Third-party logistics service providers are outside companies that complete various supply chain, warehousing, and distribution tasks on behalf of client businesses. Many companies make use of 3PL fulfillment services to save money and manpower and to better grow their operations and reach. However, just because 3PL outsourcing is popular doesn’t automatically mean it’s the right approach. Instead, consider the following advantages of 3PL logistics and see whether they are something you need or are interested in applying to your own business.
Improved Global Capabilities
Expanding business operations is always a risk vs. reward situation. There is significant financial investment involved when entering new markets and if things don’t work out, you can be left taking a very large hit to the wallet. One benefit of 3PL outsourcing is that you can use a fulfillment provider who already has distribution channels in the target region, whether it’s another country, state, or city. By taking advantage of these pre-existing channels, you can enjoy lower costs when expanding or even do a low-risk test as a starting point.
Reduced Costs
As mentioned, outsourcing allows you to avoid the major costs associated with trying to create your own distribution center or network. However, even if the start-up costs are ignored, there are distinct savings to be found in the long term. 3PL logistics service providers cater to numerous businesses at any one time and the costs of ongoing operation are split between them. This means that ongoing maintenance and labor fees are lower than they would be if you were trying to go alone. Additionally, 3PL companies frequently get reduced shipping rates because of their large volume. This can allow you to enjoy discounts on distribution that would not normally be possible when trying to ship solo.
Enhanced Security
Theft does happen and about $30 billion worth of cargo is lost in the United States every year. Although not every step of the supply chain can be fully controlled, 3PL companies can influence more steps than most independent businesses can and take measures to ensure proper safeguards are in place. How this is done takes many forms. Enhancing security can mean putting cameras in warehousing facilities, properly screening workers, installing GPS or emergency stop systems on transport trucks, or embedding trackers within the shipment itself. There are also data security measures that will be taken to prevent customer information from becoming compromised.
Improved Quality
You may be currently managing your business’s logistics and fulfillment operations just fine. While this is always a good thing, it doesn’t mean a 3PL service provider can’t do it better. This is not to insult your abilities, but it is an observation that some 3PL companies may have more experience, better shipping rates, better geographic locations, or other factors that you can’t necessarily improve on by yourself. Economy of scale also means that there will be cases where cost and quality can be improved through the volume easily obtainable by 3PL companies but too difficult or impossible for a smaller business to acquire. Many 3PL companies also make use of technologies like real-time inventory tracking and warehouse management systems that allow for more efficient overviews of fulfillment operations. This can ensure better coordination and awareness of the entire supply chain and empower you to keep things working smoothly and efficiently.
Getting a Lean Third-Party Logistics Services Provider
Lean Supply Solutions is a 3PL fulfillment company whose operations are based around the Lean Methodology, a proven philosophy based on eliminating any operations, equipment, or resources that are not capable of adding value to our clients’ supply chain. By striving to ensure that the right products are provided to the right customers at the right time, Lean Supply Solutions is able to offer consistent, predictable, and quality results. To learn more about the Lean Methodology or outsourcing to Lean Supply Solutions, or to ask any questions, give us a call at 416-748-8982.
