Are you thinking about outsourcing a part of or all of your supply chain? There are many reasons why a company may wish to partner with a third-party logistics provider (3PL). Some are struggling to find and maintain warehousing space. Others find it too challenging to hang onto a reliable fleet of carriers. Some businesses just don’t know where to begin.
One thing is certain: no one knows how to run your business in your industry better than you, but the same applies for 3PL—no one understands the ins and out of logistics better than the people who work in the industry. Whether you are looking for transportation management services, warehouse management, fulfillment services, or anything else, a 3PL can help. There are many benefits to going this route, but there are some challenges, as well (nothing comes without some amount of effort). The end result is worth it, and here are the benefits and challenges you can expect along the way.
Benefit: it can cut costs
It costs money to hire a 3PL, this much is true, but that investment can pay off in leaps and bounds in the long run. There are many financial benefits to working with a 3PL:
- Resource sharing: you don’t have to own your warehousing space, equipment, and tools, nor do you have to maintain a staff to operate the warehouse, ship products, etc. All of this is provided by the 3PL, and the costs of maintaining these resources are shared by the 3PL and all of its clients, including you.
- Better carrier rates: negotiating with carriers is a part of the industry, and many businesses struggle with getting a good rate to ship their freight. 3PLs maintain a solid network of carriers with whom they have longstanding relationships with. Not only do you have a fleet of trucks at your disposal, your 3PL can help you get the best rates, as well.
- Choosing the right shipping method: do you need to send your products via parcel, LTL, FTL, or partial load? Is air or rail better than trucking? What about sending overseas; do you choose air or maritime transport? Your 3PL partner can advise you on the best ways to send your freight, wherever it needs to go.
- General efficiency: time is money, and wasted time is wasted money. A 3PL has the expertise to make your supply chain efficient, which cuts down on the time and resources you have to spend strategizing, implementing, and worrying about everything that goes into the process. With a 3PL leading the way, you can rest easy knowing that your supply chain is optimized.
- Lower freight claims: damaged and lost freight cost companies millions of dollars every year. When you work with a 3PL, these costs are minimized as you will see a definitive decrease in freight claims.
There is an initial investment when working with a 3PL, along with continued costs, but you will soon see that the best financial decision is to outsource your supply chain to those who specialize in logistics strategy, optimization, and cost efficiency.
Challenge: systems integration
There are inventory systems, transportation management systems, systems run by your manufacturer, and so many more. Integration is a challenge for any business, and it’s no different when you begin working with a 3PL. The greatest challenge here is figuring out how the systems used by you, your partners, and your 3PL can sync and share data among them.
The good news is that modern software applications are more integration friendly than ever, and 3PLs work with all sorts of systems that handle inventory, ecommerce, transportation management, and so much more. It’s a complex issue, but there is a solution. You will be able to work with your 3PL to integrate all your systems to ensure that your supply chain continues to operate efficiently.
Benefit: a full range of services
Working with a 3PL allows you to customize your service based on your needs. You can outsource a small part of your logistics operation or the entire thing. This allows you to maintain control over the portions of your warehousing, fulfillment, and shipping operations that you feel comfortable running. Only need temperature-controlled warehousing space? You can choose to only use that service. The same applies for all areas of your supply chain.
Challenge: letting go of control
For some businesses, letting go of a certain level of control over certain areas of your business can seem daunting, which is understandable. But partnering with a 3PL doesn’t mean letting go of control. You still control every area of your business, including your supply chain. Working with a 3PL simply adds another resource you can use to enhance the process. 3PLs act as advisors and workers for your business, letting you get the most out of your investment.
Ready to talk about your logistics and supply chain needs? So are we. Get in touch with us today to start talking solutions!