Having a third-party logistics provider can boost your business. But what is 3PL? Working with a third-party logistics 3PL company can help you improve your supply chain, increase efficiency, and cut costs. So, what are the benefits of outsourcing to 3PL providers?
3PL companies take over your shipping, warehousing, and distribution needs so you can stay focused on other core aspects of your business. The best 3PL logistics company will have adequate experience in freight forwarding and warehousing services. They will also have good working processes to get your products where they need to go efficiently and cost-effectively.
Eliminating the Cost of Hiring Full-Time Staff
Regardless of the business you are running, managing your inventory and logistics is essential. By handling your inventory and logistics in-house, you may hire a full-time staff to manage it.
Also, it may cost you in terms of employee salaries, training, benefits package, etc. Hiring a 3PL company helps you eliminate the cost of hiring full-time staff as they are specialized in their field and can offer better service than an inexperienced person appointed by you.
This way, 3PL can help your business reduce costs related to warehouse operations. Money saved on these operating costs is utilized on other aspects of the business that need your attention. With the help of a professional third-party logistics company, you can focus on more aspects of your business, such as growing sales or reinvesting profits into research and development for your products/services.
Access to the Latest Technology
A third-party logistics company will give you access to the latest technology, which can help you save time and money. Automated logistics systems are designed to reduce errors, improve customer service, and reduce costs. Using automation systems can also increase efficiency because it eliminates manual processes.
As a result of this increased efficiency, you will have better data. And better data means better visibility into your business and products. With improved visibility comes more control because it allows you to adjust factors affecting your supply chain in real-time.
Reducing Inventory Level
The inventory issue is another critical aspect of supply chain management. When you partner with a third party, you can reduce the number of warehouses and inventory storage.
It helps decrease your inventory management costs and carrying costs. You can also improve service levels and increase capital utilization by reducing inventory levels. Your investment in inventories avoids theft, and waste due to error-proof systems can also be reduced.
Quick and Efficient Returns and Exchanges
Returns and exchanges are one of the most integral parts of the supply chain procedure. You would be surprised by how expensive it is for businesses to manage their returns and exchanges.
For example, a single return package costs around $10 on average. If you multiply that by thousands or millions of orders, you can see how this could quickly add up to an astronomical amount.
Therefore, partnering with a 3PL provider to manage order returns and exchange is essential in minimizing expenses and maximizing efficiency within your business operations.
A 3PL company will have the procedures to help reduce costs associated with returns and exchanges through its ability to negotiate great shipping rates. Also, they will provide technologies that track all shipments, and provide warehouse space for product storage (both short-term while they wait for shipment and long-term if a customer decides to keep it). Having available resources allows them to reallocate inventory in real-time as different products into stock.
Saving Time and Increasing Productivity
Another benefit of working with a 3PL company:
- You will be able to free up your time, focusing on what matters.
- You can focus on your core business. User know exactly how to run your business, but you probably have little knowledge about warehousing, shipping, and logistics. With a 3PL company handling all of these tasks for you, you would not need to worry about them anymore. Enable you to focus on making your products great and taking care of the customers who purchase them.
- You will have more time to develop new products. When asked if they would like more time, most entrepreneurs would say yes without hesitation—and with an effective 3PL company helping out with their warehousing and shipping needs and having more time on their hands. If you are in charge of shipping in your current business model, imagine what would happen if taken care of. You could spend that time focusing on designing new products or coming up with better marketing strategies for existing items!
- You will have extra hours in the days, growing your business in other ways. We already mentioned having more time to launch new products or improve old ones, but what else can this valuable extra hour or two per day accomplish?
- You will have more free time. Remember when we said 3PL companies offer long warehouse operating hours? That means that many tasks that would take several weeks from start to finish (like inventorying) can now finish much faster than before. The specialized team is doing it all for you (rather than yourself), and no additional training is required. It frees up even more hours during the week that you used to take care of those same tasks now being available as well-deserved downtime where work won’t get done at all or at least not right away!
The flexibility of Changing Your Orders
One of the best things about working with a 3PL company is that you will be able to increase flexibility in your supply chain. So, you will be able to expand or contract your business, whatever the situation.
You can work with several manufacturers and change orders as needed instead of committing entirely to one particular manufacturer. It allows you to expand and add new products (such as seasonal items) or add new customers for a limited amount of time.
In addition, if you need to remove products from your stock and remove customers from your list. You can do so without worrying about commitments made to manufacturers or other suppliers.
Lower Risk of Supply Chain Disruptions
Collaborating with a 3PL company can help you improve your supply chain management. They can help you reduce the risk of disruption to your supply chain. A company with experience handling and organizing inventory for large businesses is an ideal partner.
A best-in-class 3PL provider will assist you in improving your inventory management. They will ensure that the stock levels are at their optimum level, not too high or low. The 3PL provider will also assure required items are available when needed by tracking stock and ensuring on-time deliveries from suppliers.
Economical Vendor Management
You can also save a lot of money by collaborating with a 3PL Company. Logistics vendors usually follow a high standard of quality, which is what you want for your business. But the flaw with this standard is that it comes at the cost of higher rates. A 3PL company has the experience and knowledge to negotiate better deals with vendors on your behalf while still maintaining quality standards.
Moreover, they understand the specific needs of each client and their respective industry better than anyone else. So they can identify and select the best vendor for you from the get-go, improving efficiency and cutting costs from day one. They also maintain constant contact with all parties: suppliers, manufacturers, and retailers, to ensure that everyone satisfied with the services offered by logistics vendors.
Hiring a 3PL Provider Will Boost Your Business
The basic concept of 3PL is to outsource your order fulfillment and logistics process to a company that specializes in the same. A 3rd party logistics provider will help you reduce your inventory level and give you a chance to focus on your core business. It reduces transportation costs and increases the overall service level.
When it comes to outsourcing and choosing an experienced 3PL provider is a crucial step for your business. Why? There are endless reasons for this question. Nowadays, most companies do not understand how 3PL can help them drive their profits higher. But now, with emerging technology and new innovative ways, companies can easily track their products from anywhere at any point in time. Storing and getting the products delivered to the exact end-user is crucial. And this is where 3PL partners come into play.