A major point of focus for most ecommerce businesses is whether to outsource logistics or manage it internally. The decision is usually based on extensive cost-benefit analysis of both options to see which one makes the most sense. While the decision is often based on the size and nature of the business, availability of capital and manpower, geography, and operational risks, outsourcing is increasingly becoming a favored option. Below are eight reasons why you would want to consider outsourcing to a third-party logistics provider (3PL) to handle your logistics.
Expertise
Logistics is a very dynamic function. It requires understanding of business strategy, manufacturing planning, inventory management, and different modes of transportation depending on regions served. It also requires a lot of coordination and collaboration with various service providers and government regulatory agencies. While your in-house team may be able to handle these functions, the complex nature of the job makes it challenging for them to do all of it by themselves.
Because handling logistics is, by definition what a 3PL does, they have expertise in all these functions, as well as many more. There are many different types of 3PLs who specialize in certain aspects of fulfillment, logistics, and shipping. They can take over the more tedious and complex jobs, freeing your team to strategize and plan the business.
“As a hardware founder, I’m always prepared for setbacks and surprise challenges along every stage of the journey. We’ve had very few issues in our warehousing and logistics realm and I credit that to DCL’s expertise in the field.”
Robust Shipping Network
A 3PL arranges the entire shipping process—local or international, to ensure that your product reaches the intended destination on time. From negotiating rates, booking the freight, providing storage, arranging for transportation, getting shipments loaded, to following the shipment until it reaches its final destination, a 3PL can do it all. If you have international shipments, a 3PL has the experienced professionals to manage that as well.
Well Trained Staff
A 3PL not only brings in the logistical facilities like warehouse facilities and transportation, but it also brings with it trained personnel who are equipped to handle the day-to-day logistics of the business. A 3PL staff is trained to handle these areas of the business and deliver on the KPIs you set for them.
Advanced Technology
This is the age of digital logistics. A 3PL brings with it specifically designed, trusted, and ready-to-use systems and processes that can manage the end-to-end logistical process on a single platform. Most of the 3PL service providers are also open to customizing or integrating their digital platforms with that of the organization they work with. This flexibility offered by a 3PL not only helps the organization bridge the gaps in its systems but also helps it to do it at a comparatively lower cost.
Large Network of Facilities
The main objective of any business is to conquer new markets. To do this, it requires a wide logistics network and a robust, flawlessly executed logistics strategy. Your 3PL partner is expected to and can help you achieve your business goals. They may either have their own network across regions or they may have business collaborations with transporters and storage facility providers in different regions or a mix of these two. They are thus better positioned to help you expand and grow your business. To do this, all you need to do is work with them in a collaborative manner to find the most optimal solution to reach your customers.
All Services Under One Roof
When all your freight and logistics services are conducted under one roof, it will save time and money, and probably give you comfort to know that everything is taken care of. Plus when all logistics are connected, you as a business owner will have more control and better visibility, which means a smoother operation for your business. An established 3PL will have the labor, resources, infrastructure, and capital deployment to bring all the required services under one roof. Whether you need warehousing, value-added services, customs clearance, international freight forwarding, domestic transportation, or even IT-support, you can rely on a professional third-party logistics provider to take care of your business. Outsourcing can save you time, energy, and money.
Dedicated Customer Service
Logistics is now a major part of customer service. Obtaining the right product, packed in the right manner, at the required delivery time is on every customer’s wishlist. This can only happen if the ordering process and logistics are synchronized and managed correctly. A 3PL not only has the means to do so, but also the technology and the trained staff to execute the process efficiently.
Cost Reduction
Last but not least, outsourcing logistics and allied activities to a 3PL not only provides all the above benefits and improves efficiency but also reduces operating costs and administration overheads. Logistics costs form a substantial part of the total cost of most products. It may seem counter intuitive, but outsourcing for warehouse management and transportation management can generate substantial cost savings if optimally managed. 3PL providers have many customers. This allows a 3PL to negotiate better prices for warehouse space, shippers and domestic transport providers. It also provides room within each warehouse for fluctuations and inventory changes due to seasonality. A well-established 3PL will have valuable historical intelligence and data on market conditions and be able to respond quickly without needing to grossly adjust your monthly costs.
Amazon Fulfillment Services
An experienced 3PL that has a track record of working with Amazon can alleviate a lot of the challenges of working with the platform. Plus your 3PL can help minimize costs and keep customers satisfaction high. One of the biggest advantages is that a 3PL can support a seller’s own website storefronts. These storefronts are powered by shopping platforms like Shopify, BigCommerce, and WooCommerce. Sellers can own the entire sales experience from start to finish. Ultimately, using a 3PL can provide a lot more flexibility than Amazon FBA. Experienced 3PLs should be able to easily integrate with most third party shopping platforms or ERPs and provide the operational expertise to provide sellers with a turnkey solution. A good 3PL can adapt to the ebbs and flows of a sellers’ needs without sacrificing speed or quality
Bottom Line
The real value a 3PL provider can bring your business include: better rates, services, expertise, and a vast network of industry partnerships all along the supply chain. Many businesses come to this understanding quickly and understand the benefits of outsourcing. Choosing the best 3PL, one that is well suited to your needs will take a bit of effort upfront but will bring long-term benefits. A 3PL with core competencies that is the right fit will mean a long-term partner interested in generating growth for your business.
If you are looking for help managing your logistics and supply chain we would love to hear from you. Send us a note to connect about how DCL Logistics can help your company. You can read DCL’s list of services to learn more, or check out the many companies we work with