Did you know that 96 of the Fortune 100 companies use a third-party logistics provider?
The fact that third-party logistics providers, or 3PLs, are employed by thousands of businesses worldwide is a testament to the efficiency and effectiveness of their services. However, many moderately-sized companies wonder whether a 3PL is truly advantageous on a smaller scale. The truth is that 3PL services can benefit businesses of all sizes, and they are an excellent way for a company to take itself to the next level.
This is especially true in the eCommerce space, where you can face rapid changes in demand and scale. Fixed costs can make growth difficult or drain revenue when you need to reduce inventory and holdings. A variable cost model from a third-party logistics provider makes it easy to control and protect your business. Let’s look at a few ways 3PLs achieve this.
This post was originally published in 2016. It was updated on May 12, 2021, to reflect current numbers, trends, and capabilities.
Five benefits of using a 3PL
1. You can focus on your expertise
When you take the burden of getting your product to your customers off your shoulders, you can focus on what you do best. Very few people go into business simply because they enjoy managing inventory and shipping products. However, these processes are a necessary part of doing business. However, as you may have already learned, managing your storage, shipping, and returns can quickly take over your already busy schedule. Seeking the assistance of a 3PL company allows you to delegate these processes to professionals.
You go back to the true purpose of your business while knowing that you’re meeting customer demands. Orders go out the door correctly and arrive on time. Your third-party logistics provider should guarantee it.
2. Instant access to experts
Outsourcing to a third-party logistics provider means hiring a team of professionals who specialize in the supply chain. You don’t waste time or money navigating your way through the intricacies of shipping processes. The 3PL takes over the inventory, shipping, and returns portions of your business. That shift allows you to immediately hit the ground running by relying on their skills and experience to your advantage.
When you hire a 3PL provider, you immediately gain their years of knowledge and ensure that your shipping policies and practices are the absolute best available.
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3. The latest tech is always available
How many systems from five years ago do you still use today? Technology is changing at an incredible rate in every aspect of our lives, especially business. That demand is happening and should be addressed by your third-party logistics provider.
With the ever-increasing power of the online consumer, tech-driven shipping platforms are now an essential part of conducting business. If you decide to manage your shipping in-house, that means purchasing and implementing an IT platform yourself. That’s another platform to learn and manage, check for updates, troubleshoot, and integrate with customers.
What happens if such an integral system goes down or isn’t updating your inventory correctly? How would you mitigate that kind of risk?
By outsourcing these functions to a 3PL, you delegate system management to a company specialized in such platforms. For the 3PL, shipping is what they do. Managing related IT processes is simply a part of their daily business, allowing you to entrust this responsibility to the experts. Because the 3PL relies upon these technologies to keep its business alive, you know your products and customers always receive the most comprehensive shipping-related IT benefits available.
4. Get advanced support you can’t do alone
When you enlist the services of a 3PL provider, you are putting the power of all that provider’s clients to work for you.
Third-party logistics providers also can use their network to find solutions that benefit all parties. Rather than packing and shipping your products individually, the 3PL company can combine your products and needs with those of its other clients. That’ll help reduce your costs and can be especially useful for import container consolidation. Consolidation combines your freight with other companies’ freight to make your shipments more regular and give you access to bulk freight rates.
Your partner can negotiate rates, discounts, and other services by negotiating based on the combined volume of all their customers. That’s buying power you, as a private company, generally can’t have.
Get Red Stag Fulfillment’s free eBook on container consolidation here
5. Continuous improvement without needing to lift a finger
Third-party logistics providers offer a continuously improving service. As the market moves and new services arrive, you gain access through a great partner.
Just as you are constantly striving to improve the buying experience for your customers, your 3PL is constantly improving on its services to benefit you, their customer. Third-party logistics providers can improve by offering faster, less expensive shipping options, simplified and cost-effective return strategies, and more. With the assistance of a 3PL company, you know that you, and therefore your customers, are receiving a continuously improving shipping platform, which benefits your bottom line.
How third-party logistics providers benefits actually save your company
As every business owner knows, time is money. By hiring a 3PL provider, you are freeing up time you would otherwise have to spend on your business’s shipping and inventory management. Instead, you can focus on the core operations of sales and customer support, increasing your company’s value.
Unhappy customers and delayed shipments can be costly. By entrusting your company’s shipping processes to a 3PL provider, you are giving your customers the best shipping options available, resulting in fewer delays and complaints. Outsourcing your shipping and inventory processes to a 3PL provider is a simple move that can result in vast savings and improved efficiencies for businesses of any size.