A growing number of businesses and organizations are outsourcing their logistics to third party logistics providers (also called 3PL or TPL) to save time and money. 3PL companies typically offer warehousing, transportation and integrated operation services that can be tailored to the customers` needs based on market conditions. These services often go beyond logistics and include value-added services that are integral to the supply chain.
The outsourcing of logistics to 3PL providers allows you to focus on your core competencies of your business. They can help your business save money in the following ways:
Expertise and Experience: 3PL companies have the expertise and experience to package, transport and store goods in an organized and cost-effective manner. They employ practices to make sure that the goods are shipped/transported to their right destination within given time frame. The When you handle these parts of logistics yourself, there`s the chances of delays, damages and losses are greater due to the inexperience of your employees. A 3PL company helps save money by minimizing risks and ensuring fast and timely service.
Access to Resource Networks: 3PL companies usually belong to a large network that gives them access to many different carriers. As members of the resource network, they are able to negotiate volume discounts. This can result in a considerably lower overhead and faster service. A 3PL gives your company access to benefits from many resources that you cannot get on your own. Thus, using a 3PL eliminates the need to find your own carrier and negotiate with them, saving you time and money.
Automated Processing: Third party logistics providers use advanced logistics management software programs to determine the fastest and the most economical route to transport goods and track their progress. The programs are capable of inventory management, advanced reporting and monitoring. This ensures faster delivery, minimized loss and damages, and less money spent on logistic solutions.
Flexibility and Scalability: 3PL providers have the ability to scale transportation, labour and space – three key features of logistics – according to your needs. Companies with seasonal variations in their inventory can benefit greatly from this scalability. When your inventory is low, you can scale down the services to cut costs and when it is high, you can take advantage of the resources available without any significant rise in costs.
Analysis and Planning: One big advantage of using 3PL providers is that they are experts in technical analysis and planning to manage the flow of goods and information through the various stages of the supply chain. They analyze and review each stage in the process to minimize delays and losses and to maximize the return on value. This enables them to create the fastest and the most cost-effective logistics solutions.
Measuring Results: Third party logistics providers constantly monitor logistics performance to make sure that bottlenecks are being eliminated, risk of damages and loss are minimized and the targets are being met. Results are based on the analysis of budgeting techniques, cost estimating methods, quality of service and customer satisfaction. This results in a much reduced logistics costs for your business.