Understanding Logistics Brokers

The term ‘broker’ is common enough and it can be applied to businesses that we all use on a daily basis.

In the discipline of logistics, it’s gaining momentum as being a very sensible solution for companies who are considering third party providers for their transport and other logistics related services.

 

They use the expertise of a freight broker. The services are not confined to freight, the movement of goods from A to B. Logistics covers:

• Transportation
• Warehousing
• Picking and packing
• Order fulfilment
• Inventory management
• Packaging
• Freight forwarding

Types of providers

Not all logistics providers are the same. There are companies that have set up their businesses in different ways.

1. Asset-Based

These are usually large logistics companies that have their own fleet of trucks and operate large warehouses.

The services offered by these companies cover almost every facet of logistics. Advantages in using a one-stop-shop company like this is that they provide lower freight and storage costs and a quick turnaround of load and delivery times.

2. Non-Asset Based

These companies do not have fleets of vehicles nor do they offer warehouse space for storage and inventory management. They outsource your logistic work and provide freight brokerage and logistics services.

3. Warehousing and Distribution Services

As the name suggests these firms operate large warehouses from which they provide distribution services. They have personnel employed to receive, store and ship goods.

4. Financial Support

These services help look after freight payments and provide cost control and accounts assistance. They can set up tracking systems, trace inventory and provide inventory management systems.

Your Advantage

There are some very large and obvious benefits if you opt to use these outsourced services. Such as:-

Inventory Management – A reputable provider of logistics services would probably be at the cutting edge of the latest innovations and would be using best practice methodology.

It would be part of their normal improvement cycle to be up to date with the latest technologies in the logistics field.

They would have software in place that could give you a complete inventory management system.

Maximum and minimum stockholdings, efficient order quantities, re-order points and use of Just in Time (JIT) practices to optimise inventory holding costs.

There are various aspects within logistics such as fulfillment, warehousing and shipping that can be challenging themselves. By outsourcing these tasks, you are free to concentrate on other parts of your business.

Networking Resources – Large logistics providers have a network of like resources that a local business supply chain set up could never compete with for efficiency and costs.

By developing relationships, they have the power of leverage and can get volume discounts and possibly a faster service.

Saving Time and Money – it’s obvious that outsourcing saves time and money.

Time IS money as well. By not having to invest in capital such as warehousing space and transport, plus the associated staff, means a huge money saving.

No need to train staff and build a logistical network which is not really the core business. Everything associated with warehousing and distribution can all be outsourced.

Flexibility – Your outsourced logistics provider is able to scale the space, labour and transportation to the size of your business. If your business is seasonal, then that is an advantage with lower space requirements meaning less costs when your turnover is lower.

Outsourcing through freight and logistics brokers is a common-sense approach for any business that has inventory and delivery orders to fulfil.