There are many reasons why companies choose to work with a third party logistics (3PL) provider. Their popularity is largely due to the wide range of benefits that working with a 3pl brings. In this article, we’ll break down the five benefits of working with a 3PL that we feel stand out from the rest. Working with a 3PL gives businesses access to a scalable supply chain with a wider reach. We’ll look at how the access to supply chain infrastructure that 3PL’s provide helps small and medium-sized businesses expand their reach and focus their resources. At the same time, 3PL’s also benefit companies of all sizes through transportation management services that prioritize efficiency yet can scale with growth. This allows businesses to more closely align transportation needs with business objectives.
One of the main reasons many companies begin working with a 3pl and then stay working with them is because of the cost savings that 3PL’s provide. Working with a 3PL gives a business access to greater bargaining power with carriers. Businesses that work with a 3PL can often see consistent reductions in rates for transportation and logistics services. At the same time, 3PL’s are skilled at finding areas for extra cost savings, such as more efficient routing or carrier selection. Plus, by placing it in the hands of experts, you no longer have to focus on day-to-day oversight of your transportation supply chain. This, in and of itself, is a huge cost saving. You’ll no longer have to invest in the people, facilities, and equipment necessary to operate your supply chain in-house. Plus, you’ll be utilizing a supply chain purpose-built for optimal efficiency. This means you can hit the ground running and your 3PL logistics network will keep pace every step of the way.
When people think of a 3PL they tend to overlook the advantages associated with technology that 3PL’s are typically utilizing. Most 3PL’s enhance efficiency through the use of a suite of software that helps businesses manage their transportation needs, track their inventory, perform real-time analytics, and optimize their transportation and delivery routes. 3PL’s rely on these tools to produce the gains in efficiency that make them so advantageous to work with from the beginning. These tools will also give you insight into ways to improve efficiency, optimize your supply chain, and perform detailed analysis. By working with a 3PL you’ll have a more detailed, and more accurate, picture of your entire transportation supply chain.
If you are ready to expand, your 3PL is ready to help you. 3PL providers work with a variety of businesses in a number of different markets. As such, you can seamlessly expand into new areas without having to worry about whether your transportation infrastructure can follow suit. A 3PL provider can give you access to distribution centers near key markets. You can also avoid having to invest in warehousing, which can represent significant cost savings. Additionally, your distribution and warehousing will be optimally situated. Outsourcing your transportation needs in a new market to a 3PL provider allows you to focus your energy and resources on meeting business objectives and fulfilling the needs of your customers.
One of the most significant benefits that working with a 3PL provider brings is access to transportation infrastructure that is scalable to your business needs. If you are operating your shipping and distribution systems in-house and need to expand, you’ll have to invest in the labor, facilities, and equipment necessary to make that happen. This represents a significant investment in resources that could perhaps be allocated elsewhere. By working with a 3PL, you’ll have access to a scalable pool of resources that allow you to meet business objectives as they arise. If you anticipate a busy period or are experiencing rapid growth, you can expand your shipping and distribution capabilities without costly investment in labor, equipment, or facilities. This scalability allows you to operate more flexible, expanding and contracting your shipping needs alongside your operational objectives.
One of the reasons businesses choose to work with a 3PL is they have deep expertise in the transportation industry. This expertise can be used to help streamline processes, identify inefficiencies, promote cost savings, and navigate your shipping needs from end to end. 3PL’s have a wealth of knowledge about the transportation industry as a whole, as well as cultivated relationships with partners throughout the industry. This serves as a backbone for the transportation network that you’ll gain access to by working with a 3PL. Effective 3PL’s can leverage their expertise and relationships to help secure you more favorable contracts with your carrier of choice, while also help to guide you towards the most cost-efficient and reliable shipping methods.
Companies choose to work with a 3PL for a variety of reasons. Some may lack the resources to create the shipping and receiving infrastructure to match their growth objectives. Others may simply want to focus on what they do best, and not worry about the day-to-day business of moving their products. Many companies also find the cost savings that 3PL providers offer attractive. Through industry relationships and pooled purchasing power, 3PL’s are often able to secure cheaper shipping rates for your most commonly used shipment types. At the same time, 3PL’s can guide you through the ins and outs of your transportation network, identifying inefficiencies and helping craft impactful process improvements.
There are many benefits to working with a 3PL. Although we feel that the ones we have outlined are among the most important, ultimately how a 3PL can benefit you depends on your business objectives and needs, as well as the capability of the 3PL themselves. Not all 3PL’s are created equally, so you’ll have to be selective in order to find one that offers the services you need and has the expertise and experience to help your business grow.
If you have any more questions about the benefits of working with a 3PL, please contact us today!
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