The economy today requires business to be efficient on every front. The competition is growing every day and a company must find new and efficient ways to retain its edge over its competitors, even in a growing market. That requires time, money and focus on activities other than area of company’s core competency. However, if a company diverts its energy from its core competency, it is bound to falter. Businesses cannot afford to divert their attention from their product and start paying more attention to logistics. Imagine if Apple started worrying more about shipping iPhones than creating a great phone, they would never reach the pinnacle of success that they enjoy. It is for this very reason that many businesses choose to outsource their logistics operations. In fact, over 85% of fortune 500 companies utilize 3PL providers. Here are some of the key reasons why you should also consider utilizing the services of a Third- Party Logistics Provider (3PL).
- Time and Money: When you use a 3PL provider, you don’t need to invest in the warehouse space, transportation, operations staff etc. You don’t need to worry about billing, wages, audits, training the staff, space optimization and other things that go with the warehouse management. A 3PL is skilled in these areas and will perform all these more efficiently. You save the time that is required to build up these capabilities and save on the upfront capital required to build these capabilities. You are ready the moment you engage the 3PL provider.
- Scalability and flexibility: As the business grows, the logistical needs of the company grow and these again take time and money to scale up. During slow times, when your logistics space and manpower is not fully utilized, it is eating into your capital. With a third-party provider, you can hire the additional space as your business grows. Additional manpower also can be added quickly. At low times, you simply hire less space and less manpower. This keeps your cost at optimum levels while providing the flexibility to scale up and down quickly.
- The core expertise of a 3PL provider is their logistics management skills: They know about the best practices in the industry. They have the skill and experience to manage it all, from a small to a very large scale, with high efficiency. They keep on investing in manpower, warehouse capabilities, warehouse technology and IT, amongst others. Their software is optimized and can provide with wide range of reports which provide strong visibility and monitoring capabilities so that their clients, in turn, can focus on their core business activity, assured that their logistic needs are being handled by seasoned professionals.
- Diverse Resource network: 3PL providers are constantly developing their network to improve upon their efficiencies. This vast network has definite advantages over in-house supply chains. This provides volume discounts to 3PL, which in turn result in lower overheads for their client along with fastest possible service. This may not be possible with in house supply chains or at best it will be costly to achieve.
- Continuous optimization: 3PL are experts in managing links in the supply chain. It is their bread and butter. They have the resources to adjust to changing, individual circumstances. They constantly monitor each link in the supply chain to ensure they get fastest, most efficient service, which in turn means the same for their clients.
- Latest technology: The technology is changing constantly. Upgrades to technology requires heavy investment. Individual businesses need to ensure that they get their ROI before moving onto the newer technology, which may be a hurdle to upgrade. With 3PL and their huge base, they are constantly on top of their technology game ensuring that latest and the best is available for their clients. By partnering with 3PL, the need to purchase and upgrade the technology is eliminated.
- 3PL providers are usually up to date with all the latest regulations: They also have carrier contracts and insurance which is better than what individual businesses can obtain, owing to the bulk that they provide. This means that their client can stay assured that their products are being handled in most secured way possible.
- Improved quality: 3PLs thrive on efficiencies. This in turn means that their clients can expect improvements in their own supply chain. The advanced technology, plethora of assets and expertise that comes with 3PL providers, ensures that client’s logistics needs are satisfied without any capital investment in the most efficient way.
- Maximized growth rate: 3PL providers have warehousing solutions setup at multiple locations across the country and many times across the world. The clients can quickly make use of these locations, as he grows and expands, without making any capital investment, saving his time and money. The delay and cost of setting up a logistics solution (operational warehousing) is virtually eliminated, without any compromise on quality of operations.
Logistics is often an add on activity for the business that lies outside their area of expertise. Continuously scouting for best options available for shipping and other logistical solutions takes up time and resources, not to mention the investment. Business should be spending their energy on their key value add, their product. However, logistics is a very important part of business operations that cannot be ignored. Poor logistics can often take away all the brand value that businesses work hard to create. This is precisely where a 3PL player fits in.
Providing logistics solution is the bread and butter of the 3PL provider. Consecutively they make investments in warehouse locations, technology and people to stay at the top of their game and negotiate bulk deals with various providers. This enables them to provide customized solutions to businesses, in turn passing off all these benefits to them. Whether large or small, all business benefit from engaging with 3PL providers. The benefit is not only the obvious savings in capital investment, but flexibility and efficiency can provide them the strategic edge to compete in the ever-changing marketplace.