Probably, one of the catalysts to the global progress and development of this century is the internet. From the communication to the medical and healthcare sector to national and global security down to market and trade, the impact of the internet is undeniably immense.
The rise of the eCommerce industry, for example, has brought a revolutionary change in the retail and merchandise sector. The creation of popular websites like Amazon, eBay, and Shopee has reshaped consumer behaviour today as well.
As the eCommerce industry thrives, the demand for a logistic company in Malaysia has also skyrocketed. The businesses that jumped onto the hype of the train were unable to keep up with the unstoppable progress of the eCommerce industry, especially if the growth forecast for the global eCommerce sales is expected to reach US$10 trillion by the end of 2027.
To not get behind by train, many businesses hire a third-party logistic company in Malaysia. Here are the things you need to know about third-party logistic services or 3PL.
A Brief Introduction To Third-Party Logistics Services and Companies in Malaysia
What is Logistics
Logistics refers to the transportation and storage of goods, products, items, and merchandise from one location to another. Most businesses, especially the retail sector, require an efficient logistics service.The services include lorry transport and warehousing in Malaysia.
There are two main purposes and functions of logistics: transportation and warehousing.
Planning, optimising routes, and execution of ground movement and distribution of goods and products are the prime tasks of transportation management. However, transportation management has branching jobs as well, including freight auditing and payment, yard management and carrier management. Transportation management may require lorry transport services in Malaysia.
On the other hand, warehousing includes warehouse and inventory management. They can also do other tasks such as order fulfilment, where the logistic company in Malaysia receives and processes the orders.
Ideally, logistics service should be efficient, timely, and cost-effective. Delays in the logistics area affect the entire supply chain. Millions of dollars of logistics costs are lost due to traffic alone.
Not all manufacturers and retailers have their own logistic services to support their needs. These businesses tend to hire a bigger logistic company in Malaysia to assist with the logistics matter. The companies that offer these kinds of services are called third-party logistic partners.
In-House Logistics and Third-Party Logistic Company in Malaysia
Retailers, manufacturers, and businesses alike can either have in-house logistics or hire a third-party logistic company in Malaysia to manage the transportation and warehousing of goods, products, and merchandise.
In-house logistics is where the business manages the transportation and warehousing tasks themselves. It means that they have to invest in their own lorry transport in Malaysia, build or lease a warehouse for storage, and purchase software and technology for inventory, route optimisation, warehouse management, and transportation management.
Some businesses expand their operation by investing in in-house logistics equipment. Manufacturers and retailers that want to extend service without purchasing or investing in in-house logistics find a partner with a third-party logistic company in Malaysia.
Third-party logistics company or simply 3PL provides transportation and warehousing services for businesses in Malaysia.The difference between 3PL and in-house logistics is that 3PLs can extend their services apart from transporting and warehousing. Manufacturers and retailers consider several factors when deciding whether to invest in in-house logistics or hire a third-party logistic company.
The Three Main Functions of Third-Party Logistics Services and Companies in Malaysia
TRANSPORTATION LOGISTICS SERVICES
Third-logistics companies take care of the transportation of goods from the seller to the buyer. 3PLs provides cost-effective packaging services of the products and the transportation mode. Although lorry transport is common in Malaysia, some 3PLs also transport goods and items via rails, ship vessels, planes, cables, and even pipelines.
The third-party logistic company in Malaysia may consider several factors when choosing the best mode of transport for the goods. These factors include cost-effectiveness, delivery schedule, door-to-door services, tracing and tracking of the cargo, and flexibility of the service. 3PLs also ensure the safety of the products during transportation.
WAREHOUSING LOGISTICS SERVICES
Basically, a warehouse is a place where the goods, products, and merchandise are temporarily stored. Warehousing logistics manages the flow, movement, organisation, and inventory of these goods and items. Warehousing logistic services in Malaysia is ideal in keeping tabs on the items that are off for dispatch and received items. It also provides a centralised place for the goods in a particular area, making transportation easier. Warehouse logistics can also buffer and maintain the balance between the supply and demand of the goods in a specific location, making sure there is enough stock in the area before the following goods arrive.
INBOUND AND OUTBOUND LOGISTICS SERVICES
Another significant part of the logistics process is the inbound and outbound process– or simply shipping and receiving. This task is more focused on keeping track of the inventory that comes in and out of the warehouse rather than the literal shipping and receiving.
The inbound process tasks include recording, issuance of receipt, and real-time tracking. Meanwhile, the outbound process tasks include order fulfilment, supply replenishment, checking, staging, loading, and shipping.
The key for an efficient inbound and outbound logistic service of a third-party logistic company in Malaysia is an accurate management system with real-time tracking and tracing access.
Now that we know what 3PL is and how a third-party logistic company in Malaysia can help your eCommerce business in terms of transportation, warehousing, and inbound and outbound of goods, it is time to decide whether to hire one or invest in in-house logistics. Let us weigh the advantages and disadvantages of 3PLs.
Third-Party Logistics Company and Services: Advantages and Disadvantages
ADVANTAGE #1: SCALABILITY
One of the reasons why companies, retailers, and manufacturers are reluctant to invest in in-house logistics is the possible lack of return on investment.
