For many companies, logistics is a vital part of operations, but not the core business. Many business owners have a hard time making sure their supply chain keeps up as the business expands. Inventory management, storage, packaging, and shipping – there are so many things that could be streamlined to satisfy customers and increase cost-effectiveness. With a dependable third-party logistics provider, you get just that.
So, what exactly are third-party logistics, commonly known as 3PL or TPL, and what does a 3PL provider do in more specific terms? To put it simply, these firms manage some or all aspects of warehousing and logistics for other businesses. Basically, whatever you cannot or do not want to do yourself, they can do it for you. But why should you use one? Let’s sum it up.
Outsourcing your logistics function to a specialized 3PL company will give you more time to focus on what you are best at. And with the advantages of aggregating logistics of multiple companies under one roof, the 3PL providers can offer rates that are more cost-effective than in-house logistics.
You do not need to worry about investments in machines, warehouses, employees and extra labor during peak seasons. Also, the huge resource networks that 3PL firms usually have can mean lower overhead costs, volume discounts and other advantages for you.
Why switch to a third party if you already have in-house logistics? Well, a specialized business with expertise in logistics might be able to do it better. Better can mean a lot of things. For example, more efficiently and accurately. And fine-tuned logistics is a competitive edge, as customers appreciate getting the correct order and fast.
A lot of 3PL providers are very flexible, making it easy for you to adjust what services they provide for you with limited notice. When you need to increase or decrease space for your inventory in the warehouse, your logistics partner will likely be able to make it happen.
If you have a new launch, seasonal inventory, special sale or similar coming up they can bring in extra labor to handle it. During busy times and slow times, you get maximum flexibility to simply not worry about logistics when your business changes.
While there are plenty of advantages with 3PL, it is not for everyone. Handing over your logistics to a third party means letting go of a business function that impacts customer satisfaction in a major way. And if you go from in-house logistics to 3PL, your own team might have a hard time getting back on its feet if things with the third party do not work out.
If you run a small to medium-sized direct-to-customer business 3PL can be a great resource. For example, during a growth spurt, where your capacity to sell is overtaking your capacity to warehouse and send orders out.
They can provide the storage and logistics that a larger company might have in-house, with quality that will keep your customers happy to a price you can manage. All while you can focus on growing your business.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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