Is your ultimate goal to be a manufacturer? It’s the delivery of your manufactured goods to the target customer or final point of sale. But, how can you do it when the core part of your business needs a lot more time and energy? Well, the solution is a competent supply chain, logistics, and distribution unit for your product.
However, managing these elements of a business can be difficult in such a competitive market. As a result, organisations are seeking third-party logistics to outsource their entire operational logistics.
On the other hand, different ways of handling logistics and distribution have emerged over time. Be it the Clearing and Forwarding agent (CNF) or Carrying and Forwarding Agent (CFA) or third party logistics (3PL), these modes have been brought into practice. Although their foremost function is to deliver the final goods to the customer’s doorstep, each one is different.
Clearing and Forwarding Agent (CNF)
CNF deals with the distribution of stock in a specific zone. The primary function of a CNF agent is to procure and maintain a large number of stocks to distribute further. The agent obtains stocks from the manufacturer and makes them available for the company’s dealers and distributors.
Thereafter, the agent is responsible to push the sale to earn a certain percentage of the stock sold. For example, in the pharmaceutical business, a primary distributor procures medicine in bulk below the MRP from the manufacturer and then keeps a certain percentage of margin in the order received by other distributors. By doing so, the agent is just not forwarding the stock but also clearing the procured stock.
Here, a CNF agent takes charge of all the inventory procured from the manufacturer, procures stocks as per the stock-keeping capacity (SKU), bridges the gap between the manufacturer and wholesaler, and acts as a representative of the company to other distributors.
A CNF agent’s main role is to allocate the product to other distributors in a specific zone and link the gap between a manufacturer and other distributors. And in order to deliver the ordered product to distributors, they approach forwarding agents.
Carrying and Forwarding Agent (CFA)
A CFA agent is someone whose primary concern is to manage the storage and transportation of products from one point to another. These forwarding agents are responsible for bringing out the best carrier service providers — as air freighters, trucking companies, rail freighters, and ocean liners — for the client and then negotiate with the service provider to get the best price for transporting the stocks.
Further, after picking up the stocks from the manufacturer, supplier, or distributor, they are kept at the CFA warehouse or secondary warehouse from where the stocks are loaded in the fleet as per the size of the order, by third-party logistics.
Basically, the CFA agent’s function is to organise how the stocks are to be transported and which mode of transportation should be opted for a faster and cheaper way to deliver the goods at the designated destination or final point.
Third-party logistics (3PL) is a one-time solution for all logistics solutions. A 3PL comes into the picture after a company outsources its logistics process to be managed by an external logistics service provider to enable the accessibility of its product in the domestic as well as international marketplace. The reason companies outsource their logistics is that integrated facilities are provided by 3PL under one roof. For example, warehousing, transportation, inventory management, and forecasting, material procurement, picking and packing, order fulfillment, freight forwarding, customs brokerage & clearance, payment, documentation, shipment tracking, etc.
You May Also Like: The Importance Of Warehousing In A Logistics System
Supply chain solution- As we know, the supply chain is a prominent part of any production unit. Here, this solution deals with handling the process of raw materials being turned into finished products and delivered to the targeted customer. This may sound simple, but it’s a complex process and in order to reduce the complexity, companies are approaching third-party logistics. Under the supply chain solution, the services provided by 3PL are packaging, assembling, labeling, licensing, housekeeping, and security of the stocks.
Fulfillment Centre- The utmost beneficiary from the fulfillment centre function of 3PL is the e-commerce business. Third-party logistics provides facilities of sourcing, quality checking, sorting, storing, picking, packing, and dispatch under the fulfillment centre as per the business requirement of a company. Along with this, third-party logistics reviews the requirement of a business and thereafter, analyses, plans, designs, and implements.
The warehouse- This function of 3PL has broadened the scope of companies to manage their logistics. These days, for any manufacturer or supplier to allocate a spare space for storing the final product is difficult, but now with the warehouse facility provided by 3PL, this hindrance can be overcome.
There are different kinds of storage space offered by 3PL. For example, an organisation not willing to spend much on buying property can lease a warehouse on rent. Similarly, ready-to-move (RTM) warehouses, Built-in-suit (BTS) warehouses, customised warehouses, integrated warehouses, and in-city warehouse options are accessible through third-party logistics.
The foremost function that a 3PL performs is to actually execute the delivery and transport of goods from the warehouse to the endpoint. In addition, according to the size, cost, and destination, the carrier and fleet are chosen to transport the goods.
A third-party logistics service provider also provides services to the shipping industry. It means they also manage logistics for companies that do business in the international market.
In order to operate, technology such as transportation management systems (TMS), or integrated management services is used by 3PL. Additionally, 3PL attains freight data and matrix reports.
Moreover, third-party logistics also comprises many advantages that compel companies to outsource their logistics to a third party. Those advantages are cost reduction, opinions from experts and expertise, market expansion, scalability, customer satisfaction, and handling international logistics.
Through this post, the intent is to let the reader know the difference between different forwarding agents and how third-party logistics stands out from the rest.