Contract logistics is one of the services that many businesses search for. In businesses where traditional management understanding is adopted, processes such as product sales and storage are carried out with the resources of the business in question.
In businesses where digitalization continues and current business models are integrated, logistics processes are managed through outsourcing. Companies ensure their targeted shipments with the help of logistics companies with strong distribution networks. Thus, they can focus more on their core goals and also gain a cost advantage.
At this point, the contractual commitment signed by the company and the logistics partner is expressed as "contract logistics". You can read the rest of our article for answers to your questions such as how contract logistics works and what its advantages are. 👇
What is Contract Logistics?
Contract logistics, as the name suggests, is an expression that refers to contract commitment in logistics. A clearer meaning of this concept can be stated as referring to the contract between the logistics service provider and the customer and the operations carried out within the scope of this contract.
When the relevant contract is signed, all material and product movements and responsibility from raw materials to consumption take place under the coordination of the two business partners.
In order for these services to be classified as logistics, processes need to be analyzed and resolved. Elements such as capacity planning, cost planning, and vehicle status assessment include the steps of the products from raw materials to the final consumer.
These processes, on the other hand, must be based on a contract. In other words, the contract mentioned here is referred to as contract logistics.
How Does Contract Logistics Work?
Contract logistics is a service preferred especially by businesses operating in the manufacturing field. This concept has been put forward to characterize processes such as procurement, storage, and transport in the stages from raw materials to the finished product.
Some companies manage their logistics operations themselves. There are logistics managers here, and different stages of the relevant process are supervised by these logistics professionals.
In some companies, all or part of the logistics management is requested from a logistics partner company trusted for its professionalism. Contract logistics companies can manage these processes more economically and efficiently. Navlungo is among these professional companies.
Contract logistics companies agreed upon for contract logistics have deep knowledge of business processes in the numerous sectors they serve. Because the logistics processes required by each sector are different from one another.
Navlungo, which can easily gain dominance over any sector, meticulously carries out every stage of the supply chain. In order to understand more clearly the contract logistics working principle carried out by Navlungo, you can look at the following items:
• The needs of the customer are evaluated by taking into account elements such as product type, supplier, target market, volume, budget, and delivery characteristics.
• A contract outlining the scope of service, delivery schedule, costs, and other conditions is signed.
• The logistics support provider considers the needs of the customer. It then uses its capabilities and resources to meet the customer's needs and develops a strategy.
• The provider starts implementing the relevant strategy, ensuring the coordination of multiple logistics tasks to guarantee that the products are delivered precisely and quickly.
• Additionally, the provider continuously tracks and reports on the effectiveness of logistics activities. In fact, by reporting here, the suitability of all operations to the signed contract is determined. In this way, the customer is continuously informed about issues that may arise.
• The logistics service provider continues to check the effectiveness of the logistics processes. Because areas that need improvement are only determined in this way. It is very important to perform this step to ensure a high level of customer satisfaction and logistics process performance.
In general, contract logistics is a process designed to meet the specific requirements of customers. Thanks to this application that reduces costs, productivity increases while end-to-end logistics support is received.
What are the Advantages of Contract Logistics?
Contract logistics has many advantages of its own. First of all, it becomes possible for companies that outsource logistics services to focus on their core activities and grow rapidly. Companies that can focus more on their business achieve growth by easily gaining efficiency.
Additionally, contract logistics is an application that provides the capacity to reduce commercial risks. Providing flexibility in responding to changing market conditions and capacity planning, this application contributes to firms working more efficiently.
Managing logistics processes by a partner is highly effective in discovering core capabilities and seeing obstacles to growth.
Thanks to contract logistics, bureaucracy decreases and restructuring becomes possible. Thus, you can use the information technologies your company possesses more accurately. While the logistics partner you have made an agreement with in the background performs applications, you can focus on your business more easily and realize your goals.
Companies providing contract logistics are alongside businesses at all steps of the relevant logistics operations. Companies benefiting from this service question the supply chain and make efficiency plans more easily. To obtain these advantages and more, you can contact the Navlungo team right now.
What are the Differences Between Contract Logistics and 3PL?
Before touching upon the differences between these two concepts, it is beneficial to mention what the concept of 3PL is. In the logistics sector, various codes are mentioned depending on the activities carried out and the number and types of communication between the sender and recipient companies. The 3PL code is also one of these specifications.
The concept of 3PL refers to delegating all logistics operations that need to be carried out by the business to a different logistics or transport firm. In third-party logistics, while the manufacturer company receives support from the logistics service provider, it can delegate part or all of the operational processes to the firm.
In 3PL services, transfer management and supervision over transactions are carried out entirely by the manufacturer company. At the same time, depending on the contracts made between companies, additional services such as product packing and boxing during transfer are also available.
Firms that are the subject of 3PL services mostly offer a highly comprehensive logistics service to the manufacturer or supplier company. In third-party logistics service, a third firm is also involved in the management of the recipient or sender company's operations.
In other words, in 3PL service, just like in contract logistics service, there is not only the customer and the logistics partner but also a third firm. However, whether the shipped products are damaged regarding transport is not an issue within the responsibility of the 3PL company.
Why Should You Use Contract Logistics?
Contract logistics solutions provide the most ideal support for managing your company's logistics operations. It can be difficult to catch up with continuously ongoing market needs and marketing trends. As Navlungo, we provide an infrastructure suitable for these innovations, and we support you in all your logistics processes by blending our acquired knowledge with technology.
Navlungo develops different and special solutions for all kinds of industries while providing contract logistics services. Specifically, personalized solutions suitable for storage services and the supply chain are available. As Navlungo, tracking the end-to-end management process and supporting all logistics processes of our customers from production to distribution is our main mission.
You can lean on Navlungo for sustainability, integration, planning, process excellence, and integrity capabilities, and continue to work for the future of your company.
