7 Advantages of Third Party Logistics that Shippers Need to Know
Regardless of the size of your business, it is worth considering a 3PL provider if shipping is a high priority for your business. Partnering with a 3PL can help shippers cut down on costs, make transportation more efficient, and improve customer satisfaction. This article discusses what 3PLs are and 7 ways in which they benefit shippers.
There are many advantages of third party logistics companies (3PLs) that shippers should know about. This is because, regardless of your business’s size, it is worth considering a 3PL provider if shipping is a high priority for your business. Partnering with a 3PL can allow businesses to focus on marketing, growth, and customer satisfaction while the 3PL takes care of all the logistics requirements.
A survey from Gartner, Inc. showed that 81% of the surveyed companies outsourced at least some of their domestic transport. This makes sense because 3PLs relieve businesses of additional labor and responsibility and can manage all aspects of shipping and logistics.
Continue reading to learn more about what third-party logistics is and the advantages of third party logistics.
What is Third Party Logistics?
Third party logistics refers to a service offered by certain companies to handle some or all parts of an organization’s logistics. And, the companies that offer these logistics outsourcing services are called third party logistics companies or 3PLs in short. This outsourcing includes aspects of logistics such as shipping, fulfillment, warehousing, and others.
Source: American Manufacturing Solutions
Companies first began outsourcing logistics in the 1970s and 80s, and now – with the boom of e-commerce – 3PLs have become popular worldwide. This is because good 3PLs can help enhance an organization’s operational, financial, and end-customer performance. The next section discusses specific advantages of third party logistics that shippers should know about.
Advantages of Third Party Logistics
The most important advantage of third party logistics companies is that they can help organizations save on costs. This is possible because a quality 3PL always remains on the lookout to improve efficiencies, cut costs, and add value to their customers’ business.
With transportation, 3PLs are adept at leveraging their collective order volumes and frequency to negotiate better rates with carriers. In addition to that, they can also help save businesses from costly errors, thus building a logistics network with lower risk and higher returns.
Access to Expertise
A 3PL company has the necessary knowledge and experience in transportation, documentation, import and export, customs, international compliance, and shipping regulations. Additionally, they are also up-to-date with the industry best practices and latest developments in logistics and technology. This expertise allows them to build systems that make the transportation process more efficient and easily overcome issues.
Focus on Core Competencies
Outsourcing logistics requirements to a 3PL can provide any organization with the leeway to focus on core competencies instead of devoting time and resources to critical but non-core components of the business. Transportation, especially, can take up large amounts of time, and 3PLs help by providing the resources and manpower to manage it efficiently.
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A very important advantage of third party logistics companies is that they can offer businesses the flexibility and scalability to use resources based on current business needs. In other words, it is easier to navigate the high and low seasons when partnering with a 3PL, as they can help you respond to changes in demand swiftly. They can also scale resources, such as transportation, labor, or space, based on inventory requirements without added risk or legwork.
Moreover, working with a 3PL also allows businesses to grow in new regions without barriers. Those looking to expand to new regions – domestically or internationally – benefit from a 3PL’s logistics support and industry expertise. This reduces expensive delays and cycle times, making the entry into a new region much smoother.
Delays are common in the world of supply chain. They can happen regardless of any amount of preparation and communication with the driver. The advantage of working with a 3PL here is they have plenty of experience dealing with delays and damaged products since logistics is their core business. Additionally, being insured against loss or damaged products allows them to help their clients deal with unforeseen circumstances straightforwardly.
Another very important advantage of third party logistics companies is they have a vast resource network. This, when put to good use, can help execute every step in the supply chain in the most efficient way.
Major 3PLs have a wide network of interconnected routes that permit them to maximize efficiency while shipping their clients’ freight. They put this network to good use and have a firm understanding of alternative routes and solutions when unexpected challenges occur.
All the advantages mentioned above boil down to improved services that directly translate to improved customer satisfaction, which is one of the most important goals for any business.
A quality 3PL can ensure timely pick-ups and drop-offs of orders, qualified drivers, and ultimately – happy customers. This way, shippers avoid vendor chargebacks and schedule disruptions, making the transportation process more efficient.
In summary, partnering with a third party logistics company can help shippers cut down on costs, make the transportation process more efficient, and improve customer satisfaction. This is made possible by a 3PL’s industry expertise and vast resource network. Therefore, if shipping is a high priority for your business, it is worthwhile to start looking to outsource logistics services to a third party logistics company.
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