Third Party Logistics in the Modern Supply Chain

Most companies like to rely on their own logistics capabilities when it comes to moving their products around the world. Having your own fleet of vehicles ready and waiting to move out and distribute products gives an organization more holistic control over their operation and makes it easier to track shipments and harvest data.

However, the challenges of the modern pharmaceutical industry are seeing an increasing number of companies rely on third party logistics provider to assist them in shipping products.

With millions of pharmaceuticals – in particular, lifesaving COVID-19 vaccines – needing to be distributed all over the world, these logistics providers are filling gaping holes in organization’s internal operations.

Driver Shortages and The Great Resignation

One glaring reason for the increasing reliance on third party logistics providers is the global truck driver shortage and The Great Resignation which has seen thousands of operators resign from their position and seek out less stressful work with a better work/life balance.

At time of writing Smart Trucking reports that Canada has a driver shortage of around 25,000, while the figures for the US rise to a staggering 60,000. To compound the matter, all available data suggests the issue is only going to get worse over the coming years.

This means many companies are unable to adequately staff their internal logistics operations and is driving the turn towards third party providers.

Increasing Complexity

Another reason for the shift towards third party logistics providers is the increasing complexity of global supply chains.

With massive geopolitical events such as the COVID-19 crisis, the Russian invasion of Ukraine, Brexit, and China’s COVID Zero policy, the regulatory environment surround moving products around the globe is more detailed and complicated than ever before. Restrictions, border controls, bureaucracy, and costs all need to be considered and often require specialist experience and skills to successfully navigate.

Rather than try and manage all this complexity in house, many pharmaceutical brands are turning to third party specialists to handle the regulatory heavy lifting on their behalf.

"3PLs are logistical experts," says Allegro Logistics. "They know the industry inside and out and have all the infrastructure, equipment, and staff in place to deliver highly efficient turnaround times. As well as this, a good 3PL will always be looking to improve aspects of supply chains through investing in new tools and technology and developing their team."

Flexibility

Working with a third party logistics provider also allows your operation to become far more agile and flexible – better able to respond to a shifting landscape which is especially useful during these unstable times we currently find ourselves in.

Being able to easily scale logistics provision up and down in response to demand is a key advantage. It is neither practical nor ethical to keep firing and hiring staff in response to demand, so being able to expand or contract the service delivered by a third party provider offers a clear solution to this issue.

"Third-party logistics providers enable your company to adjust and either expand or contract if there happens to be a decrease or increase in the market prices," says logistics provider, DCL. "They provide you with the industry’s best practices according to what the market is saying. You will be able to make use of supply and demand resources so no huge loss is incurred if there is a drop in prices, nor would you lag behind when there’s an influx of demand."

Saves Money

Because the third party logistics provider supplies the entire logistics operation – which often included warehousing and other expensive infrastructure – the savings which can be made through working with one can be huge.

Aside from the obvious cost reductions, the third party provider will also be continuously investing in new logistics technology such as AI and automation which means your own organization doesn’t need to.

A third party provider will also make it easier and less costly to enter new international markets.

"If part of your business’ strategy is to enter new markets, 3PLs can help you test the waters and open new distribution channels without a large-scale investment and commitment on your part," adds Allegro Logistics. "This is one of the many ways a 3PL can facilitate your expansion as a business."

Final Thoughts

Investment in third party logistics saves an organization time, energy, and money and can help relive many of the stresses caused by recent geopolitical and sociological phenomena. If your organization is finding managing its own logistics too challenging maybe 2022 is the year to consider a shift?

You can hear Bristol Myers Squibb Head, Senior Director Global Market Supply Operations, Marcelo Coutu speak about reliance on 3rd parties, agility, and Industry 4.0 at LogiPharma 2022, taking place in September at The Westin Copley Place, Boston, MA.

Download the agenda today for more information and insights.