This Urban Wallace analysis has been presented at the Fifth Annual State of Logistics conference in Washington, D.C. and appears in Ryder's 1994 annual report. There are two tiers of benefits that create an interest in contract logistics. First there are the benefits of optimizing distribution. This first set of benefits can be achieved internally or through contract logistics services. Second, there are distinct benefits to outsourcing distribution to a third party.
Companies seeking contract logistics seek both kinds of benefits.
Process simplification lowers overall distribution costs. Faster delivery reduces finished goods inventory and thus lowers the costs of handling and owning this inventory. Your products remain accessible throughout all stages of distribution, making it easier for you to respond to problems or new opportunities quickly. Separately, you gain increased financial flexibility because faster delivery means faster collection of receivables. Increased operational flexibility enables you to manage production better and to allocate resources more efficiently.