Did you know that an estimated 86% of Fortune 500 companies use the services of third-party logistics providers? Third-party logistics providers, also known as 3PL, allow companies to outsource their businesses’ supply chain, procurement, and logistics operations. 3PLs have been used since the 1970s, offering a wide range of services to keep a business running smoothly, such as transportation, warehousing, and order fulfillment. In addition to these more traditional 3PL services, today third-party logistics providers also work as strategic partners with their clients to supply value added services such as transportation management and full outsource.
The most common reason a company outsources is due to cost. 3PLs have long-standing relationships with others in the industry, which means they can negotiate better prices on behalf of companies. By working with a 3PL, companies do not have to tie their capital up in warehouses or transportation. That also means they save money by not having to pay for IT, insurance, utilities, or staff. Third-party logistics providers aim to deliver the best results at the best price without sacrificing service levels. Hiring quality staff can be expensive, so by partnering with a 3PL that already has experienced professionals, companies can save capital.
When a company partners with a third-party logistics provider, they gain more than the use of their warehouses or trucks. A major benefit of 3PLs is their industry expertise. 3PLs have long-standing relationships and partnerships in all aspects of the supply chain. This gains them knowledge on suppliers and receivers, shipping and receiving habits, and who the best professionals in the industry to work with are. 3PLs are experts in their fields and by working with them, companies will benefit from this industry insight and professional networks.
Technology is constantly changing, and for companies, it can be expensive to constantly invest in the latest technologies and software. A 3PL can take on the responsibility and cost associated with investing in technologies. These technologies will greatly improve the efficiency of a company’s operations. Transportation will be better planned, orders fulfilled more effectively, payment seamless, and the data from the entire operations can more easily be analyzed to improve even more!
A traditional third-party logistics provider will ensure inventory is stored, orders are fulfilled, and deliveries are made. These days, 3PLs don’t just manage logistics; they ensure it’s done in the most efficient and effective way possible. By hiring experienced professionals and investing in the latest technologies, 3PLs make sure a company’s supply chain is running smoothly. They can provide guidelines for more efficient ordering, delivery windows, scheduling, packing and more. Increased efficiency will mean that a company’s overall service will improve, keeping customers happy and allowing the business to grow.
Scalability and Growth
A big benefit of outsourcing to a 3PL is that a company has more time to focus on their business’ core competencies. As great as growth is if a company can’t handle the increased demand and costs it can be the beginning of the end. Scalability is important to sustainability. Third-party logistics providers already handle more than one client’s needs, which means they already have the infrastructure and resources to easily manage increased demand.
Efficient and cost-effective distribution is a major hurdle for businesses. A major benefit of partnering with a 3PL is what is known as zone shipping, which lowers distribution costs by shortening the distance between the products being shipped and the customers. This is a more cost-effective and flexible option compared to postal services or private couriers, which typically calculate shipping costs based on distance.
There are many benefits to partnering with a third-party logistics provider. From more traditional ones, such as warehousing, transportation, and packaging, to value added services such as industry expertise, efficient management, and innovative technology. Contact us if you’re interested in learning how partnering with TRAFFIX can help with your logistics and transportation needs!