In today’s highly competitive market where specialization is important for growth , executing all business functions in-house may not be the best recipe for success. Outsourcing business activities to an experienced partner can often give a company competitive advantage and allow them to focus more on their own core competencies. This can be especially true when it comes to fundamental operations like warehousing and fulfillment.
Most larger companies outsource their fulfillment to third-party logistics (3PL) providers. Small and medium sized businesses are increasingly doing the same to take full advantage of the experience that a 3PL can bring to their company. It may seem like a large jump for a smaller business to outsource fulfillment and logistics, but it doing so can help increase sales growth and provide a market differentiator to help stay ahead of the curve.
These are the four main ways a 3PL can assist your business with warehouse optimization, save you money by keeping your processes lean, and aid your business in long-term growth and success.
1. Only Pay for What you Use
Life would be much simpler for supply chain managers if demand forecasting could be done with 100% accuracy. Unfortunately, there are unplanned variations every day that create a moving target for inventory management. Hopefully these variations do not require huge inventory fluctuations, but seasonally there will always be an ebb and flow to the warehouse capacity your business needs any given month. Boosting capacity is a time consuming and capital-intensive activity, and it is not always possible for companies to increase capacity quickly when necessary.
3PL providers offer flexibility in terms of storage capacity. Having multiple customers within the same facility gives them the chance to even out seasonal demand variations. By working with a 3PL you can simply choose to pay for what you use and protect yourself against fluctuating warehousing requirements, and the costs associated with them.
2. Advanced Reporting and Analytics
Regularly measuring and analyzing your operational processes is important to ensure your business is constantly improving. Analytics can offer visibility of your efficiencies and overall warehouse management. It not only reveals the number of units you move, but will also show you the areas that need attention. Analytics should be embedded into your warehouse IT infrastructure—that’s the only way to ensure you efficiently capture the right data sets.
A good 3PL will have robust analytics tools in place. They will have the experience of providing their customers full visibility of their products and detailed information on each of SKU and its performance.
3. Value Added Services
Today’s fulfillment centers provide many value-added services like quality checks, packaging, labelling, bulk breaking and last mile distribution. Most small and medium businesses likely face operational challenges if they try to manage many different functions under one roof. They usually don’t have the required infrastructure in-house to manage the same complexities that a multi-functional facility does.
A 3PL provider has the equipment, capacity, labor force, and industry expertise to provide value added services—and with the skill to ensure a smooth flow of operations. Bundling all the services together offers their customers savings in terms of cost and time and improvement of the overall warehousing experience.
4. Single Point Logistics Solution
Companies who manage their own warehouses, often struggle to integrate the whole chain together and link many different partners together (such as freight forwarding, packaging, and last mile delivery carriers).
An efficient 3PL provider has the experience and long-standing relationships to fit all these pieces together efficiently. By handing over this logistics puzzle, you will be freed from the hassle of managing multiple partners. Plus your 3PL will provide you with a single point solution for all your logistics needs. With your 3PL handling the many supply chain third parties they work with, they will be able to see the overall picture of your entire supply chain and provide a strategy to help your business achieve long-term goals.
Bottom Line
Successful businesses of all sizes know the value of partnering with an experienced 3PL. Collaborating with a 3PL can provide your business with the benefits of modern warehousing facilities, without adding additional or unnecessary costs. Warehousing and distribution are core competencies of a 3PL provider. They have the required infrastructure and expertise to manage it well and even lower the overall costs of your supply chain operations.
If you are interested in working with an experienced 3PL, send us a note to connect about how we can help your company grow. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support
