Excellence in Execution

Such facilitating relationships can be especially beneficial when an LSP can perform logistics processes at a lower cost, the company wants to focus on other activities, or capital investment...

By Dr. Brian Gibson
August 24, 2015
2 minute read

Such facilitating relationships can be especially beneficial when an LSP can perform logistics processes at a lower cost, the company wants to focus on other activities, or capital investment requirements are too high. Top logistics outsourcing activities include domestic and international transportation, warehousing, customs brokerage, and freight forwarding, according to Langley’s recent annual third-party logistics study.

An LSP can also be very beneficial during geographic expansion. For example, Nature’s Garden Express is expanding beyond the metro Atlanta region, but doesn’t want to set up distribution hubs in neighboring markets. “We’re partnering with a subsidiary of FedEx that specializes in shipping perishables,” says Kirk. “This is the optimal model and saves us money.”

The chief risks of using an LSP, Kirk notes, are losing control over the last leg of the journey and a reduced level of service personalization.

Summary
As we have discussed, timely and error-free order fulfillment doesn’t occur by chance. Logistics professionals must develop a clear understanding of available resources, customer requirements, and demand patterns. They must use these insights to overcome a never-ending torrent of logistics challenges ranging from freight capacity shortages to warehouse operation bottlenecks. When internal insights and execution expertise are lacking, companies can turn to their partners and external LSPs.

Logistics is the unglamorous but indispensable final step in demand satisfaction. Successful completion of transactions depends on a company’s ability to get produce into the hands of the customer quickly, safely, and efficiently while it is still in optimal condition.

Dr. Brian Gibson is Wilson Family Professor of supply chain management at Auburn University and a former logistics manager. He is coauthor of Supply Chain Management: A Logistics Perspective (9th ed.) and active in supply chain executive education, research, and consulting.

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