link between the company and the customer. In English it is also referred to as Third Party Logistics or 3PL .
Table of contents
areas of responsibility
Contract logistics involves the outsourcing of logistics processes. The manufacturer relies on a logistics service provider. In addition to the typical logistics activities - warehousing and transport of sea freight, air freight or land transport - contract logistics includes entire service packages. Additional logistics services such as shipment tracking or non-logistics services such as assembly work are offered in order to offer the customer added value.
Contract logistics refers to the entire supply chain management: from the production of the goods to delivery to the customer. Procurement logistics is also sometimes taken over. Other areas of responsibility are as follows.
- Goods transport, delivery, warehousing, warehouse management, labeling and picking
- planning and design of supply chains
- order processing
- shipment tracking
- accounting and debt collection
- design of industrial plants
- quality control
- final assembly or partial assembly
characteristics
Integration of several logistics services: See areas of responsibility.
High degree of individualization of the service: In contract logistics, the services are adapted to the individual needs of the respective contracting party. Due to the strong integration into the customer's value chain, the high degree of individualization and the contractual commitment, the contract logistics provider cannot be replaced in the short term.
Long-term contractual safeguarding of the business relationship: In contract logistics, in contrast to "transaction"-based business relationships, which can be terminated at any time, the partnership with the associated rights and obligations of both parties is fixed in a written contract - the contract. The minimum term for contract logistics services is around one year. In practice, the term of a contract is between 3 and 5 years.
Contract Logistics Advantages
- cost savings
- planning security
- concentration of the company on core competencies
- Better calculable warehouse and supplier logistics
- Lower costs for personnel, transport systems and fleet
- Long-term business relationships
- Proven logistics concepts
- Higher delivery quality
- planning security and cost transparency
- utilization of specialization advantages
- Transparent cost accounting
contract logistics disadvantages
A major disadvantage of contract logistics is that the logistics provider cannot simply be replaced by another one due to long contract periods. This can be problematic if the collaboration does not work out.
- quality defects
- High initial costs
- Great negotiation effort until the contract is concluded
- bond strength
- Insolvency or excessive transport fees of the service provider
If both parties see and treat each other as partners and want to contribute to success, the disadvantages can turn into advantages. Choosing the right partner is extremely important. Transparency, employee qualifications and value for money are essential.
