What is Contract Logistics, Why is it Important?

Contract logistics means acting on the basis of contract in the provision of logistics services.

What is Contract Logistics, Why is it Important?

Contract logistics means acting on the basis of contract in the provision of logistics services. This concept, also known as contracted transportation, refers to the execution of logistics services based on agreements between the parties.

Contract logistics includes all logistics activities such as transportation, warehousing, stock management, order management, packaging, distribution. Logistics companies provide logistics services according to their needs by making a contract with their customers. Contract logistics increases customer satisfaction and contributes to the establishment of a long-term cooperation between the customer and the company.

The importance of contract logistics is very high for companies that provide transportation and logistics services. When a contractual relationship is established with contracted transportation, advantages arise for both the logistics company and the customer. While the logistics firm guarantees to do a certain amount of work in a certain time period, the customer guarantees to receive a certain service for a certain fee. Thus, possible risks that the customer will experience in supply chain management are minimized.

In addition, thanks to contract logistics, logistics companies better understand their customers' needs and can offer tailor-made solutions to their customers. Logistics companies that provide a service that fully meets customer needs increase customer satisfaction and create customer loyalty. This increases the competitiveness of companies.

As a result, contract logistics is a contract-based approach to the delivery of logistics services. Thanks to this approach, logistics companies increase customer satisfaction by offering special solutions to their customers, while guaranteeing their customers to receive a certain service for a certain fee. Contract logistics creates a long-term cooperation between the parties, increasing the competitiveness of companies and increasing customer satisfaction.

Kontrat Lojistiği Neden Önemlidir?

Contract logistics is a logistics method used to ensure that the services or products purchased by a business are received from suppliers in accordance with the terms of the contract. In this method, it is acted within the framework of contracts made with suppliers for a certain period of time or for a certain job. Contract logistics plays an important role in the supply chain management of businesses.

First of all, thanks to contract logistics, the efficiency of enterprises in supply chain management increases. With contract transportation, businesses can better plan their logistics processes and use resources more efficiently. Compliance with the timeframes and delivery conditions specified in the contracts minimizes uncertainties in supply chain management.

Secondly, contract logistics reduces the costs of businesses. Since contract transportation is carried out within the scope of long-term contracts, it provides cost advantages at all stages of supply chain management. Contracts provide a certain price guarantee so that businesses can operate at predetermined costs.

Third, the risks in the supply chain can be reduced by contract logistics. Thanks to contracted transportation, all stages in the supply chain can be controlled and risks can be minimized. For example, if there is a problem with the products of a supplier company, the risks can be minimized by the measures taken within the framework of the contracts.

Contract Logistics Examples

Contract logistics is a service that companies in different sectors make contracts to perform logistics activities such as transportation, storage and distribution. Examples of contract logistics can be:

  1. Automotive industry: Automotive companies can get contract logistics services for the transportation of parts used in the production line and the management of supply processes.
  2. Food industry: Food manufacturers can get contract logistics services for the storage, packaging and distribution of their products.
  3. Perakende sektörü: Perakende şirketleri, mağazalarında satılan ürünlerin tedarik zinciri yönetimi ve dağıtımı için kontrat lojistiği hizmeti alabilirler.
  4. Kimya sektörü: Kimya şirketleri, tehlikeli maddelerin taşınması ve depolanması için özel lojistik çözümleri gerektirdiğinden, kontrat lojistiği hizmeti alabilirler.
  5. Health sector: Health institutions can get contract logistics services for the storage and distribution of drugs and medical supplies.

The examples above show that contract logistics services can be used in different areas, in accordance with the needs of companies in different sectors.

What is the Difference Between Contract Logistics and Warehousing?

Contract logistics and warehousing both play important roles in logistics management. Contract logistics is the contracted transportation of products and services, while warehousing is the storage of products.

A contract logistics agreement is established for the transportation of certain products for a specified period of time agreed bilaterally. During this period, the products transported, their quantities and transportation conditions must be certain. In contrast, warehousing encompasses the stocking, storage and processing of a product. Warehousing means keeping products in a storage area, labeling the products and tracking them by the warehouse management system.

While contract logistics is used for the bulk transportation of products from different suppliers or manufacturers along a supply chain, warehousing is used to stock or process products at different points within the supply chain.

However, contract logistics and warehousing are two complementary concepts. A product is transported through contract logistics, stored when it needs to be stored, and processed in the storage area when it needs to be processed.

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