Logistics projects in logistics services outsourcing – part 1

We are convinced of this approach to the role of logistics not only based on press reports, papers presented at symposia and conferences, or the opinions of practitioners. Interest in logistics also translates into an increased demand for professionals in this field – it is worth looking at job advertisements seeking logisticians, the offerings of domestic and foreign schools providing training in this profession, and finally, the growing number of logistics companies. The vast majority of them provide logistics services. According to H. Brdulak, a logistics service “is most often associated with all activities in the field of distribution, transport, and warehousing, aimed at reducing costs while maintaining a consistent level of quality service. It assumes the company’s concentration on key functions (core competence), through which it is recognized in the market, and the purchase of other services from external contractors”.

“A logistics service (Third Party Logistics) is organized and provided by a specialized company that manages the logistics system of another enterprise, regarding, among other things, transport and warehousing. Managers of the logistics company handle negotiations regarding transport routing, cargo handling during the transport phase, etc. On the other hand, logistics companies sign contracts concerning only the economically efficient, professional process of warehousing and inventory management”. A logistics service is, therefore, the transporting and warehousing of logistics products organized by an external company, including their full formal-legal and customs handling. A logistics service is a response to the customer’s demands and needs, which are associated with delivering the right product at the right time, at a price that suits them, and while maintaining the proper level and quality of that service. As E. Gołembska notes, a logistics service is additionally distinguished by:

• a departure from the typically secondary demand for this service, whereas a transport service is provided as a result of the emergence of secondary demand for that service
• the price of a logistics service, which is a function of the prices of warehousing, transport, and the customer service process
• the enhancement of not only the value of the goods by the logistics service but also the increase in competitiveness in international markets.

Logistics services allow an enterprise that decides to entrust the performance of logistics functions to a specialized entity to achieve specific benefits. These include:

• current balancing of the effects of demand seasonality for logistics products by concluding contracts with manufacturers regarding the accumulation and handling of inventory in regional warehouses with unused storage space
• improvement of the distribution of logistics infrastructure through the proper layout of warehouse bases, as well as the use of geographical conditions for balancing supply and demand in the market
• reducing or lowering transport costs by using multimodal, intermodal, or bimodal transport instead of fragmented cargo transport
• introducing new products to the market by researching demand, through the rapid delivery of small batches of products, but simultaneously to many points of sale, in a short time. This form of logistics service is an alternative to large, expensive advertising campaigns organized by goods manufacturers.

The article comes from the magazine “Logistyka” 6/2008.