Getting the Most Out of Third Party Providers

2008-07-14 14:41:17

( Legal )



What are Third Party Providers?

In today's business world, economies of scale and leaner organizational structures are the increasingly popular trends. Businesses are not as top-heavy as they used to be, and many business owners prefer a simpler set-up with lower requirements for people, materials and technology. This can be accomplished by using third party providers or outsourced providers of various goods, services and even entire business processes.

Types of Third Party Providers

There are countless types of goods, services and processes that third party providers can offer your business.

Instead of making your own raw materials or accessories, you can outsource this through another manufacturing firm who makes the same products. This manufacturing firm becomes your third party provider. If you operate a restaurant, you can outsource some of your menu items, especially desserts and breads through third party suppliers.

You don't have to maintain your own delivery vehicles and personnel. Instead you can contract with third party logistics companies who can already provide the transportation facilities. This is especially convenient if you need to ship goods to out-of-state or global customers.

Another very common practice is to hire third party payment processors who can receive remittances and payments from your customers on your behalf. Some can even act as your collectors and contact your customers directly to request payment. This helps reduce the size of your company's uncollectible debts.

You can also hire third party software providers especially if you don't have the technological expertise in your own company. The third party software provider can install and maintain these software programs, as well as give technical support.

Many companies have even gone a step further by completely outsourcing some of their major functions, such as human resources, accounting and customer care.

Choosing the Right Third Party Provider

You will first have to determine your business goals for both the present and the future. Then you need to identify which part of your organization's functions and services you'd like to outsource.

Once you have pinpointed the areas where you will need third party providers, the next step is to look up these parties, either on the internet or through referrals from your business associates. Have a thorough discussion with each provider first, and let them present their entire package offer. Compare this against a scenario where your firm handles the function in-house.

While the cost of acquiring third party services and functions may be a major factor, it should not be the only basis of selection. You should also look into the third party provider's reputation and experience in the field of specialty.


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