Together with the growth of a company is a myriad of expanding demands on the supply chain. They find themselves in a crossfire between the pressing need to focus on their core competencies and to suffice the demand for their product. This is the point where a company can make use of a third-party logistics provider.
This organization will manage third-party logistics jobs like inventory, storage, packaging, and shipping of the goods while the company is busy with improving their operations. As long as the company chooses a provider with enough experience and skills, they should reap the following benefits:
3PL providers can customize the service they provide depending on the needs of the company. They can scale up transportation recruitment as well as space and labor if need be. Third-party providers can accommodate seasonal inventory and large product releases all year round. Compared to maintaining an in-house SCM tool, working with 3PL providers allows you all the time and resources to use without having to acquire any equipment.
Third-party providers save you from hiring additional personnel, renting warehouses, paying for transportation, and more. Since this aspect of your SCM happens outside the company, you cut the cost of product distribution while having more time to focus on business initiatives. Usually, the third party will provide a cost projection for you to assess how much the company can save if they avail the service. Aside from the expenses, hiring a logistics provider will remove the need for in-house training, billing, and auditing.
Wider market reach
Third-party logistics provider will help you reach a wider clientele and cover areas your product has not reached before. This spells dollars on your sales, not to mention your increased brand equity due to the established presence. The best part is that the company gets to monitor sales and product distribution without actually doing it. Businesses who want to position themselves strategically or improve their footing in the supply chain will benefit the most from this setup.
3PL provider network
When 3PL providers start their effort of distributing a company's product to a wider area, they are tapping different warehouses and distribution centers. Experienced logistics providers will have a network of distributors they can work with. Doing this in an in-house setting is quite impossible, if not difficult for a busy company that barely has enough personnel for the job. Letting the logistics provider tap their connections can save companies more money due to lower overhead cost, bulk discounts, and cost-effective service.
Low capital commitment
When a company partners with a 3PL, they spare themselves from buying new technologies, hiring additional staff, and maintaining warehouses. Overhead cost including electricity, I.T, and labor cost is also out of the picture. More often, logistics providers can offer low rates compared to what the business spends when doing it on their own. Such a thing will result in performance gains and business growth.
Paying for third-party logistics jobs can be more efficient for companies lacking experience and skills in the supply chain. With the risks minimized, working with 3PL can potentially deliver sales like never before.