The trade and market remain unstable, and the demand and supply for goods fluctuate constantly. For many businesses, investing in building warehouses, transport equipment, and other logistic functions is not ideal with an unstable market.
One advantage of hiring a third-party logistic company in Singapore is its ability to scale its services and operations according to the needs of the client and the demand of the market.
The 3PL can decide how much labour and transportation are needed to accomplish the logistics task of the client. During peak season, a client may require more workforce, transportation and distribution services, inbound and outbound processes, and warehousing in Malaysia. At the same time, 3PLs can scale down or reduce the logistics of the resources during the offseason.
ADVANTAGE #2: EXPERTISE AND RESOURCES
A reputable third-party logistic company in Malaysia has extensive expertise and experience when it comes to handling, picking, and packing bulk and high-volumes of supplies and goods off-season or on the season.
3PLs have the right technology and equipment to manage to ship, receive, warehouse, distribute, and transport goods and items.
Apart from having their own lorry transport in Malaysia, 3PLs have connections with other companies and parties when it comes to high-volume shipment overseas. They can manage shipments of goods via plane, vessels, and land transportation.
Third-party logistics companies and services also incorporate advanced technology in inventory management and order fulfilment to ensure the accuracy and safety of supply details concerning the quantity, quality, expiration dates, coming in and out of the warehouse.
ADVANTAGE #3: REDUCED OPERATIONAL COST
One of the advantages of hiring a third-party logistic company in Singapore is saving operational costs in in-house logistics. Instead of allocating money in hiring new labour for in-house logistics, training, compensation and benefits of the workforce, leasing or building new warehouses, and new transportation equipment, companies often get the value for their money from the efficient work or reputable 3PL company.
Apart from taking advantage of the complete logistics resources, manufacturers and retailers save money from unforeseen expenses during the movement of the goods, such as equipment malfunction, accidents, weather, and so on. A reputable third-party logistic company in Singapore is aware of the problems that usually arise during the entire process, therefore, can troubleshoot and prevent them from happening beforehand.
ADVANTAGE #4: GLOBAL NETWORK AND CONNECTION
A giant third-party logistic company in Malaysia often scores partnerships with the biggest suppliers in and out of the country because of their global network and connection.
Companies, suppliers, and retailers can take advantage of this overseas connection in expanding the business on a global scale. Usually, these giant 3PLs have access to interconnected routes, warehouses, and other facilities in prime locations abroad, making overseas shipment and transportation efficient and cost-effective.
Meanwhile, in-house logistics may be incapable of shipping goods abroad without a global network. Problems may arise amidst the process as well and could be harder to troubleshoot. Apart from the incapability to do overseas shipping, it may be an economical choice concerning tariffs and taxes.
ADVANTAGE #5: ADVANCED LOGISTICS EQUIPMENT AND TECHNOLOGY
Larger companies can take advantage of the advanced logistics equipment and technology concerning inventory management, order fulfilment, shipment tracking, and route and transportation optimisation to make the process faster and more efficient.
Apart from lorry transport in Malaysia, 3PLs incorporate technology in warehouse robotics to reduce safety risk and enhance inbound and outbound service. Tracing platforms and portals gives real-time tracking of shipments and goods. Meanwhile, barcode scanning and automation systems speed up inventory yet retain accuracy and precision in shipment and goods’ details and information.
Businesses rely heavily on the internet and online portals for swift access and storage of sensitive information; a credible third-party logistic company in Malaysia invests in stringent cybersecurity as well.
DISADVANTAGE #1: LOSS OF CONTROL
Most companies, retailers, and manufacturers are reluctant to hire lorry transport and warehousing services in Malaysia due to the loss of control over the supply chain.
The supply chain plays a critical role in logistics services. Retailers and companies have the freedom to decide and the final say concerning the supply chain matters with in-house logistics. Companies and suppliers can customise and optimise routes, systems, arrangements and organisations of the supplies, inbound and outbound process management, and strategies.
Apparently, retailers have no control over the logistics equipment of their partner 3PL. It becomes a problem when the partner 3PL is unable to meet the demand of the retailer.
It is better to rely on in-house logistics if the retailers have a specific or special requirement where no third-party logistic company in Malaysia can meet.
DISADVANTAGE #2: WAREHOUSE DISTANCE
Hiring a warehousing service in Malaysia hands the retailer storage facility at specific and targeted locations. It is a benefit when the retailer is trying to reduce the transportation cost; however, it is harder for the retailer or supplier to access the facilities personally, especially if problems arise.
The distance somehow restricts insights about the goods and supplies, resulting in reliance on reports and information provided by the third-party logistics company in Malaysia.
Physically inspecting items and the storing and distributing process of the goods gives retailers that the supplies are handled well and of their best quality.
Companies and partner 3PLs can solve this issue through communication, trust, and transparency.
DISADVANTAGE #3: TRANSPARENCY AND COMMUNICATION
One of the problems in a partnership between a business and a third-party logistic company in Malaysia is transparency and communication. It is hard to give up inventory control to a 3PL with a lack of communication. Mistrust and conflicts often start with communication and transparency problems.
Companies and 3PLs can solve this problem by working together to achieve goals. It is essential to have open communication on both ends and to be willing to listen, take feedback and constructive criticisms.
Finding a reliable and reputable third-party logistic company in Malaysia ensures a smoother partnership.
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