Why Do Companies Use Third Party Logistics?

Business is always challenging, and owners must stay ahead of the curve to be competitive. This means knowing what they do best and surrounding themselves with employees who can help them grow and prosper. Another part of the puzzle is using partners to help your business run smoothly, which is best achieved by using third party logistics.

Can’t you just do your own fulfillment? Yes, you can, but there are many stages to logistics. If you are not an expert or don’t have the infrastructure to do it, you will experience slowdowns and unhappy customers. Fortunately, there are professional companies that can handle this for you.

IMAGE: UNSPLASH

So why do companies use third-party logistics?

Logistics Process

As your business expands, outsourcing your logistics becomes increasingly wise and necessary. Rather than handling everything yourself, you can employ a third party logistics company to handle it for you.

These companies provide various services, such as transportation management, warehouse and inventory management, supply chain management, and freight forwarding. They are responsible for receiving, storing, packing, shipping, and additional services, including inventory management, assembly, procurement, and handling returns.

3PL companies handle procurement and receiving goods from the supply chain’s upper levels. They manage inventory diligently while identifying low stock levels and arranging transportation from manufacturers and suppliers to the 3PL warehouse.

Warehousing Solution

3PL companies offer public warehousing solutions based on demand, priority, and capacity. They also provide contract storage tailored to specific customers for various durations. Additionally, they maintain specialized storage facilities for various products (like chemicals or food), which may require unique environments.

Their specialty is skilled management of receiving procedures, inventory control, stock level maintenance, and distribution.

When fulfilling orders, these 3PL companies receive requests and manage inventory by deducting orders from stock levels. They pick the items to be shipped, pack them securely into containers or parcels, and arrange for suitable loading and distribution.

They also cover all forms of distribution methods, including truckloads (TL), less than truckloads (LTL), full container loads (FCLs), less than full container loads (LCLs), drayage services, cross-docking facilities, intermodal transport, and brokerage services.

To ensure an excellent customer experience and reliability in delivering products on time, 3PL companies accurately track goods during transportation.

Save Time And Money

You must create or procure the products and services you sell in your business. From there, you must get the word out about your business and why people should buy from you.

There is marketing and sales to consider and employees to manage, leaving no time for one of the most critical aspects of business: getting your products to consumers.

Using a third-party logistics company takes that burden off your shoulders and frees up your staff to concentrate on other aspects of the business.

It also saves you money by not having to house and ship items yourself because 3PL companies have all the infrastructure and are ready to ship.

They also analyze and monitor their supply chain procedures and continually improve the process to serve businesses and customers better.

Scaleability

Your operation may be small when you start, but as you become more successful and grow, you need to keep up with demand. This includes:

Delivery of products.
Warehouse storage.
Picking.
Packing.
Shipping.
Handling returns.

Third-party logistics companies are large operations that often use a network of hubs locally, nationally, and globally, so they already have capacity well beyond your needs. This means that as you grow, they can handle the increase easily.

Knowledge And Expertise

Shipping your products across town is relatively easy, but as your customer base grows and reaches further, it can get complicated to fulfill orders.

You must consider customs duties, documentation, and shipping regulations when sending products internationally. Understanding and implementing these protocols gets overwhelming quickly, so it is better to use a 3PL company that is well-versed in them.

They know how to comply with international shipping requirements, which relieves you.

Third Party Logistics Technology

Your goal should be to fulfill orders as fast as you can without errors or issues. Fortunately, information technologies can help you out. 3PL providers implement several tools to smooth logistics, including:

Electronic data interchange.
Application programming interface.
Transport management system.
Cloud-based programs.
Tracking tools.

This better manages the logistical process and gains visibility in warehousing, transportation, customer relationships, and e-commerce.

Handle Returns

This is a necessary evil as some products and goods can become damaged or defective when they reach the customer. Your products may also not suit them. It can be challenging to handle returns, but your third-party logistics provider will handle it.

Reverse logistics lets your customers easily return not-fit-for-purpose items to the 3PL provider and get refunds processed quickly. They will also handle restocking, shipping back to the manufacturer, or disposing of unwanted inventory.

This is why companies use third-party logistics. To succeed, you need dedication and support from your employees and business partners, so implement a third-party logistics company. It is the best money you will spend on your business.